Episode 137: Digital Twins Gone Rogue

 

Transcript:

Rich: [00:00:00] This episode of MSP Chat is brought to you by MSP Mastered. If you like co-host Erick Simpson’s Tip of the Week, you’ll love the comprehensive growth advice Erick and his team provide at MSP Mastered, your go-to resource for overcoming business challenges, improving service efficiencies, selling more profitable MRR agreements, and increasing the value of your MSP business.

From sales and marketing, to service delivery, to hiring and retaining high performing talent, MSP Mastered offers access to over 90 online master classes, 150 on-demand webinars, and 250 advanced MSP tools resources, along with regular group coaching sessions and unlimited strategic email support, all for one all-inclusive membership [00:01:00] fee.

Unlock your true MSP potential by joining MSP Mastered today. And three, two, one, 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 in managed services.

My name is Rich Freeman. I am chief analyst at Channel Master, the organization responsible for the show. I am joined, as I am every week, by your other co-host, our CEO and chief strategist of Channel Master. His name is Erick Simpson. Erick, how you doing? Doing well, Rich. Doing well. Just preparing for what they’re claiming to be the hottest week in California history.

Maybe that’s this year, but yeah, we’re peaking at supposedly 97 degrees in Southern California today. Not to be outdone by, other states here in the United States, I was talking with a co- a colleague of ours recently and said he was driving through Texas and his [00:02:00] automobile temperature thermostat reading said it was 111 degrees outside and h- here I am.

Yesterday I was working away here in Seattle and glanced at the temperature reading on my watch, and it was 86 degrees. Wow, 86. In Seattle, that’s blazing, let me tell you. Yeah, people are losing it in Seattle.

As we begin to wrap up the the summer here and head into football season, things cool off, we’ve got plenty to talk about. Let’s dive into our story of the week which actually speaking of hot, it was quite hot last week when I was in Dallas attending the 20s Vision Conference.

And our story of the week comes out of that show. A lot of interesting conversations I had there and all written up in my latest post on Channel Hall at my blog. But the piece of it that I kinda wanna zero in on here has to do with the emerging AI strategy at the 20. Now the 20 for folks who don’t know [00:03:00] is an MSP roll-up, an MSP platform 49 MSPs acquired to date and growing.

This is a very large company. A company big enough to have an eight-person R&D team internally developing AI tools for themselves, and to have been over the course of the last year recruiting a team of AI consultants basically who are going to work with clients of the 20. And they’ll be doing a number of different things I think, but the particular AI offering that I spoke with Tim Konkle, their CEO, about at some length is one where they’re gonna be looking to build and deliver digital workers to end users out there.

Now we talk a lo- a, a lot about being the virtual chief AI officer, about workflow automation this is a, a very specific kind of example of the impact that a properly equipped MSP can have in an end user environment where you take a tool… Now part of why I was [00:04:00] down at at this event was that one of the speakers there was Fred Vaccola.

Fred Vaccola used to be the CEO of Kaseya. He’s now the CEO and chair of a company called Simpro. They sell basically digital workers for people in the service trades, plumbers, electricians et cetera. So if you’re an MSP you can take software from a company like that. There, there are vertical specific examples of that in different industries, and you can bring that into an end user environment.

And so it- the thinking, and I should say they’ve got a team. They’re doing assessments and all sorts of AI work with clients now at the 20. By the end of the year, the expectation is they’ll be going into a, an end user environment. They’ll be looking at expensive labor-intensive kind of roles and they’ll be able to have a conversation with the customer role.

They’ll say you’re spending $85,000 on that role right now. I’m gonna bring in a digital worker who can do the job just as well, and I’m gonna– you’re gonna pay me [00:05:00] $60,000.” Huge margin obviously for the 20, and enormous savings for the customer. They’re happy as w- as well. And you do that role by role throughout the organization base, basically there.

So a number of different things pop up there. So f- first of all, we talk a lot about AI pricing and the complexity around that. And I’ve spoken with Tim in the past about charging some percentage of the efficiency gain that an AI, a workflow transformation solution enables in an end user.

And as I, last week talking to Tim, he said he still likes that idea, but how do you measure efficiency going in? How do you monitor efficiency coming out? How do you make sure everybody is agreed on what those numbers look like? One of the things that makes the digital worker model appealing is if you are training that d- if you’re using the digital worker basically to do a job that a person was doing before and I know how insensitive this sounds right now in [00:06:00] terms of putting people out of work.

But if you know I’m p- I’m paying $85,000 a year right now for this automatable role, that is a very clearly crisply measured outcome. I’ve gone from 85,000 to $60,000 and the work is still getting done, and it may be even getting done faster because it’s happening at machine speed 24/7 basically.

So when we talk about outcome pricing, this digital worker model is appealing from that standpoint. But again, it brings, it, it calls attention to two things, Erick. And one is this is the kind of thing that we are seeing these larger MSPs, these platforms, these roll-ups do already. Part of why they’re doing it now and can do it at all is because they have the resources to recruit people who can go in.

It’s not just a, a credit card swipe and a resale motion where you just, install that digital worker in the end user environment. There’s implementation work that needs to happen. That’s [00:07:00] margin-rich professional services. There’s ongoing monitoring and maintenance and updating and training and retraining.

That’s all mar- margin-rich professional services. They have the staff to do that at the 20 because they can afford to hire those people. And that’s not something that everybody here can do necessarily. So there are other ways to monetize AI, obviously, in end user environments right now, but this is a glimpse into what the, the larger, more sophisticated MSPs are doing, will be doing more and more of and what the AI consultants we talk about sometimes on the show will be talking to your customers about as well.

So it’s something to investigate and look into for anyone in our audience as a possible opportunity for them, and it’s something to be aware of as a potential competitive issue down the road. Rich, I’m… i’ve had some recent experiences with our own AI projects that I’m trying to work on [00:08:00] here for us at Channel Mastered, and so this is very visceral to me.

