Episode 114: Haves and Have Nots

 

Erick and Rich discuss recent evidence about security awareness and alert fatigue that show why outsourced, AI-based automation must play a critical part in how MSPs protect their clients, as well as practical ways to enforce proper security with your clients rather than rely on the good intentions of their employees. Then they’re joined by Robin Ody of Omdia for an in-depth conversation about the analyst firm’s 2026 MSP Trends and Predictions Report. And finally, TWO last things: an illustration of the wrong way to incorporate voice AI in the call center and a follow-up on Erick’s suggestion last week that MSPs use AI to practice for big client meetings.

Discussed in this episode:

Cybercrime Victimization Climbs to Record High 44% Over Five-Year Period

New N‑able and Futurum Report Reveals How AI is Reshaping Cyber Resilience

Overview of Omdia 2026 MSP Trends and Predictions Report

Callers to Washington state hotline press 2 for Spanish and get accented AI English instead

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] And 3, 2, 1. Blast off, ladies and gentlemen. Welcome to another episode of the MSP Chat podcast. Your weekly visit with two talking heads, talking with you about the services, strategies, and success tips you need to make it big and manage services. My name is Rich Freeman. I’m Chief Analyst at Channel Mastered, the organization responsible for this podcast.

I am joined virtually, although we’ve spent part of this week together in person by your other co-host, our CEO and chief strategist at Channel mastered. His name is Erick Simpson. Erick, how goes it

Erick: It goes well, rich back at home in sunny Southern California. Just, shout outs to all of our.

Listeners who are dealing with bad weather and the East Coast and [00:01:00] things like that. Yeah, I grew up in New York, rich for the first, probably 13 years of my life. And I know what it’s like to have to deal with severe weather, but not like what the folks are experiencing like this year. It’s insane.

How are you doing?

Rich: I’m doing great. Thank you very much. Yeah, we both flew home from a an event we were attending in New Orleans earlier this week. Got back late last night, but yeah, you raise a good point. It could have been a much harder, longer trip if I had not been flying New Orleans to Seattle.

Yeah I’m grateful for having a managed all week basically, and for multiple weeks to have dodged some of this weather that a lot of folks in our audience have been dealing with. Like you said, all winter.

Erick: Yeah, and the best part of flying back home from New Orleans is, we both gained some time back so that works out well too.

Rich: Absolutely. Let’s dive into our story of the week, which is going to borrow a little bit. From this conference that we attended this week in New [00:02:00] Orleans and also from a conference I attended last week in Oceanside near San Diego. That was the Global Technology Distribution Council event.

Big annual gathering of the major distributors out there. I wrote all about my impressions from that event in in Channel Holic, my blog, which you can get to at Channel Holic News. I’m gonna use one little observation made by somebody at that conference to set us up for what I really wanna talk about.

And I was speaking with Jason Beal, he’s the America’s President at Exclusive Networks, one of those distributors there. I was talking with everybody I interviewed at that event about AI naturally, as one does these days. And Jason was talking about the importance in his view. Four distributors of balancing AI with what he called IR, which is an acronym he invented for authentic interpersonal relationships.

Basically in the age of ai, you wanna be providing tools to people that are gonna help them be more efficient. You wanna take advantage of everything AI [00:03:00] can do for you, but you also wanna be investing in relationships, because if you are a distributor, your partners still value that. As Jason said they wanna know that they can pick up the phone and talk to somebody.

Now and again, I think the exact same thing is true. For MSPs out there in our audience right now, you completely and totally need to be investing in everything that AI can do for you internally, inside the four walls of your business to make you more efficient and more profitable. You need to be investing in researching, gaining skills, in using tools like that.

In solutions for your customers that are going to be valuable for them and sticky for you as well. You also need to be using some of the employee bandwidth that these AI automation tools free up for you to invest in relationships, customer success better relationships with your customers.

What I wanna try to do here a little bit, Erick, [00:04:00] is complicate that picture just a little bit because we were at this event in New Orleans earlier in the week here, and we were joined by our mutual friend Corey Kirkendal, a 5K technical services, a managed service provider in the Dallas area.

Corey is very successful as an MSP. He’s also a widely recognized thought leader in the managed services world. And he was talking about some of the very sophisticated ways that his company is using AI right now, including in fielding calls from customers. And and basically they have AI answering calls from customers.

They are very transparent about that. When it happens the client who’s calling in knows they’re talking to ai and they are given the option of saying, Nope, don’t want to talk to a machine. Put me on with a human. And basically what Corey told us is, and he was saying this in jest, but it directionally is probably true.

It somebody’s 67 years of age or older and [00:05:00] calls in they will usually wanna talk to a human. Everybody else is more or less content to talk to the ai unless they. Can’t get an answer. They need, and something needs to escalate. And so I guess the point I wanna make here for the MSPs in our audience, if you are feeling like your competitive edge in relation to larger MSPs out there, or MSPs who are a little bit more forward thinking about AI is your relationship power your ability to create and sustain relationships, the fact that you have these personal connections with your customers, I would just encourage you to think about the possibility that is not as unique or as sustainable and advantage as you might think it is.

Because Corey and his company they’ve got great relationships with their customers too. And some of that relationship is actually strengthened for him and delivered for him by ai. My point here being. AI [00:06:00] relationships. These are not mutually exclusive things. And so you need to be looking at ways to use AI to create relationship value with your customers.

And you need to make sure that you’re not making the mistake, slipping into the mistake of thinking relationships matter to customers. I’m good at relationships. I’m gonna be okay regardless of what my competitors are doing with AI right now. Because the clients in your customer base right now, 67 years or older, you’re gonna have fewer and fewer of those over time.

And the people apparently who are 66 and younger don’t actually mind having that relationship or that conversation with AI right now. So these are not mutually exclusive things. It’s not an either or. You need to be doing both of those. Erick, your thoughts?

Erick: Yes. Thank goodness that MSPs are leading the charge here.

With ai, I think it’s a delicate balance that we need to strike and giving the [00:07:00] the client the opportunity to say, oh, yeah, I’ll work through the ai. I think everybody will try it once, and depending upon that experience, they’ll be more apt, more likely, or less likely to use it the next time.

Just based on how it works. I think it’s, I think where MSPs can take a note is from every other business that we engage in, everyone else is doing this. Everyone is moving in this direction of having an ai an autonomous, virtual person, answer those calls and route those calls. I, and so if MSPs aren’t leading the charge.

Moving in that direction. You’re right, rich, the new, the folks that are open to that and see that as a fast way to get answers. If the solution is crafted in such a way to deliver an [00:08:00] experience that, with outside of it being a human interacting that delivers the same outcome in a very efficient manner and people get used to it, I think we’ll adopt it.

If it doesn’t and gives a poorer experience, then folks are gonna hate it. I’ll give you a great example. I was on vacation last week and I had to extend my rental car by a few hours. We weren’t gonna get to the airport. We were gonna do some other things. And so I called the rental car company and I got an AI virtual assistant, and it asked me what I wanted and I said, oh.

Great. I’m gonna tell it. I need to extend my rental experience. And Rich, I got stuck in a loop that made me so angry that I just, I couldn’t figure out how to get out of this loop with this agent because it said, [00:09:00] oh, I can’t, it couldn’t complete my request. And what made it worse to add insult to injury on the first thing I tried to do was just do it on the app on my phone.