My response is probably, would probably be different had I not gone through some recent trials and tribulations with AI. So just a couple of questions. The first one is, I- it makes sense that it’s easier to measure someone’s salary, like that replacement, right? That is… Because everybody’s trying to hunt and try to figure out how do we monetize it?

Is it based upon an outcome? How do you measure the current state, the future state? Is it an, an efficiency incr- increase? Like you said, it’s tough to get a baseline of that. The easy play is, “Oh, okay we’re just going to provide you a digital person, a worker, and for a lower cost than you could get someone otherwise,” right?

So but can you replace a whole person, is my first question. Because, again, just from recent experiences I thought [00:09:00] I had built, my digital twin and my AI model to replace me, but I’m constantly having to go back in and correct it and feed it and adjust it and maintain it.

So the question is I’m d- I’m- I’m not sure that we can completely replace a role unless it is a very kind of repetitive administrative type role. I don’t see us replacing maybe, a, a level one engineer, but not even a whole level one engineer, because there are things that those folks do that are beyond just that role.

I don’t know yet, right? So I’m just there’s a lot of work that goes into, like you said, assessing and then deploying and then training the agent and then maintaining the agent. I’m doing a lot of the latter two. Training, retraining, training. I thought I had trained it. I’m retraining it.

I’m saying, “What, why are you screwing up? Oh, we’ve got to do this now.” And it’s continual, so there’s a lot. Now, of course I’m one person that knows nothing about AI, right? Hey, I’m an engineer, but I [00:10:00] think I can tackle it like many MSPs say, “Let’s go at it. Let’s get after it.” But I can just imagine the work that needs to go into creating a deliverable like what you’re describing that 20 is doing.

It is… hats off to them for tackling this. It’s a big elephant, just from my small experience. And the second thing so that’s the first question. So I’ll stop there, get your feedback, and then I have another one for you. Go ahead, Rich. Okay. Yeah first of all, there’s a lot of nuance in terms of the role that you’re replacing and who’s in that role, and is that person dedicating 100% of their time to the role?

It, is the work repetitious and the kind of work where you can measure the success or failure of the output on an easy base. So you can’t necessarily replace any worker with a digital worker. You do raise… in any conversation I have with anyone connected to AI and managed services in any capacity right now I have yet to come across anyone who says, “I’ve got all [00:11:00] the answers, and we’ve figured it all out.”

And, Tim, I’m sure would very much concede that they’re gonna learn by doing a little bit with their customers here. So if in the example I’ve been using it’s $85,000 to pay this person and $60,000 to do it with us, if it turns out that there’s a lot more work that the 20 has to do to keep this digital worker functioning properly, or if the digital worker isn’t as good as the, the person, and so I’m saving $25,000, but I’m also experiencing headaches I never experienced before, these are things that people are going to have to adjust around.

So right now, Tim’s very excited about the margins that he’s anticipating. But he may discover they’re not quite as rich as he thought because it is harder to keep these things working right than we’re all hoping. Yeah, I’ll s- I’ll stop there and get your next question.

Okay. Yeah, because I’m… Like, I spent so much extra money this last week [00:12:00] on tokens because what I was building, I thought I had a… and every time the AI makes a mistake or you have to retrain or you have to correct it or you… And it admits it, “Oh, yes, you’re right. I didn’t do this,” or, “I didn’t look over here,” and it’s written right here in my…

It’s costing you money, real money, right? So just, so the change request later that says, “Oh, we’re gonna…” The gap between 40 and 65 or 60 and 85, right? Somebody’s got to eat that as it’s being figured out. Okay, so now the next one is something that has impacted me in the last three weeks as I am relying more heavily on AI.

Now, of course, I’m joking, like I know nothing about AI. But I’m learning fast, Rich. I’m like pouring every spare minute of time I have in learning how to leverage this stuff for us and for the clients that we support, right? So the other one is, what happens… Think about this one.

What happens when the model is down? Like now you’ve got… So B- [00:13:00] Claude has been down periodically, probably, for hours every week for the past three weeks, sometimes for half a day or more. L- And, I’m subscribed to the, to the uptime alert and stuff like that. It tells you when it is down, and it has been down a lot.

I can just imagine relying on four or five digital workers in my company. Four or five people don’t usually call in sick and are out of commission, Rich. But when the m- when the AI, when the model, when the company that you’re relying on the back end is down, everybody’s sick Yeah. A, a lot of risk I guess attached to that.

It, and it goes to the due diligence issue, right? Which is basically you’re not gonna hire an MSP, or as an MSP you’re not gonna sign up as a partner with a a digital worker platform until you’ve convi- you know satisfied yourself that the technology is secure, [00:14:00] for example, and that it’s reliable.

And that doesn’t mean it’s gonna be nine… five nines of reliability forever and ever and and so on. But there’s, yeah, presumably it, if the, the tool is going down hours a week every week, that’s gonna be something that you can discover when you’re researching these vendors, and you’re not gonna bring that technology into a, a client environment.

Arguably I’m talking about the gold standard of LLMs, right? Claude, ChatGPT, these are the platforms that, that are going down. So anyway, I just wanted to share a little bit of my, my stress this last few weeks with some of these models and directly relative to if you to our audience if you’re, dipping the toe in the water, here’s some of the things that I’m finding right now that I’m trying to work around because, yes, the benefit is absolutely valuable, right?

We want to get there. And of course, I think that, these things will [00:15:00] continue to get better. Heck, they have to or else, the whole economy is gonna suffer, right? Because everything is relying on AI and all the investments that are going on in that sector Yeah. Much more to be said about that, and I have additional stories coming up as I get into these platforms a little bit more and and learn more about them.

But for this week, let’s move on to your tip of the week here which in a weird way connects to what you were talking about there in terms of how the lowest level of the organization, which could be a digital worker, plays heavily into the success of the entire organization. Yeah, it’s, that’s interesting, Rich.

How, yeah, so I have to think about it differently now because you’re right. And tip- it’s the tip of the week this week is all about empowering other folks in your organization to feel confident in making better decisions at all levels. And it’s, it’s– The, the spin on it I’m gonna put is it’s it needs to be part of the culture, [00:16:00] right?

So if your cul- company culture is we’re going to empower and train and increase the role and responsibility of our team members, and reward them for that, of course along the way, and incentivize them to do that, then we have to have not only this philosophy, Rich, of, oh, I’m gonna train my replacement.

Like I’m at, maybe I’m a, a leadership position in my organization, or I’m a manager and I want to train folks so that I can delegate more of that- But it goes beyond that in this scenario, and what I’m describing is every individual in your organization should have the ability to make decisions within guardrails so that they can learn from those decisions, and it takes a little bit of a load off of everybody else’s plate up the chain.

So three things that we can do today is just delegate a decision that your team is already ready to own. How [00:17:00] many times I’m speaking to the audience now. How many times have you had a technician come into your office and say, “Hey, I’ve got this issue,” and then you give them the answer.

You’re giving them fish, right? Say, “Okay, everyone needs to… This is the new policy. You’re going to c- If you have an issue, I want you to research it. I want you to come in. Don’t tell me what the problem is. Give me the options, and g- not only give me the options so I can decide what to do, but give me the option that you recommend.”

And what you just said about the parallel, the digital work it’s really interesting, Rich, because I’m training the AIs that I’m working with right now to say, “Hey, don’t just say, ‘Here’s what we need to do, and we should do this.'” I tell it now, “Give me all of my options. Describe what the problem is, give me the options, and why each one of them, pros and cons, and then tell me which one you recommend and why.

And then let me decide.” And, eh, 75, 80%, it chooses the right option, but [00:18:00] it’s not me, so sometimes I say, “No, I want this option,” right? Even though it feels like, oh, that’s gonna cost more, it’s gonna do… no, that’s the right option for the long run, ’cause it doesn’t understand the big-picture vision. So as we’re sharing this stuff with our team, that is what we wanna do, and then explain to them in a very…

we’re training other leaders. So we’re coaching and mentoring our team, so it’s gotta be collaborative, and we want to explain to them how we arrived at the decision that may be different than what they recommend, so they get it and go, “Ah, got it,” right? And move on. Give the, your employees a clear decision-making boundaries.

So instead of saying, just do what you think is best,” give them some guardrails. If… So a great, easy example is, hey, we have to open a ticket with an upstream provider. Let’s use Microsoft, for instance, right? Rich, you and I both have real good experience with Microsoft. Sometimes you have to pay for support, right?

And instead of having [00:19:00] a, a technician come in every time or send an email or open a ticket and say, “Hey, we need approval to spend $250 for, escalation or something like that,” just say, “Hey, if it’s 250 bucks, here’s a budget. Go ahead and spend it,” right? I- if you think that is the right decision and you’ve gone through all our checks and protocols- Don’t, you don’t need to come to me with it.

I expect to set aside a budget for those things, and I already have preapproval from my clients that if we escalate and we have to pay, they’re going to approve. So go through that process with the client, get them to approve it, and do it. I don’t need to be involved, right? So give them those boundaries, and then celebrate when they are doing things the right way, even if the decision, Rich, they make is it just falls on its face and it, it crashes and burns.

That’s okay because, the 95% of all the other decisions that you have not had to be involved in is a win. So we sit down and we learn from this and we say, “Great, you followed the process. It didn’t work out. [00:20:00] Cool. Let’s learn from that,” and the next time it happens, now you’ll know how to respond.

So this is giving your team authority, guardrails, and confidence to feel empowered and feel like they’re making a real difference for our clients, for the organization, and they’re earning the next level of promotion by making those decisions and becoming better leaders and better decision-makers Yeah.

And it’s not just a, So the the key thing I kinda wanna hone in on there is the empowerment, but it’s not just like they feel they’re making a contribution to the company, they are- They are … because you are spreading out the workload that would otherwise reside in, with you or with managers and so on.

You’re, by empowering the team, you’re allowing the entire organization to be more efficient and and more effective. And I think most employees are going to appreciate being entrusted with more decision-making authority. And the [00:21:00] people who don’t appreciate that, who want you to make the decision, are probably not people you kinda wanna have on the team, right?

You’re looking for people who like the opportunity to think for themselves a little bit within, guardrails that you establish and so on. And I particularly think around technical work, that becomes more and more important going forward because to the degree that level one technical work becomes, digital worker a digital worker role, part of what we’ve spoken about before is, okay, now you’ve got these people with all sorts of untapped capacity that you can apply in other areas.

And those other areas are going to require more independence of thought and more willingness to to present outcomes and recommend one and engage in a dialogue with you and with the customer and so on. So yeah, to the degree you’re doing that with the work you do today, you’re also readying the workforce for the kinds of roles you’re gonna be hiring for more and more down the road.

Absolutely. What are the fir- some of the [00:22:00] basic questions that, that we ask when we’re hiring folks, are you a self-starter? Are you motivated? How much, management, guidance do you feel you need? The, the, the way they answer those questions either, gets them to the next stage through the hiring process or, puts them in the, yeah, not a fit pile, right?

So when we’re asking them and then they say that, yes, they’re a self-starter, they want, they want to, be empowered and want, don’t need a lot of management great. That’s exactly the kind of folks we want in our culture of, ownership and decision-making and and growing through the ranks of the organization by demonstrating you’re making the right decisions, you’re following process.

Or when you find out a process is broken, don’t just bring it to us and tell us it’s a problem, give us the options and give us how it should be fixed. That is gold right there, Rich. Totally agreed. Folks Erick and I are going to take a quick break right now. When we come back on the other side, we will be joined by [00:23:00] Ryan Walsh.