And I said, look, extend it had the capability of doing it, and it kept erroring out. And I’m like, oh, that made me angry. Then I got my laptop open, same thing, different browser, same thing. Then I said, the last thing I wanna do is call and talk to somebody to get this done. Something so simple, right? And I call and I get the AI thing, and it gave me this endless loop I finally got through to somebody and this poor, employee, I had to let ’em know.

Hey, I just wanna let you know I went through all of these things and I couldn’t get this solved and it was so difficult to get to you. And of course, they have no power. And I felt bad. It’s I’m dumping on this person. But I said, Hey, if you could just escalate that experience to someone in your, on your team that [00:10:00] could address it, like the website.

Now none of this stuff works, right? So I’m giving you the extreme of when all that AI stuff and automation fails, I got a very bad experience from it, right? MSPs have the opportunity rich to turn this around. ’cause we know that MSPs are going to test, they’re gonna, they’re gonna pressure test it, they’re gonna, implement.

They’re gonna try to go through the experience themselves as we do as MSPs to make sure that we’re providing an experience that doesn’t get somebody caught in some weird, matrix time. Of AI interaction. AI is supposed to make things better for us. And, those MSPs that are out there thinking about deploying something like this please sandbox this test it, be it with a few clients as I know folks like Corey do to deliver that experience.

Rich: And I’ll just say, don’t let Erick’s story there scare you away from doing this at all. I would, [00:11:00] I realistically, the kind of painful experience you had with the rental car company there, Erick is much more apt to happen with AI right now because the technology just really isn.

Completely mature yet, but end users have bad experiences with human beings at MSPs all the time. There, there are good experiences and bad experiences that do and do not involve ai. And, before you introduce AI into the mix, you wanna make sure that you are confident you’re gonna be able to deliver a good experience.

But I would just say that when the AI works from the end user’s point of view, there, there fundamentally is no difference in terms of how, how I feel about my managed service provider, right? My virtue of the fact that I was talking to the AI instead of a human again, assuming I can get to a human if and when I want one right now.

So yeah, the real moral of the story here is you need to be. Mindful of, and doing everything in your power [00:12:00] to optimize great experiences of all kinds with and without AI for your customers. And you need to be especially sensitive around that with something new ai, given that it’s not a fully mature technology.

Erick: Yeah. Just, test, move slowly, be a test with a couple of clients to work out all the kinks and bugs. It is a valuable technology when used properly and dialed in. And I didn’t even care that it didn’t sound like a human that much. I just wanted it to do what it did, but it kept wanting, it wanted to help me so much Rich that when I kept asking for a human, it said, oh.

It kept going oh, the fastest way to get you support is to let me help you. And they kept asking me the same three questions and I’m like, I need to speak to you. I said, you are not helping me. It wasn’t even intelligent enough to understand sentiment, right? Because I know Corey is also managing sentiment and his deployments and things like that.

It’s very interesting stuff. So yeah, there’s a lot of potential there. With [00:13:00] great AI power comes great responsibility.

Rich: So we are talking this is actually a nice segue to your tip of the way week, Erick, ’cause we’re talking a little bit about what you do as an MSP in terms of utilizing AI and doing it in a safe, tested and responsible way, but also to the point of doing it in a safe, tested and responsible way.

How you do what you do. And that’s a little bit about what you wanna talk about this week.

Erick: Absolutely. And Rich, the tip of the week this week is all about. Valuation, right? Every few episodes I come back to a tip around making sure that MSPs are doing everything that they possibly can to make sure that when they’re ready to exit they’re, and sell their company.

Lots of m and a going on, as we’ve talked about before. They can command the highest offers or the highest valuation. If you think about it, rich, there are different ways to increase valuation. Of course, the first thing that a buyer is going to look at is ebitda. [00:14:00] That’s your net profit at the end of the year.

And what percentage of that of your total revenue does that represent? We’re talking about, double, high doubled, almost say, 18, 20% really good ebitda. But once we get past that initial. Measurement. What else can add more multiples or value to an organization from a buyer’s perspective?

A couple things we’ve talked about in the past, rich, is nobody wants to buy a job, right? The organization has to operate independently of the seller. That adds more value. We want to buy an operating business, not parts and pieces of something that we need to fix. Now, I will say, rich, that, some buyers are looking for organizations where the seller has taken it as far as they can take it, and they know with a little bit of their extra, 13 or 14 ingredients they can really turn that company around relatively quickly and maximize value.

So [00:15:00] there’s some of that there, but at the end of the day, nobody wants to. Sit behind a desk in day-to-day operational mode. These buyers want to grow businesses. They may be acquiring multiple businesses. Owner dependency is probably one of the, key factors here. Another thing is, processes and documentation, right?

I’m going back to this 1 0 1 type of a conversation. We always talk as MSPs at every conference we go to and webinars we watch, and we’re always talking about making sure that our process are truly documented. Are they really documented to the point that you could onboard a new technician or engineer and they can quickly be onboarded and learn your documentation, platform, your integrations and things like that, and begin delivering service much more quickly.

I remember the days when I was in MSP. Rich and we had a ride shotgun. Every one of our technicians and engineers rode shotgun for six weeks [00:16:00] with another technician and engineer. Before we felt okay, we’ll give ’em a few tickets and see how they do. That doesn’t work these days, right? We’ve got the technology.

We’ve got the ability to do this. If we are relying on a small set of dragon slaying engineers and technicians that have all of our institutional knowledge in their brains that operate the business, that’s also considered a risk by buyers and will lower offers when you’re ready to sell, and how well are we automating the noise, right?

How are we looking at AI to help us simplify and automate some of the day-to-day noise that technicians and engineers have to deal with? This is another area where AI has such promise when used properly, and just regardless of ai. How many platforms do we have? I’m talking about sprawl now. Do we need all those platforms?

How well integrated are they to give us the business [00:17:00] intelligence that we need? And then how can we leverage AI to even elevate that, that ability to understand the data and the intelligence to help us make smarter decisions to help us create better relationships with our clients. Some things that we can ask ai, to identify top 10 clients with potential gaps in their portfolio of services that we deliver to them, things like that, right?

So there’s lots of ways to think about this, but think about modernizing your MSP practice in a way that makes it super attractive to a potential buyer that can elevate that offer at the end of the day and make you stand out among all the other folks that they’re considering investing in and pay you more.

For your company.

Rich: Yeah. And a few thoughts on that. You were talking about some of the 1 0 1 level stuff that might seem really obvious, but absolutely. Factors into the [00:18:00] price you’re gonna command. And you were talking about documentation and so on. Super important, all of them.

We’ve spoken in the not distant past on the show here, but another one that I’ll just remind people of which is just this idea that no acquirer wants to inherit chaos. Basically. Some of this goes to what you were saying in terms of the tool stack and right sizing and rationalizing and integrating that.

Some of it also goes to security basics and just get your security house in order, ’cause no one’s gonna wanna pay you. For a business where they know going in, the first thing they’re gonna have to do is clean all of that up on the AI front. It’s interesting. And this is something that we were talking about a little bit at this event we attended earlier in the week here.

I know for a fact, speaking with the CEOs of some of these very large private equity backed MSPs that do a lot of acquiring right now, that the more sophisticated you are in ai the better a price that you are going to get. This is something that they’re looking for and it’s not just that you’re using the tools, the [00:19:00] more you’re using them to do something customer facing, something sophisticated, the closer you come to intellectual property around ai, the more valuable you’re gonna be.

That said, and this gets to something else you were talking about a little bit there, Erick, it’s not as, if cannot sell the business. If you don’t have that kind of AI expertise inhouse, you are not get the kind of price maybe that you want. But I also, when I have these conversations with the CEOs of these big m ms P roll-ups, one of the things that they will say is, we are sophisticated with ai.

And so we know if we buy a company an MSP that is pretty good in, in every area, but a little inefficient operationally, if we bring our AI to this acquisition, we’ll increase the operational efficiency and the profit. And so they’re quite often in the market for a NMSP that is inefficient, not using AI effectively, but for you as the seller on the sell side of that [00:20:00] deal, you’re not gonna be happy with the way that comes out.

Erick: Absolutely right. Rich. And let’s talk about the other side of the coin where. You may not be, your next phase of growth may not be, or your next phase may not be selling your company. Your next phase might be growing through acquisition. So the more AI forward you are, and the more that you’ve got your AI leading your operations, and you maybe even productized it now and are delivering AI services and consulting services to your clients, this is a way for you now to look at other MSPs that may be not quite as sophisticated that way, just like you said, rich, and you can offer them a, a fair market value price for their organization.

But then by rolling out your secret sauce, like you just mentioned, rich, it dramatically increases the value to the buyer after the fact.

Rich: Alright, so with that, we are going to take a quick break. Ladies and gentlemen, when we come back, we’re [00:21:00] gonna be joined by Chris Day. Chris Day spends most of his time as the CEO of Scale padd vendor you might be familiar with.

Chris is a long time. MSP built a very large managed services practice and exited that. You might know him as the founder, former CEO of IT Glue. He’s part of a team at top-down ventures, which invests in vendors who create products for MSPs. This is a guy with deep roots in the managed services world.

A very interesting person with very relevant opinions. What we’re gonna talk principally about with him though, is some research that scale Padd recently did around trends. The managed services landscape. Lots of good stuff for us to get in there that hopefully will include some good actionable insights for you.

So stick around. We’ll be back with Chris Day in just a moment.

And welcome back to part two of this episode of the MSB Chat podcast, where [00:22:00] we are very pleased to be joined by Chris Day. He is the CEO of scale Padd, and yet a whole lot more both today and in the past. We’ll learn more about that in a moment. But Chris, welcome to the show.

Chris: Thank you, rich. Thanks for having me.

Rich: Four folks in your audience who don’t know you don’t know about scale Padd, don’t know about what you’ve done in the past prior to being CEO of scale Padd, tell folks a little about yourself.

Chris: Sure, yeah, I’ve been I’ve been a veteran, of the, of this MSP industry for just over 20 years now.

I think probably a very similar story to a lot of folks that started my MSP in 2002. Just me built that up over the years. It sold that it was a very accelerated story, but sold that in the last piece of that in 2021 to the largest telco in Canada called telus.

At that point we were like 500 employees. And then through that period in 2013, started it glue which many people know. And then a few years after that, co-founded a company at that time called [00:23:00] scale Padd. At that time it was called Warranty Master. Now it’s called Scale Padd.

And actually had someone many people know as well. Dan Wensley was the CEO of scale padd for five years, from 2019 through the end of 2024. And then I just stepped in as CEO shepherd us through the next chapter at the end of 2024. And then on the other side of the house we obviously have a venture capital firm top down where we’ve been investing in early stage SaaS companies in the MSP ecosystem.

Myself, Joel Rumson Mark Scott, both we were all involved in fully managed. Mark Scott was the founder of Enable. And then Joel ran fully managed when I was busy with documentation. Very connected and yeah, very active in, in on that side as well. Although my day job at scale Back gives some pretty busy.

Rich: And worth noting, mark and Joel were guests of ours on the show in an earlier episode which was a great conversation. We know them and our audience knows them too. Now like I said what we most wanna talk about with you here is this new MSP trends report, that Scale Pad [00:24:00] published within the last few weeks now tons and tons of really interesting data points in there.

And we’re gonna zero in on a few of our favorites and get your thoughts on them. Here’s one where I wanna begin with the report says that smaller MSPs are less likely to have grown MRR in the last year than larger ones. Is this kind of business as usual in the managed services world, smaller MSPs or smaller for a reason, or is does it reflect in any way at all this kind of shift in the landscape We’re seeing where there are some much bigger MSPs out there than there used to be.

Chris: It’s an interesting question, and anytime we like, this is why I love this trends report because you have a lot of preconceived notions of what’s going on, and then you get data back and some of those things make you scratch your head a little. You and there’s several of those in there, I’m sure.

We’ll talk about a few that were surprising to me. And usually I feel like, Hey, I know this thing. I know everything about this industry. No, nothing can surprise me. I would say that one surprised me a little, but but yeah, we [00:25:00] see it as well, like one of the trends that, I don’t know the detail how much detail was in there, but as an example, the number of assets that MSPs are managing, so like devices effectively is going down.

It, it’s actually declining over time. However the number of. Clients that MSPs are managing is going up at almost inverse amount. Let’s call it roughly, 10% decline in assets and roughly a 10% increase in the number of clients being managed. This is from scale padd data.

So that, that’s really interesting to me. I think it does speak to the large aggregators that are picking up bulk numbers of clients at a time as well. But I don’t know that, that number, just to answer your question directly would’ve been much different.

10 years ago, I think it was always harder to grow when you were smaller and it got a little bit easier as you got larger, we were able to go up mar up market. That one in particular, I’m not sure that there’s any alarm lights. Alarm bells going off for me on that [00:26:00] one.

Rich: I do wanna very quickly follow up on something interesting you said there that I don’t think it was in the reporter I glossed right over it, that the device count being down, but the client count being up by roughly the same 10% figure. I presume businesses are not using fewer devices than they used to.

So does that kind of, in your mind, reflect a shift, a trend in the marketplace in terms of what end users want from an MSP? It’s like the, we’ll handle the devices. Thank you.

Chris: Yeah.

Rich: With all this other stuff that is harder for us to do alone.

Chris: Yeah. I think partly I think if you think back to the traditional office environment where everybody had a desktop and a laptop that, that’s certainly one area where we’ve seen where we’d see a reduction in devices.

I think the other obvious one is in, the last 15 years or so of migration to the cloud, which you know, on the infrastructure side. Less devices on, on, on that side. And then I do think de definitely people with w work from home [00:27:00] scenarios, fully web enabled thin client web-based apps like the, those not all those devices are managed anymore.

So I think it’s becoming more about managing the apps and more about managing the users and probably a lot less about the devices and hopefully that trend continues.

Erick: Yeah, it’s interesting. I was just thinking, Chris, that, could co-manage the, it be a factor here where the internal IQ department is managing some of that day-to-day user device stuff.

And the MSPs or the MSPs are managing more high value strategic services and security and AI and things like that.

Chris: Yeah it’s not a bad trend, right? If you don’t bill based on devices then something’s going in the right direction. Value based pricing, I don’t care if you’ve got a hundred or 200 devices it’s based on what are we accountable and responsible for.

Yeah, I think that’s a very positive trend and hopefully there’s zero devices for us to manage in 20 years.

Erick: Yeah. So the commodity stuff goes away and it’s all app [00:28:00] apps and and connectivity and BI and all that.

Chris: Yeah, we’ve got more like tons to do on the app side, to be honest.

There’s like more than enough work to be done on that side and securing applications that if we don’t have to take a screwdriver to a machine again, I think we’ll all be happy.