He’s the tree- chief strategy officer at Pax8. And speaking of digital workers, I who knew when I flew into Dallas for the the Vision event that digital workers would be the big story that I ended up writing a lot about. But as it happens the interview this week with Ryan concerns a very good white paper that Pax8 published a couple of months ago about the agentic workforce.

And I’ve been dying to talk about it with him ever since you and I were at the Pax8 Beyond event. I can finally scratch that itch in just a moment when we come back from this break. Stick around, folks. We will be right back

Welcome back to part two of this episode of the MSP Chat Podcast, our spotlight interview segment, where we are very pleased to be joined by Ryan Walsh. He is the chief strategy officer and a co-founder of Pax8, a company I’m guessing approximately 100% of the people in our audience are very familiar with [00:24:00] right now.

Pax8 is also a company responsible for an excellent relatively recent AI related white paper called The Agentic Workforce. And Ryan, I’m not just making happy talk here. I get sent a lot of research papers and as you can imagine, a lot of them are about AI. This is, I think, the third I’ve gotten from Pax8 in the last year plus.

They are all excellent, genuinely. This one is no exception. 61 pages of AI related goodness. We will have the a link to the download page in the show notes for this episode for anyone who is interested in reading it, and I encourage them to do so. Ryan, welcome to the show

Ryan: Thank you very much.

I was I know we were just talking in the prep, like I’m in a studio room, but, coming from the basement days, this might’ve been in a closet and or at a Starbucks. So I know we seem a little bit more professional, but nonetheless genuine and hopefully informal about what we talk about.

That this report it really means a lot to me. It’s something that despite the, [00:25:00] the page summary that you cited, I… It’s like a good book to me. And so when the team was asking me like, “Hey, is this too long?” I’m like, “Absolutely not.” I’m a biased reader because I’ve been consuming the research that’s out in the industry for a long time, and so it really does mean a lot to me.

And I’m like, this is just, there’s a lot of insight in there, and that’s why I get excited about it. So apologies that it is long, as you mentioned, but it’s it’s really meant to give somebody an advantage by knowing it. That’s how I think about research myself.

Rich: Yeah. Yeah. No, it’s, it it…

I would describe it as deep rather than long. There’s a lot of solid substance there. So Ryan, as I said, I’m not gonna ask you to explain or introduce Pax8 to anyone in the audience, but for the few folks watching or listening right now who have not encountered you, just tell folks a little bit about your role, past and present role at Pax8.

Ryan: Yeah. Yeah. As stated, CSO is chief strategy officer and but the thing [00:26:00] that I find most relevant, because I, being a, a co-founder is that when you get out of the basement you have to wear a lot of hats, and I think I would describe myself and my interest and my background as somebody that’s more like a Swiss Army knife.

My journey to this role went through channel chief, which is something that I always care about talking about because I’ve spent a lot of time curating our own strategy and our positioning based on talking to partners and vendors and those in the community. That, that’s probably a title that I’ve kept through all, throughout this journey, and we’re approaching our 15th year from the basement days.

So I’m proud to say I’m still standing with the scar tissue noted on my body. But I started at Pax8 in in focusing on the products on our catalog. So I had a lot of insight and experience and conversations with vendors who wanted to learn more about what was on the oth- other end of that market, which is a small, medium sized business primarily, not exclusively.

And then the [00:27:00] channel partners, delivering the on that last mile promise. So that’s where the journey started, and so this is where I am now. And I’m excited about that because it, For me, it’s personal in terms of how research or strategy really can benefit everyone. It certainly benefited us.

When we started, a lot of people would ask us questions that I really had to know our positioning well. “What are you doing? Why are you doing it?” And so that’s context for me. And before Pax8, I feel like if somebody looked at my journey before Pax8, they would’ve said, “He doesn’t know what he’s doing.”

My, my career ladder was not a career ladder, it was a climbing wall, which I really embrace that analogy because I did start my career in as a system integrator with Deloitte, and then broke off from that and, a few of us started our own niche. And then along the journey, I also joined MX Logic, which a lot of your readers would know as a born in the cloud vendor.

And so if you take those two experiences, [00:28:00] and then Pax8 came after that, so it completed the story. That’s a little bit about me. And something else I would say that what’s more important is that I’m one of five in my family. Second. One older brother, three sisters, and I’m number two.

And the age gap between number one and number five is seven and a half years. Wow. So that tells you something. And one bathroom when we were growing up. A- and my dad was a basketball coach, so a lot of analogies that I use- … reference that because I I watched along the way, both from a sports perspective, but I think it transfers over into business quite well.

Rich: You almost had enough folks in your family for a basketball team there, Ryan.

Ryan: Yeah, exactly. And I d- don’t… I had to do a lot of encouragement for everyone to wanna play, but we played pretty well together and so it’s always nice to show up with five. Although I was talking to somebody at Pax8, and they just had their sixth, and young enough to know, like for us and our [00:29:00] family, if you just sit with that and think about logistics on how do you go to the store.

My dad was traveling a lot, so my mom was taking five of us at one point, and I remember when we had our kids complaining when we had two boys and I was like, “Oh yeah, Mom had five by the time we were even thinking about having one.” It’s like, we’re not saying anything. Can’t say anything to Mom because she handled those logistics quite well.

Rich: Ryan interestingly enough the, the reason I am doing this conversation from a hotel room, as our YouTube audience can tell, is ’cause I’m attending a conference this week. And just about two hours ago, a speaker on stage here was talking about how using the AI tooling out there MSPs can potentially increase their revenue 30 or 40% without actually hiring anybody.

And this plugged right into something from the white paper- Yeah … this concept of headcount free growth, as you refer to it in the white [00:30:00] paper which is a very exciting idea. I’d love it if you could talk about the idea a little bit. Yeah. Talk about the financial implications it has. And we’re not limiting this, to be clear, to MSPs.

This is something that AI can do for any SMB, including MSPs. Talk a little bit about the financial implications in terms of valuations and things like that, but also for the MSPs in our audience who are used to per user pricing. When your customer is growing thanks to your AI, but the user count isn’t growing, so maybe your revenue.

What, what are the, the growth implications for MSPs of headcount free growth in their clients?

Ryan: Yeah, this is really, I’m glad you set the stage here that this isn’t about me just citing a stat in a report that’s 61 pages long. This is how do I digest that? If anything, this is the best example for me that where you can take what remains human, which is your instinct, your judgment.

[00:31:00] I can read those in 61 pages and say, “This is something that stands out to me.” And what you’re talking about stood out to me so much that I added it to a breakout session that I delivered at Beyond in Salt Lake City, and this was one of them. And the stat went that small businesses– And this is something we poll b-by way of context.

It’s in the report itself. We look at external sources as a way of context. We used our own insights. We have a, a, a user experience team that’s polling our partners and their use of our marketplace platform which, has an answer to how you monetize but also small businesses. That– It always matters to me when, whether it’s an external study or our own, which we have in that agentic workforce economy report, as well as we’re producing quarterly small, medium-sized business pulse surveys.

And so I track it all the time because what’s relevant is the [00:32:00] clients of our partners, what are they thinking? So whether we’re ready or not to look and listen and try and understand where a small, medium-sized business customers are in terms of how they think about this is always relevant. Relevant to have a conversation with them, relevant to think about how your services align to it.

And in this particular case, this stood out that the expectation is 30% cited well revenue growth with only 5% headcount growth And we’re hearing this all the time. This is where you can take a stat like that, and I take it out to the street, and I ask partners, and I’ve been asking partners, “Tell me about customer one.

Are you finding this to be true?” And Rich, Erick, I can’t tell you how many times I’m hearing this. I ask that openly just to say, is this stat, does it reflect your world? And that’s relevant for all of us to do ’cause somebody could say that’s not my customer.” But I can tell you that stat is relevant.

It… I’m hearing it a lot, in particular in comparison [00:33:00] to enterprise clients. We get asked, and I think the whole community’s been asked, it’s like what about headcount cuts? Small businesses don’t have, the resources, so they’re asked to do more with what they’ve got or to start the business without the headcount.

And so that stat of 30% revenue growth with a 5% headcount growth, that’s the new math. That’s the new math that our partners need to really embrace when they’re talking to small businesses because they’re trying to win from that. And the other thing that I studied in light of why is this relevant is Scott Chasin, our CEO visionary technologist, he mentioned something.

And so for me somebody who appreciates the stats and data-informed decision-making, he said something, I’m like I’m just gonna go check to see if that’s true.” It’s kinda how I’m wired. And what he said was, “Hey, we’ve noticed that new business formations are through the roof.” Like, when we think about [00:34:00] cuts, the, the counter to that is landing in small business formation.

And we checked this, and it was, like, last year, I think the number w- appropriately, if I’m not correct, it’s directionally right, 5.7 million new businesses formed last year. And then I checked, I’m like, “Okay, I wonder if that stalled out in 2026.” I think it was March, it ha- it, it was the highest number of business formations ever in the history of ever tracking.

Like 625,000 businesses got formed in, in the US is where this is coming from. So I’m like, okay, now if you apply these economics, and this is validation of we’re hearing this over and over with new digital native newly formed businesses. They’re starting by saying, “How can I use Cloud Cowork to address my my support requirements without hiring somebody yet?

Because I just got started. I can’t afford to hire somebody yet. So how do I deal with forming my new business, this new [00:35:00] idea that has to come to fruition?” And so this is frontline validation of that stat Rich. And the g- the growth implication, when I think about it translated for the channel community we’re seeing so many indications of validation, not only from the small businesses, but also from our own community of early adopters.

We’re talking about managed intelligence providers as a, you know, evolution from managed service providers. This is also something you asked, and I’d like to make sure I capture this as well. But we’ve tracked that the compound annual growth rate of AI services is in the 59% range, whereas managed services in general is 13.

So that should get your attention. Now, the denominator might be smaller, but if you look at the stats that we’re tracking around this, the combination of both AI growth as well as SMB spend on IT is, surpassed enterprises [00:36:00] 777 billion compared to 592, so small business IT spend on software compared to enterprises.

And if you look at digital workforces you’re talking about this something that came out of Salesforce. You’re talking trillions. They’re referencing, like, how much are you spending on a digital workforce. Seven to 10 trillion is a number that, that we’re seeing. So there’s huge total addressable market, and the trend is leaning right in the middle of where we live.

Now, what you said this is a theme that we’re really embracing now in a different way than we used to. So let me answer your question. What happens to Per Seat, and how do I take advantage of what’s happening in AI services consumption? How does the trans- how does the translation work? What we’re seeing, what we- we’re guiding the community with…

And by the way, that guidance we took, the vision of that’s coming from Scott, and I think he’s really dialed into this well. And [00:37:00] then what we’ve done is we’ve built our programs with partner feedback, identifying early adopters, like those that are actually doing something with agentic services, whether it’s building agents or it’s providing services around this.

One of the materials that we launched was a playbook that said, “You might not be a builder, but you might wanna, provide the base foundational security governance protection,” which is what you do and add AI services to your suite of managed services. So regardless of whether you’re building an agent or not you’re trying to monetize we are, we used to say be customer zero and then use that insight to become and sell onto customer one.

Most recently we’re saying you can’t afford to do that anymore. You have to do them both in parallel. And what’s relevant about that is we’re also putting a spotlight on the fact that what that means is for a lot of partners that we’re talking to is that This is about [00:38:00] managing your day business and then future horizon business.