Erick: We won’t be carrying graphic cards and ram and stuff in our trunks anymore. Remember those days? Yep. Exactly. Hard drives. Oh my goodness. A couple other interesting stats. In the report, 58% of MSPs track, MRR probably the most, popular metric to track, but only 35% track client churn and 23% track ebitda. What can you tell us about, those numbers?

What’s your insight there?

Chris: Yeah, that’s, to me that’s that was a, that was definitely one in the category of surprising surprising metrics. I was on stage at a couple of different events most recently at the Lyra event. And then before that, I’m trying to think what, which event it was, but it, [00:29:00] in line with this it was like a question about net dollar retention.

Obviously this has a, the addressing net dollar retention is all about retention and growth from existing clients and most of the room didn’t know what net dollar retention was. This was not the wire event. They definitely know what net dollar retention is there, but most of the room didn’t know what net dollar retention was and almost nobody was cracking it.

So they, they didn’t know if they were growing from existing customers or if they were growing from new customers. They could tell you I grew 10% last year, but they didn’t know the source. The MRR I don’t understand that one for sure. I feel like that’s table stakes to manage monthly recurring revenue.

But the one that I think this industry needs to keep a closer eye on is the net dollar retention. And as the big money comes into the space, it’s not only can you retain. Your revenue,

Rich: But can you grow that revenue without adding a single new client? And I think those are the outlier

Chris: MSPs that we’re seeing now are developing programs that allow them to put new services and [00:30:00] offerings at scale in front of their customer base.

Some of the result they can grow without new customer acquisition, which is the holy grail of a recurring revenue business. So I think that’s the biggest unlock I think for the next five years is the MSPs that can figure that out.

Erick: And a follow on thought, right? Because that’s really what buyers are interested in is EBITDA and net revenue retention.

R also it’s called that retention. These are mature metrics that MSPs should be measuring. Yeah. The 58% on MRR, like it’s MRR. It’s ebitda and now we’re seeing NRR or net dollar retention, net revenue really being like the drivers, because there’s so many MSPs nowadays, Chris now, like when we started our MSPs 20 years ago or whatever.

There’s a lot more and mature MSPs now that are being, let’s just say, fielding lots and lots of inquiries

Chris: Yeah.

Erick: From interested [00:31:00] buyers. And when you’re looking at, two MSPs that look about the same, the folks that are really, that really understand NRR and EBITDA and the percentage of MRR that, that makes, that, very attractive business are the ones that are gonna succeed, right?

Chris: Yeah, totally. It, I, I remember for me going in, and God, I don’t know, this would’ve been 15 plus years ago, but going into the service leadership groups with Paul Dipple. And get really getting into those metrics. And we had a pretty big MSP at that time, and some of those concepts at that time were still pretty new.

And, we, we built a discipline around those numbers and gross margin was always my favorite. And it feels like that was a really good one because that you were optimizing your service delivery and, making sure you charge the right amount and had, enough automation and different things in place.

But we never really looked at those numbers, like growth from existing customers. We always talked about share of wallet but it was never like defined enough financial metric. It was like, are you increasing share of wallet? I think [00:32:00] so. So yeah, I, that’s just, I think another level of discipline that’s coming to this industry.

And I think that big money has has pushed that envelope.

Erick: I think that these buyers that, are looking at. Managed services at our industry for the first time. They’re traditionally buying other types of businesses and things like that. They’ve, I think they’ve brought more of that focus on things like NRR and EBITDA and those things.

And I think it’s having a positive impact for MSPs that are starting to track those metrics more diligently now.

Chris: Yeah, it’s interesting too. The other one that I’ve, just from our data that I find fascinating is like in a SaaS, SA SaaS or MSP, there’s a lot of parallels.

Like the financial model works very much the same way cost of goods, revenue and all that stuff. But there, there’s like a real lack of focus on what drives the gross margin and. I think it’s like a same transformation that happened in SaaS and it’s trying to figure out what are the [00:33:00] levers we can pull to make a difference there?

The thing that I’ve noticed that’s most interesting is that the gross retention in the end p industry is far better than in SaaS that sells to SMB. So like a typical SaaS company that sells SaaS like software to an SMB, if you are in the, high eighties of gross dollar retention you’re like, fine.

Don’t don’t put any more effort in there ’cause you’re never gonna change that. That number is the mindset. MSPs are typically like in the nineties and it’s a recurring revenue model. So I think that’s why there’s a lot of interest from investors there is because, hey, you guys have built a really resilient business.

We all know. Difficult to, as a buyer of an MSP service, it’s difficult to churn ’cause you don’t, it’s painful and nobody wants to do it. And that’s a really sticky business. And so I think there’s a lot of hope that there’s a way to convert that other part where we can actually get the growth.

Because if you can retain 90 plus, 95% I’ve talked to a bunch of the large players or 93, 90 [00:34:00] 4% gross retention, which is phenomenal. So if you can figure out how to grow 10, 15% just by, with your existing base, and then you can add 10 or 15% with organic growth or m and a or whatever, you’re now starting to get a really really interesting business that can look more like these rule of 40 SaaS companies.

And probably the valuations can follow. So I think that’s where I think there’s a lot of hope for that.

Rich: There’s some really interesting data in the report around compliance, which is one of those end user needs that everyone acknowledges is important and widely shared. But a lot of MSPs are, for various reasons, reluctant to do anything about, they’re a little scared off by offering compliance services to their customers.

In the report though so a reflection of that, the report says only 12% of the MSPs you spoke to are making over 25% of their revenue in compliance. It’s a relatively small source of of [00:35:00] revenue for MSPs out there, and yet the MSPs we spoke to who said that they think compliance will be extremely important or somewhat important in the next three years.

Are all MSPs with higher revenue, higher average revenue per user higher recurring revenue. It’s like the the more invested in compliance, the more importance you attach to it, the faster you appear to be growing, or at least there appears to be a correlation of that kind. What’s your thinking on the correspondence between doing compliance within for your customers and just being a successful MSP?

Chris: Yeah, my perspective is that this is the, like outside of, out of ai and I think we’ll probably get there, but there, there’s a lot of opportunity there, obviously moving forward. But outside of ai if I were starting an MSP today, I would be heavily, heavily over rotated on compliance related services because it’s much easier to establish value on, on, on a risk management program than it is with [00:36:00] the table stakes of managing it as we did, for 20 years.

And most importantly, those compliance projects. And I think why you’re seeing the growth is the companies that, so by like jumping in and saying, I, I want to move the needle on risk management and compliance is one of the ways to get there, or the most important way to get there, it drives all the.

Decisions that SMBs typically don’t wanna make because you’re doing it with a framework and you’re doing it with a scoring system that’s widely accepted. So you’re basically saying if you’re okay being a three outta 10 great, we can stay there. If you wanna become a 6, 7, 8 outta 10 in terms of your know ability to support risk then these are the steps that need to happen.

And the steps that need to happen typically result in the SMB doing all the things that you know, they need to do anyways. And so I think that’s like the magic of compliance plus the external pressure thing, the rise of CMMC you’ve probably seen some of those stats of like where that’s expected to go over the [00:37:00] next several years and the mandates and regulations associated with that.

There is nothing but margin in that. And it’s like it’s being mandated. It essentially, so yeah, my perspective is. Is compliance should be table stakes or should and probably will be table stakes at, when will that be Exactly TBD, but I think within the next five years and no MSP is immune from that because you, whether you have, 20 customers or 4,000, there’s a segment of those that have that requirement and that segment are gonna be your probably your best customers.

’cause they’re gonna do all the mature things that are provided for by, by a risk management program and MSPs that we’re seeing that are doing those types of services, whether it’s like VCSO or compliance as a service or however you wanna name it those compliance related services are operating with different margins than helpdesk by far.

Like more like software margins. [00:38:00] They’re higher value services. They’re higher margin services. They’re, they put you in the boardroom where some of the other, services that you’re not getting the right people to show up for a QBR. And so I, I think it’s like the single biggest opportunity.

And guess what? It’s also linked with ai. If you want to go do anything more than surface level ai table stakes will be compliance because otherwise your data is going where.

Erick: Yeah, Chris, that’s interesting. I always say that everything’s gonna, everything’s gonna be regulated at some point, but for right now, I think the most opportunistic topic is, cybersecurity insurance policies, right?

You’ve got to help your clients comply to what’s in those policies. So that’s like the first step. So I think that kind of opens the door. Or, this moving, like you were saying, moving the conversation from the server room to the boardroom being more strategically relevant to your clients.

Chris: Yeah, I’ve seen that. And, the, these sort of like the [00:39:00] MSPs that I’ve talked to that are having early traction on AI are leaning it in that same way. There’s oh, we wanna do an AI readiness assessment. You say you’re ready, you’re very excited to do ai. Here’s what the situation is.

And we need to correct these 10 things before we’re ready to embark on that project. And so I, AI is another good wedge for compliance. I love it. Because it’s much more interesting for the CEO of a mid-sized accounting firm to talk about how AI can help them move their firm forward and be more profitable and take on more clients and all those things.

And then have, compliance or infrastructure be a sort of prerequisite for that. Rather than leading with, I’d love you to have faster, newer, shinier, secure, more secure stuff. It’s just not that interesting. So that’s why I feel like AI is a good wedge for this stuff as well. And the end result will be, Hey, your stuff’s locked down and secure and fast.

Erick: Yeah, it’s an accelerant for sure. Let’s pivot a second to like more of the kind of [00:40:00] table stakes services that MSPs deliver to their customers today. Before I started my MSPI was in the enterprise and I built out service desks and call centers, right? For Fortune 1000 organizations. And we were tracking KPIs, on the service desk, on the call centers down to resolution time, first touch close, hold times, all kinds of different things.

The survey or the analysis, the report that you put out indicated that. Only 48% of MSPs are tracking average resolution time. That kind of blew me away. And only 45% track average first response time, and only 38% track utilization rates of their technicians. It’s a little nutty to me. What are your thoughts?

Chris: Yeah, I think it’s interesting because you have this it’s this ecosystem, right? You have the such varied maturity and even fragmentation even within the platform players that are [00:41:00] aggregating a bunch of MSPs, the, that answer would not be always everywhere.

It would be like sometimes somewhere, someplace, some places sometimes. And so I think it’s really interesting just to, to those metrics, I’m sure you guys tracked those diligently. We were, I feel like we were 10 years ago. Pretty diligent on most of those things.

We had, first call resolution. We had response and resolution time. Then we also had complete total elapsed time, which we found was another one that drove churn and unhappiness. Our SLA was intact, but it also took three weeks because we’re waiting on the customer and those type of things.

Yeah, I don’t know. I don’t know to me that, that says that folks have adopted purchased a bunch of tools but haven’t operationalized them, and haven’t brought it into the management process and haven’t, created quarterly objectives to make improvements in those areas.

But yeah, it’s a little bit alarming. E either that or nobody cares and there’s no tickets anymore, which I don’t think [00:42:00] that’s the case. I haven’t been running an MSP for a few years, but I’m pretty sure all those things still matter.

Erick: Yeah, it’s, maybe it ties back to that we’re not even tracking ebitda, so how do we know that we can improve our, gross, net profit at the end of the day by, enforcing some of this stuff and measuring some of that and, expecting our ignitions to close, hopefully five tickets a day that just, it blows me away.

Chris: That’s, and it’s still really hard like utilization. I still don’t think we’ve cracked a code on that necessarily. You can have, engineers with full days. But then exposing what, what, there was eight hours in there. What first of all, was it all real?

And then second of all within the reel, was that happening at the most efficient, in the most efficient way that, that it should and all? I think there’s a lot more questions and answers in many cases. So I think as we get into, a lot of these startups now working on level one automation triage, resolution without an engineer.

I, I think obviously we have a ways to go until and until we trust AI to, to do a [00:43:00] lot of those things or until AI has a lot of the capabilities necessary to do a lot of those things. But I think that will be a forcing function to look at some of these things and reimagine what’s possible because it’s getting a lot easier, but it’s still not quite there.

Rich: It’s a perfect segue to something I wanted to ask about actually, so you asked MSPs in the report, what is the least efficient area of your business? And the number one response given to you by 34% of the sample was sales and marketing. Not a surprise historically, this is not an area of confidence for most MSPs.

But the second highest most frequent answer at 31% not way behind sales and marketing was help desk services. And, top down ventures one of the things you’re involved in invested in a company called zoic, which is one of these AI automation tools for MSPs recently acquired by ConnectWise, you clearly have some thoughts about the impact that AI can have.

So talk a little bit about what that [00:44:00] result tells you about the upside potential for both for vendors and for MSPs in applying AI and automation to the help desk.

Chris: Yeah, I think for me, for first of all, in the sales and marketing I chuckle because that, that’s been the same for 20 years.

I, I think my perspective over the last several years has changed on that as I was talking about. Net dollar retention and thinking about growth in a different way. I think there’s a lot of money left on the table, a lot of growth left on the table. That can be achieved without sales and marketing especially looking at just how bad some of those numbers are.

But yes, on the help desk and automation side, I think there are huge gains to be had there. I think not dissimilar from almost any sort of ai any agents I guess that, that are coming to market right now. We’re seeing a really good ability to get to getting better at getting context, giving good suggestions, and and [00:45:00] categorization and putting things in the right buckets.

Scheduling, there’s a bunch of those areas that are very strong, I think. Taking action is still the one that it, that the chasm to be crossed, you know, the ability to actually rely upon an action being taken by an agent, which I think is gonna be the true unlock to remove labor. And until these agents can, A, be trusted and b, be capable to be able to go out and actually perform a function.

Do you actually trust it to reset the password? Do you actually want it to reboot the server? There, there’s, it’s gonna be a little bit of time until we get comfortable with that piece. But that being said, there, there is and I talked about this in the it glue days there, there’s an infinite amount of waste still going on.

Researching researching solutions, trying to find information. Trying to even if you’re just purely engineer based and pure human labor, just to lay up possible solutions that are highly [00:46:00] probable to be correct. That’s a huge, there’s a huge amount of opportunity just in that.

And you think about the margin profile of the business, I think MSPs need this. If we want to grow to be profitable

Rich: Mid-size accounting firms, we want 30, you

Chris: know, percent EBITDA or above 40% ebitda. These type, like we, we’ve gotta get there’s a ton of waste that we can cut out before even we worry about robots automating into and doing tasks.

So I think anything that can cut down 10 minutes out of every service request. Or 20 minutes out, out of many service requests or take care of the time entry, take care of the documentation, the ticket take care of the feedback loop with the customer. Like these are all huge unlocks. And so I think we’re gonna see a bunch of companies hopefully a bunch of cool innovations.