But instead of what you might have thought today you’re living in today, and then e-eventually you’ll do a strategy offsite and you’ll deal with what you’re gonna be in the future. What will your business look like in one or two or three years? It’s just moving so fast. The analogy is like in the morning you’re dealing with those seat licenses and managing software, and in the afternoon you’re really learning how you are going to build and enhance your future services.

You have to do both of those at the same time, and that’s guidance that we’re giving our partners today. And so it requires a different mindset when you do that. But what we’re seeing is you need to be positioned to take advantage of this massive opportunity because there’s a lot of competing forces that are out there trying to appeal to the customers of our partners, especially small businesses.

And agentic workforce report showed a couple of stats, and our pulse survey is validating the same thing because even if you took a [00:39:00] stat like we did that was released in June, things are changing so much. One of those stats in the agentic workforce report was a stat that showed 92% small business were adopting.

But when they looked at it, they said only 10% have fully integrated those solutions. So we coined that as the messy middle. They’re getting stuck. 82% are getting stuck either because they’re expe- experimenting, they’re not fully committed to it yet. They don’t know exactly which way to start. And I would add my own conversations with partners to add to this.

I talked to a partner about this, and we were talking about, whether you’re zero or one, and he said, “Look, I I went to your event and I went out to try and go sell customer one and I failed twice. Like I just I I didn’t have enough experience to help guide what they wanted.” And he said what they wanted was they just wanted a button.

They just wanted to hit a button to do the AI and return a result, and it doesn’t work that [00:40:00] way. You gotta, we’ve talked a lot about outcome conversations, workflow conversations, and that’s something that if you’re not doing it now in the morning to manage your license per seat business, you need to do it in the afternoon to have a conversation with your customers to find out what they want, how they want it, and how you can monetize that future flow.

And that’s what I’m excited about because it does provide an answer to what you’re saying. What we’re monitoring is both things are growing. Now you’ve covered this. We’re looking at this on a regular basis. There’s some applications that you could see the per seat growth won’t happen or it will slow down and you’re gonna be vulnerable to that.

Our eyes are on that but what we’re seeing is there’s growth when you e- embrace both. And I w- and the reason why I think right now is that when you look at what’s the barrier to growth, right? I… This I’ll go to the pulse survey. The most recent pulse survey is just fascinating to me [00:41:00] because where you’re making money or where you’re saving money or where you’re reducing risk, to understand the economics of that is, I think, the path to monetization, just generically stated.

And so when you look at the pulse survey said, okay, a small business, where are they going first? What workflow, what area of the business do they start with? I think that’ll answer the per seat question here. And what we saw was I expected, with a lot of talk around automation and productivity, that you would have that up right away, right up front.

And we certainly see stats broadly in the economy showing that productivity is starting to increase. But what we saw in that pulse survey was using their data and business intelligence. That was the number one use. The second one was customer experience, amplifying customer [00:42:00] experience. Third was sales and marketing.

Now you can think, all right, translate into that, what do you mean by that? Acquire customers, expand new services, expand markets. The fourth one was productivity. And if you go all the way down content creation. We’d expect that, but it just wasn’t in the top three. And so to me, that’s informative of, all right, what are our current needs right now?

How does that translate into new services that you’re gonna offer as well as ones that you provide? As context to what we provide, one area that I guess I would say this serves as It’s an opportunity and it’s a risk that must be managed is security. So we sell a lot of security managed software and services, and so that interest is only growing here with agentic threats.

And so when you think about that, I just don’t see that you’re gonna vibe code a S- a SentinelOne or a CrowdStrike. [00:43:00] That you need a complexity and somebody who’s using this new advanced technology to actually amplify their own security, and we’re seeing that is, that’s highly adopted with our partner base.

I do see though that there is a gap and that’s what the Agentic Workforce Report called out. There’s a gap in understanding here. This is getting in the way of some small businesses actually using AI services more, this, the messy middle. And so that, that’s something worthy of leaning into

Rich: Ryan, you just talked about the 82% where these SMBs kind of stall for whatever reason.

What… can you dig a little deeper into what you think causes it, and what can MSPs do to help their clients get through that? I know that a lot of MSPs are trying to figure out how to monetize this stuff. At Channel Master we’re going through the same thing, like we’re leveraging AI really [00:44:00] heavily while we’re working in the business, while we’re working on the business.

There’s a lot of spinning plates, and it takes a long time to really train some of these models to really get what, we want, and sometimes, you gotta, challenge it and what it told you yesterday isn’t true today and all this other stuff. So can you give MSPs a little bit of guidance in saying, “Look, here’s where the, the clients are stuck and stalling, and here’s maybe a few steps that you can maybe, break through that and help them through some of that.”

What, what- Yeah … what are you seeing?

Ryan: A couple of things, and I’ll cite the report and I’ll cite the new study too, ’cause I think it’s there’s a theme and a pattern in there, right? That the, the 82% was centering around full integration. So imagine that if you’re using some of your data but it’s not fully integrated into your workflow, I think that’s what that means.

So that, again, if I’m an MSP becoming an MIP, I… In my mind, I’m like, “I gotta deal with integration, data readiness.” And I hear a lot [00:45:00] of both the early adopters have cited some examples of that. And the way that they demonstrate value on that is a quick hit. So that’s one thing. The second thing is there’s a difference between experimenting to see what value you can create, maybe save some time.

It’s pretty obvious you can save time in a lot of the generic ways, right? I’m not spending time on, summarizing things anymore, but, trying to make a faster decision. But what we see that we covered that we picked up was something that stood out to me quite a bit, like I had to sit in it in a moment, which was on average this was…

I’ve seen studies that show on average for those that are early using they’re saving an hour a week. A little over an hour a week. I’m like that matters to a small business that doesn’t have a lot of time and not a lot of resources.” So that alone would’ve said that’s a big deal, ’cause a lot of partners would tell me, “Where I start is I’m just gonna try and sa- save them 15 minutes a [00:46:00] day.”