Zoic was one that was really I was very impressed. I think that was one of the only investments. So 90, 95% of the investments we made were inbound in, in, in top, down. And that was the only one where we actually reached out to Lee and Zick [00:47:00] and said we wanted to be a part of it.

’cause we saw that they were doing things different. I would say they, they had a Silicon Valley approach to the tech. And I, and we are seeing that, we’re seeing different types of entrepreneurs and innovators coming into the space and thinking more like a. California Big Pec and it’s not all just former MSP founders starting stuff.

So there’s some real brain power coming into the space. I think that’s gonna be really good as we now, some of these solutions are very complex.

Erick: Yeah. So it was also interesting to us, Chris, in the report there was analysis that indicated that employees are saying that they use AI less than executives say it’s being used, and they’re also more likely to see their AI use as somewhat effective while executives are saying it’s very effective.

So yeah. What’s the disconnect there you think?

Chris: I, it’s funny, we had a similar experience just in scale, PADD. We had our management [00:48:00] team offsite, and we were trying to assess like how AI was being used throughout, throughout the organization. And I felt the same.

I feel like I’m growing almost every day and having a new epiphany almost every day with ai, whether that’s clog code or lovable or rep or, you name it codex, all the, there’s my use of that stuff. And then you have this sort of assumption that people are very effective in the tools that have been provided with chat TPT or copilot as an example.

But you realize that most folks like, have not been skilled up in this stuff. And there’s we have an education problem because I don’t think most people know what you can do with a chat, with an AI chat interface, let alone. How to pipe systems together with AI and connect some APIs together.

So I think that’s a common issue. I think, we’re dealing with the people side of that now as well. I think there’s a natural element of people not wanting to use AI because [00:49:00] they feel like if they do someone will notice and then that job not exist. But I think we’re still working our way through that.

That I never, I actually don’t think that’s an actual problem. I think it’s just a fear that’s natural for humans going through this big change. But if the perspective can flip into I can do the work of more people, therefore we can grow as a company faster and we’re, we’re not struggling to hire because we can scale.

That’s always been let’s always been the dream. It was never implement documentation. Save 25% of your tech teams time back and then, fire 25% of your people,

Rich: right?

Chris: But that’s just like human nature to, to think that if we get more efficient, we’re just gonna need less people.

That the reality is all these companies are generally growing and so you’re just slowing down the hiring. And so I think that’s just a extreme version of that, that we’re going through now. And certainly software is way worse. Like the automation that you could do in a software business, product development, product [00:50:00] management ui, ux, like these areas are dramatically changing at at a ridiculous pace.

Much more so than many other industries. Like the MSP industry, that’s, it’s not as easy to automate these things. You gonna try to automate the user experience for your help desk. It’s not quite the same.

Erick: Rich and I recently heard from a group of MSPs. About how their clients and their end users, try copilot for instance, and then they just cancel it and try something else, and they’re jumping around to these different AI platforms.

Go tie this back to that board room, to the server room opportunity for MSPs. What can MSPs do about it? And, help their customers and help themselves as they guide them through this, AI journey. There’s governance, there’s, give us some insight from where you’re sitting on what the opportunity can MSPs do about it.

Chris: Yeah, I think there’s a hu there’s a huge opportunity that we’re seeing some startups coming [00:51:00] now there, there’s a few in, in the MSP channel, al already, related to orchestration. Ai. I think next, like we’ve seen this with the Microsoft 365 stack, like observability compliance like these, there, there aren’t a lot of tools that exist for this yet.

So I think there’s gonna be a whole new set of management responsibilities that MSBs are gonna have to handle, whether you’re the one that’s gonna go automate their sales intake process and hook it up to their ERP and, like that type of work. True integration work. It is TBDI, I think it would be akin to saying that you’re gonna help, this sales team create their decks.

Your customer, help your customer, VP of sales create decks like that never happened. That’s never gonna happen. But I think there’s a, yeah, there’s a new level of and this is not here yet, but it’s coming. It’s like observability and orchestration of this stuff is where I think software companies are gonna be built up and made.

There’s a whole bunch of these guys that have built really big businesses, ’em [00:52:00] all around just managing Microsoft. The same will will apply for ai. So I’m excited to see where that goes. I think if we can pivot, help desk into AI orchestration charge the same amount, hopefully but, instead of making 40%, make 70% margin on those services, I think everybody would take that job.

It’s not dissimilar to, moving exchange servers to to the cloud. Right that, remember that fear that came with that time was like, oh but my whole job is managing exchange servers now. It’s just as hard to manage all that stuff as it was before. It’s probably harder

Erick: and you bring it back.

Memory is like one of our core competencies was very complex, multi server exchange deployments and things like that back in the day.

Chris: Yeah.

Erick: But we sold our MSP before all this moved to the cloud stuff.

Chris: Yeah.

Erick: There’s good and bad about that whole story too, which probably sold too soon. But anyway.

Rich: Yeah. And I gotta say, Chris [00:53:00] I just last week attended this big distribution conference and when you were talking about software companies coming into the market to help MSPs on orchestration, I keep wondering when and if the distributors are gonna step into that role. ’cause it’s a very logical role for them to play.

Forcing all my AI from one of these companies and I’m doing the billing and a lot of that stuff with them already. Can they help me orchestrate that AI swarm of agents that stack for the end users?

Chris: I definitely think so. I think there’s that it’s really interesting because they the age agentic.

Orchestration stuff. All the big players Salesforce, Microsoft, ServiceNow they all, have their own sort of agents that can, that are very smart and very capable within their platforms. And then you’re gonna have this sort of general purpose the open ai the anthropics the Geminis, et cetera.

And like [00:54:00] there, there’s some missing connective tissues still for all of this. These are, for myself even individually, I just have three different things. I use ’em all. I ha in some cases I have a personal and a work one. And like this is pretty much shadow AI at this point, right?

And that’s really what’s going on. And I think that’s a really interesting, like getting our arms around shadow ai, I think will. A ton of sense. I don’t know what the delivery mechanism will be, if it’ll be hooking up to each customer’s tenants and managing that managing agents that they’ve got running monetizing agents that you create that is your ip.

I think there’s lots of things to be figured out here and certainly there are players that are like platforming that as well in the space. But yeah, I th I think the very logical spot for the sort of cloud marketplace providers to sit there because you’re at the intersection of the billing and the executions.

And you have all the access that you [00:55:00] need, but at the same time, they’re gonna need to be come software companies to be able to create the sort of experience and the technologies needed to do orchestration. So it’s gonna be gonna be interesting to watch that.

Rich: A little bit of a pivot, but I can’t help myself here.

So the, our interview guest on the last episode of the show was Conar Orgy, the CEO of Lexel. We were talking about Zoic before a top down portfolio company. You’ve exited obviously to ConnectWise there, but you are invested in Lexel. And one of the many interesting things about Lex Full is that you are connected to it given your role in the past around it glue.

And so I guess it’s a two part question. ’cause documentation really is just where Lex Flow is beginning, but I’m super curious to know what the fact that you have invested in that company that is doing AI based documentation says about your thinking on the opportunity in documentation for MSP.

It feels probably to a lot of people, [00:56:00] like this is a solved problem now. Apparently not so much to you. So I’m curious to get your feel for the opportunity around AI and documentation, and then also just a few words around the larger opportunity for Lex full with MSPs.