Per employee and add it up. But this– but the, the chart that really hit me was one that said line of business users, and we’ve seen this before. Operational users are really getting it, so line of business users were saving on average 3.1 hours per week. I think this was a Harvard Business Review study.

It

Rich: was IDC.

Ryan: But… Yeah, it was at IDC on the 3.1. Maybe it was the one in five, the one in f- but one in five small businesses redeployed the time. So think about that. I saved the time, but I wasn’t intentional about where I put the time. And so this is something, Erick, we wanted to have an answer for that.

Like, why would that happen? I didn’t think about– I was focused overly on the productivity, but I didn’t really think about the redeployment of that time. And if you don’t think about it, it just gets consumed with something else, and that something else might not be prioritized. And so this is something [00:47:00] that we’ve put together.

We put in our educational material that says, “Here’s what we would recommend you should do about that issue.” Go through and identify where your savings are, whether that’s time savings, whether it’s revenue enhancement or, a reduction in risk identify whether AI is the right solution for it.

It could be automation. It may not be an AI solution. But anyway, have that conversation, then prioritize it, then use that to guide what you do next. And so that should serve as the answer to what you do with the 3.1 hours. We know exactly what we’re gonna do with the 3.1 hours, because we saved it over here, and we’ve been forced to answer the question, what will you do with the time savings?

And then ultimately, how will you make money and save money around that? This is another thing that I put a lot of attention on too, which is we’re seeing a lot of those time savings that weren’t making their way into the bank account. They weren’t [00:48:00] hitting the P&L. So I’m like, we’ve got to put some attention on this, because we’re hearing too many examples of this.

And so how do you deal with that? You gotta be very intentional, and we built some very specific templates that you can use to say, “Here’s how I’m gonna walk you through what you get and how, and then we’ll measure that.”

Rich: That’s really great guidance, Ryan. Because, yes if we don’t have a plan for what to do in those hours that are being saved, it just gets consumed in noisy other things- Yeah

and nobody really sees the value and benefit of it. A year later it’s like what did we do with all that time? We didn’t convert it. So I appreciate that.

Ryan: And- There’s one other thing that I would add, I would lump together to answer your question that’s in the stuck middle. Security and governance.

You could break them out and say three and four, but… Or, put them together. That is that’s a barrier from what we’re seeing. It’s getting in the way and, It represents an opportunity. And one of our poll surveys sh- revealed this by noticing a difference between [00:49:00] operational leaders saying, “Yeah, this thing is, gonna help me.

I have to have this service u- utilize AI in the next, one to three years,” where the business owner was 14 points lower than that. So it was… I think it was 70% to a 56%. It’s like what are the– What’s keeping the owners back? Is it they just don’t know? It’s… No, it was security, data privacy, governance.

I don’t want my data out there. So this is another thing that when you… All right, so what does that mean for our partner community? You need to address this. You need to address the governance and security concern, and you need to do that upfront, and we’re hearing that from a lot of our partners.

Not exclusively, because I think another thing that’s coming out of this, and it goes back to your question, Rich, is ROI. The importance of ROI is elevating. Make sure that I know that I’m getting measurable value, and we’re seeing now something that’s starting to reveal itself. Originally [00:50:00] we were having an adoption conversation.

What can this do? Now we’re seeing that this has shifted into an execution and it’s almost like it’s starting… I was thinking about this morning. It’s like a race, a car race or the Peloton where you see a few are breaking away, and what are they doing? The ones that are been really intentional about how they’re using this to compete how they’re gonna use that dollars, how you’re gonna get security and governance and data security and privacy.

They’re the ones that are starting to realize the benefit and break from the pack of I’m not sures. So there’s something in there that’s, I think that’s really it provides guidance for the, for our partner community to start with.

Rich: I’ve been coaching partners for the last probably 12 months or so on, on using AI as the pull-through for enhanced cybersecurity and governance and things like that, the things that their clients were reticent to do.

[00:51:00] “Yeah, we don’t need that,” or, “Who wants our data?” And now they want AI, so now they have to up their cybersecurity posture Yeah. And maybe, I track you guys all the time, and I know that I– what’s amazing is it’s incredible how fast the, the shifts are happening and what we’re talking about now.

Ryan: This is one that’s really starting to bubble up more and it’s something that I’m seeing. I don’t know whether I would call it haves and have-nots, but figured it out or not fully figured it out. We’re starting to hear these stories where those small businesses that are being helped by partners to do this they’re increasing their spend, not reducing their spend.

During these economic times, they’re accelerating the spend, not pulling back because they need to save money. So they’re seeing this correlation between measurable value and, how this powerful technology helps me get there with a guide. Most of them need a guide and, the stats show that.

Despite the fact that small businesses are embracing this, and in some cases not [00:52:00] fully disclosed, meaning, we’re seeing some employees hide their use of AI from their employer. That’s a problem, right? And our community knows that. To your point on governance and privacy the percentage between those that are actively using and those that have a documented acceptable AI use is a g- there’s a gap that’s in the messy middle.

It’s oh my goodness. Again, this came from the poll survey. Sixty-one percent actively using, twenty-three percent have a documented AI policy. Now, some, percent said, “Yeah, it’s informal.” It’s like, okay, where do you– where should I start on Monday? How about there? Th-this, this allows you to do both at the same time

Rich: We talk we tend to talk generically about AI opportunities for MSPs.

One of the end– the many interesting things highlighted in the report is a distinction that you guys call out between the opportunities an MSP might find in what you basically called a, [00:53:00] like a born agentic company versus a more established legacy kind of guy. Two very different kinds of companies, different kinds of opportunities.

So talk just a little bit about those differences between those two kinds of opportunities, and then what the distinctions mean for MSPs in terms of skills required to, to meet those requirements the revenue and the margin they might make, et cetera.