Chris: Yeah, I think so. It’s become clear to me and I’m, I, as I mentioned, like pretty, pretty active in in prototyping a lot of the, a lot of the new solutions and technologies that we’re developing at scale padd.

And so as you go through these exercises you realize the and companies like Zoic popping up and many others that are doing similar you realize the need for true context and and so it’s what’s always been like a system of record, I guess since the IT glue days as an example hasn’t really been built up in a way that is queryable by an agent.

So I think that’s the job to be done is to solve like true context of what’s going on. If I if it was [00:57:00] possible, I would almost say that modern documentation should be AI as ux. So it’s literally there’s not even a web interface. You just ask questions, you get answers, and they’re perfect.

So I think that’s really the big opportunity there because they, I think that unlocks all the other ecosystem tools, everything that we’re trying to do with, automating the service desk. I think about it what CVIC had to do, it’s to be able to answer a ticket came in, I need context.

I need to give a good idea of how I might solve this thing. And the current ecosystem requires me to just basically archive, ingest process, and. For the best. Whereas I think that the real answer is real time like knowledge graph type access to what’s going on, what is the right way for me to do this for this client?

And you just get two sentences and it’s always right. So that’s the delta between what I would say would be like [00:58:00] legacy documentation and what would be next gen I is that awareness, the ability to self-heal automate not scripts to rewrite articles, but like every article is current and updated real time with almost no interaction and learns from other things that are going on within your MSP.

So I, I think that’s the future for Lexel and I also think the bigger opportunity is on the SMB side which is not something we ever. Took too far back in the it glue days. But the same thing, the SMBs are running copilot. They have questions they wanna reset they want, they wanna reset a password, they wanna create a new user account.

And to be able to take all that knowledge and put it out, teams chat at the edge or where it never even became a ticket. And that value was provided by the MSP, I think that’s where we start to see really, it’s not a client portal, it’s an answer. So I think that’s really the direction where that needs to go.

And it’s it’s doable, but it’s hard. [00:59:00]

Erick: Chris, it sounded to me that like there, that you had just confirmed another future technology prediction that started with the original Star Trek, the original series where you’re just speaking to the computer or the AI and it has got connected to every system in the ship.

And it comes back to you with, actionable intelligence. But

Rich: absolutely

Erick: dig, I digress. So many things can be tied back to things that were imagined back in the late sixties that show. But anyway,

Chris: fine imaginable able to just chat. It’d be like, you know what, just go ahead and close that ticket and it’ll just happens and puts the proper notes in it.

Like you just, you’re just chatting. You do this all on your phone. It won’t be too long,

Erick: no doubt. Or on a wearable device that, other companies are trying to

Chris: Yeah. Or the Star Trek one.

Erick: Exactly. The communicator

Chris: communicated that. Yeah,

Erick: sure. The com badge. So jumping back to the report, there was indication there [01:00:00] that MSPs with the highest utilization that those folks that are tracking it

Chris: Yep.

Erick: Tend, tend to use 16 to 20 or maybe even more. Apps while those with lower utilization rely on fewer solutions, but high utilization is also correlated with high churn risk. So how do you explain that? Is it having too many tools, increasing efficiency, great for the MSP, but not great for customer staff?

Chris: Yeah, you’ve probably heard this there’s definitely vendor fatigue. I think that’s one of, that’s one of the areas where I think we’ll see some some outliers here. I hope Skill Pad is one of them. Where where there’s like lot there’s, I say this a lot, but there’s many let’s call them companies that are really maybe a product or [01:01:00] maybe it’s not quite a product and it’s just a feature.

And I think that’s what we’ve become victim to in the MSP industry is, you get started, you get your PSA set up, you get your RMM set up, and then you add 48 things on top. And I think that there’s a big appetite to start bringing that down. And I think that, we gotta push ourselves as software providers in this space to bring that value.

I’m not talking about, trying to break down any businesses that exist, but I’m saying there’s room to aggregate some of these things in the best interest of the customer. And I think if the experience that a typical SMB has with an MSP is still, like there’s the exemption, there’s exceptions.

But it’s still pretty archaic. It’s like I got an email with a ticket and like the ticket looks weird and the email’s got a bunch of stuff in it. And it’s like re-imagining what that experience should look like as a buyer. And I was talking about that 10 years ago and it’s still an issue.

So I think my perspective is focusing on that last mile, like [01:02:00] focusing on the customer experience is something our industry has not put enough effort into. We’ve been solving for MSP optimization, MSP workflow, MSP, efficiency but, did we consider what pops up on a client’s machine and how we engage with them to solve their issue with no ticket.

So I think that’s part of it is we’re, there’s like a lot of different things. There’s, we’re emailing out quotes, we’re sending out spreadsheets we’re sending. Tickets we’re texting, maybe now we’ve got an AI chat bot inbound. We’ve got an ai voice bot inbound, and then you’re just like what am I, what kind of experience am I curating here?

So I think that’s a next thing is like really rethinking, like how do you engage, and what is that customer’s experience engaging with you? I know the biggest reason for churn probably was the same in your time as it was in mine, Erick. But if you can keep the lights on, your supports decent [01:03:00] and the customer feels like they have some form of a plan, like some sort of a strategic plan that they can refer to for the next year, two or more generally they’re happy.

And if like in the absence of a plan. They feel like your service is a commodity and they’re just gonna take the next quote that’s $5 less. So I think that’s the, that, that’s really what’s driving this. I told a story. It’s in the, in a book of mine that’s coming out later in the fall. But our private equity partner of ours talking about an MSP that they work with 300 plus employee MSP, which I didn’t know at the time.

And I just like having a board dinner. And I said, Hey, how’s it going? I know you guys work with an MSP. How’s that going? And he goes, eh, we’re think we’re gonna make a change. And I like, why? And he is ah we just we have no idea like where we’re headed. We have no plan.

We wanna invest. [01:04:00] But we haven’t had any of those conversations. I said, you don’t have a roadmap. You don’t have a, any kind of structure. No, we’ve never had anything like that. And so it’s the fact that we haven’t been able to get that piece done. And by the way, that absence of that plan is exactly why net dollar retention is low.

Yeah. You, they are ready to spend money. They do not feel like they have a plan. If they had a plan, you’d have a forecast with four quarters of spending that they, then they’d be happier. They’re gonna spend more money with you and be happier. And I, so I think that’s the age old problem. I experienced that in my MSP, that the customer that spent the most were the happiest and generally the ones that, that had a plan in front of ’em.

Yeah. I think that’s largely what’s going on is we’re trying to optimize optimize help desk and we’re not optimizing for strategy.

Erick: Yep. I agree. Okay.

Rich: Chris really interesting conversation. Really interesting report. For the folks in the audience, we will link to the MSP trends report from scale.

Padd in the show notes here. I encourage you to check it out. ’cause trust me, [01:05:00] there’s a lot more than we’ve gotten into here. Chris, for folks in the audience who want to get in touch with you, get in touch with scale Padd, learn more about either one, where should they go?

Chris: Yeah, just probably best is LinkedIn.

Hit me on LinkedIn first day. And happy to connect. Love to connect. I’m there every day.

Rich: All right. Chris, Dave, scale Padd, thank you for joining us on the show. Folks, Erick and I are going to take a quick break right now. When we come back on the other side, we’re gonna chat a little bit about this interesting conversation with Chris.

Have a little fun wrap up the show. Stick around. We’re gonna be right back

and welcome back to part three of this episode of the MSP Chat podcast. One last thank you to Chris Day for taking some time aside to talk to us about the MSP trends report and some other things going on in the industry and in his world. It’s it’s interesting Erick, a lot we could follow up with, but it was striking to me, [01:06:00] I knew going into this interview that it would be striking to you as well, how many MSPs there are that are just not doing some of this really fundamental stuff.

We were talking about 1 0 1 level stuff earlier on in the episode here, and tracking utilization some of these really basic metrics that you. Constantly push your clients when you’re consulting with MSPs to do, there are a lot of MSPs who are not doing that. So that was eyeopening.

And then it was also interesting talking to Chris about opportunities in areas like compliance and so on. And you really got the sense for the possibility of what economists will sometimes refer to as a, like a khap economy. You can see a future for managed services where there are the people who are doing all the 1 0 1 level stuff, right?

They’re investing in these new areas like compliance, they’re on the pointed up and to the right side of that khap art. And then there are all those people out there who are not getting the fundamentals right, competing with the people who are, and who are [01:07:00] also investing in more advanced services.

And they’re on the wrong end of that khap future. And so you. Food for thought. There’re both in on a in a positive way and in a less positive way for folks in our audience.

Erick: Yeah. Rich, I really appreciate you illustrating it as this khap phenomenon with msp just like any other business or even consumer.

It’s very interesting that there were such, there was such a high percentage of MSPs that aren’t even doing like the most basic measurement. Even from an it, if anyone with any IT experience in the enterprise knows that there are metrics that we need to measure. I would love to ask more questions about, the set of partners, like the demographics of the folks that, that took this, how long they’ve been in business.

What questions that. We don’t normally ask like, where did you come from? And I think that’s what [01:08:00] surprise, that’s why this surprised us so much was because like most other surveys that we see don’t ask these kinds of questions. I’ve not seen that reflected like, Hey, you measure this KPI and things like that.

So that was really striking for me as well. And just Chris having that wealth of experience and expertise in the channel. We could have talked to him for days, like I could have geeked out with him for hours just about, his journey and what we’ve seen in the channel and shared experiences and things like that.

But one thing that really came out for me was, he just, his love for the MSP channel, just like we love it. And and him, giving back.

Rich: We will include a link to the MSP trends survey in the show notes for this episode. I really do encourage you to go there. I there are a number of things aside from the fact that there’s a lot of data and some of which we talked about here.

A number of things that really do make it worth your time. First of all the depth of information the breadth of information that they [01:09:00] collected is very impressive. As somebody who reads a lot of these reports, I was impressed by the just the number of different topics that they got into.

And then the other thing that I was really impressed with, ’cause I get a lot of these research reports from across the industry, and they’re almost always just basically a static PDF file. And that’s fine. I can read the PDF, but the scale CAD guys actually did the work to create this interactive site.

And you were talking Erick, about wanting to get deeper into the data. In some places they didn’t do this everywhere, it was only in a few places. But there are some questions in that survey that you can go to through the link. We’ve gotten the shown us where you can move some sliders around and see, okay, what about the smaller MSPs?

What do they say here for? So it’s, truly. If you have any interest in any of this at all, I really do encourage you to click through and play around in that site. Benchmark yourself a little bit against the the people who participated in this study. It’s super interesting stuff and that leaves us with [01:10:00] time for just one last thing, ladies and gentlemen.

And, we’ve been talking about AI and ways to use AI to create a more effective organization, creative new uses for ai. I came across an interesting new use of AI that may or may not be something that folks in our audience wanna consider doing at their company. This is something that they are actually doing with AI at Uber.

And they have created what they are calling Dara ai Dara. K for Shahi. I hope I’m saying that he was the CEO of Uber. And there is now a virtual AI powered version of him. And if you know that you’re gonna be sitting down with him in a meeting, you’re gonna be presenting to him, you can not just rehearse what you’re going to be saying, you can do it with an AI powered virtual version of him and get some sort of feel for what you, your questions he’s gonna ask the mood he might be in as he listens to what you’re telling him.

And apparently this is actually proven to be very useful for folks. Maybe you create an AI [01:11:00] powered version of yourself that your technicians can spend some time with before a performance review. That kind of a thing. I think there’s something here.

Erick: Yeah. It’s a very interesting article that we’ll share in the show notes.

Rich and I had a different take on it actually. I thought, wouldn’t it be great? If you could create a virtual AI avatar of the decision makers in each of your client relationships, and then you could, again, just Hey, if I know enough about them and feed intelligence into this AI from all the conversations and the calls and the virtual meetings and all that and how they respond, that would be interesting.

And then you could say, okay, how, what, how could I best present this next solution? How, how, what is interesting? What should I bring to the QBR? What really motivates or drives this decision maker? ’cause everybody’s a little bit [01:12:00] different, right? Rich, we know that from behavioral profiling and we have to assume right?

Where they align and then we adapt our behavior to align with their behavior. That’s just move, taking advantage of. Just connecting better with someone. For instance, if there’s somebody that just wants data very quickly and they wanna make decisions fast, the worst thing that you can do is just be the talkative, sales person that just never shuts up.

And that’s gonna be a disconnect. But if you know that person needs data quickly to make quick decisions, then I’m gonna adapt my behavior. If I’m the, extrovert, I’m gonna be very concise, specific, give them exactly what they need so they can make that decision the opposite. I don’t wanna be the engineer that just speaks in, engineer speak.

You got a quick decision if they’re somebody that is more of a people person and wants to talk and things like that, right? Imagine if we had the ability somehow, I think we do, especially over time to create some ais or representative [01:13:00] virtual people that represent each of our clients. And then test.

Pitching and test Yeah. With them, things like that. So that’s what I thought.

Rich: Yeah. I, and honestly, we are not very far from that at all right now, Erick. Already there are tools out there that utilize AI to help prep you for a call customer, basically and just pull together information about things you’ve discussed in the past and maybe tickets that are, and, just get you ready.

But you, all you really need to do is marry up that sort of historical record about the end user with voice and video AI to create this avatar of the customer. And yeah, you could absolutely practice that meeting with a customer before a very important meeting in advance. So coming soon folks to you will be this this kind of capability.

Erick: Yeah. Rich. Even think about, letting the, letting the AI loose. On all that person’s social media, everything about them on the web, internet and where they’ve been. And then you can bring up, hey, how was your [01:14:00] vacation last week? And things like that to ice break the con. It’s a brave new world, rich.

Rich: Indeed it is. And folks we’re gonna let you get right back to it now, here as we wrap up the show. We thank you so much for joining us on this episode of the show. Erick and I are gonna be back with you in a week’s time with another episode. Until then, I will simply remind you that this is both a video and an audio podcast, which means if you’re watching us right now, but you’re into audio podcasts, go to wherever it is you get those Spotify, Google, apple.

Look up MSP chat. If you are listening to us on an audio version of the podcast book, you wanna check us out on video, go to YouTube, book up MSP chat there. You’re gonna find us as well. And wherever, however it is 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. He is part of the team with us here at Channel Mastered, where we work with vendors. Have or would like to have a thriving MSP channel. You can learn more [01:15:00] about the full suite of services that we offer at www.channel master.com. Channel Master has a sister organization called MSP Master.

That’s Erick working one-on-one with MSPs to help them grow and optimize their business. You can learn more about that at www.mspmaster.com. Once again, we thank you for joining us. We’ll see you in a week, folks. Until then, please remember, you simply can’t spell channel. Without [01:16:00] MSP.