Ryan: Yeah. No. This is this is fascinating and interesting to me because we’re dealing with partners that sit in both, right?

And and by way of context for us, we ha- we historically, when we came out and, formed the business we were a small business too, and so we were constrained with resources, and we treated everything, all partners the same. As we grew, we realized we couldn’t do that. This has been no more relevant than in this area, Rich because it’s relevant for our community to understand [00:54:00] not just AI-native small businesses, but AI-first MSPs and what do they want, what do they need, how do they operate, as well as somebody who’s got a day business.

They might not have all the resources of a larger MSP, and they’re trying to get there too. So what do we see here? A couple of things. AI first, AI native they have less Nick talked about this and we see this. They had less debt to deal with. They don’t have to change the way they operated. They were built to operate with this powerful technology as a core part of what they’re doing. And we’re listening to that because w- we have to have, we have a marketplace technology built for originally managed software. Now it must support managed intelligence. So if you started with that as your business, you need to know, we need to know for the community, what do they need? What do they want? [00:55:00] How do they want to interact You know, everything to, what do they wanna buy?

And so we have to know and understand how to support that group as well as help our partners on a journey. We we were built this way. So as in the early days… So we got we formed and came, started the business in June of 2012. And so at that time managing cloud software, take advantage of recurring revenue associated with that was what we were focused on, and a lot of partners weren’t there yet.

They were focused on break-fix. They hadn’t moved into this new realm. We had to learn how do you take what was a, a certain business practice and move it to something else. So we’ve got a competency here, Rich. And so if you– The, the first part of that or the second part of that question, which is if you didn’t start with AI services or AI capability a-as you launched your firm, what do you need to do?

And one of the things that we call attention to is you gotta deal with your [00:56:00] legacy debt. You cannot just take and automate an old process without considering the power of this new capability. And so education becomes a critical element in terms of thinking differently about your services.

You’re moving from managing systems to managed intelligence. What does that mean? One of those things, so that’s a mindset debt. That’s legacy process debt, and it could be, tech debt that you have to deal with, a different way of operating with your customers. And so we call attention to that i-in the report in terms of the opportunity to educate and, enhance these services and what you have to do.

And we-we’ve incorporated that into our enablement capability. This is something that, we’ve always been about. It’s never been, just come into a marketplace and pick a tile of something that you wanna buy. It’s not a buying conversation, it’s an outcome one. It’s a consultative one.

And so we’ve put those two things together [00:57:00] and in our education, our academy, and it’s called the MIP program, and it really breaks it down into very specifics in terms of how do you take and change the way in which you do business to adapt to this new way to interact with your customers. And so there’s a lot of examples and stats within the report that show what customers need in this realm.

The thing that really amplify this stuck in the middle concept. The other thing that we noticed too, Rich, and it was also in the report and we’re trying to respond to it, is that we noticed that between last year and this year- When asking MSPs if they were ready for the future, the confidence level went from high to low.

I think in this context, we covered a stat that said it was centered around security, so you know that, that’s understandable, but it still applied to AI services. It went from 90% to 50% [00:58:00] over the course of 12 months. That is a massive problem around education. And so what we incorporated from that is we have to help in the transformation.

We have to be very clear about how we help in the transformation, and that’s changed for us, too. We changed over time. We started the way in which we educated partners was based on what vendor product we got added. So we would say, “Hey, we’ve got a new vendor product.” Because when we started, we were trying to get the recipe right and what, and so we didn’t have a lot of products, and a lot of partners would tell us, “Hey, when you have this one, I might do business with you.”

So the way we went to the, you know, market and helped partners is we would tell them what the new product did. But then we got so many products, we’re like, “That’s not really scaling, and that’s getting so noisy, it’s not really helpful.” So we changed the way we educate and enable partners by focusing on a topic of an area of content.

And so that… Think security. Hey, I’m not an M-SSP. I [00:59:00] need to know more about this so I can add to my s-security stack to my, for my customer who needs it. So we started building out content around that topic, and then at the end of that, you would say, “Okay, here are the solutions you could pick from to, that could fit your business.”

And we did the same thing with AI and data privacy, but it wasn’t enough. What we found is we need to get lower to the ground to deal with what we’re talking about, this transformation journey for partners. And so that’s where the MIP program came from, and it’s templated. It literally says it…

In response to a customer who’s not sure whether they’re getting value, we have a template that says, “Here’s how, here’s the calculation on how you calculate value gap between what you’re doing now and what you’re doing in the future.” So this serves as an example of what would you do if you’re an MSP today, you haven’t really embraced this journey, what do I start with?

And so we put details into [01:00:00] this program that was what you can do on Monday. Another example of that, just real tangible. Instead of telling somebody this is what a large language model is, and here’s skills and tool sets and markdowns,” this was really built to have a conversation with your customer and what do you do.

And so we have one section that says, “If your customer has this question, here’s the type of service that you might sell.” So this answers your question very tangibly. If I sold this type of services, how do I move into a new one? But we found that a lot of partners didn’t have a lot of time to really think about that, or maybe they just didn’t have a lot of answers to that.

And so we put that as an example of guidance template. It’s not the only one. But if somebody wanted to know where to start, they could start there and start selling like governance and data security services right away as they’re figuring out what their suite of services will be.

And this is an area that I– you’re covering a lot, and I’m listening a lot to [01:01:00] how are you pricing this? Did you have a different unit of measure for your pricing? And what I’m hearing is still a lot to learn here on what’s working, challenges with, some of the ways in which we could do this.

We’re building the capability to support a hybrid pricing model where you might say, “All right. I’m I need this to be recurring,” ’cause that’s powerful. And valuations I never answered that question for you. Valuations need to have a recurring element to it. It’s predictable. But if there’s upside, how do you capture some of that upside?

And so we’re hearing a lot of examples of that, but from a, a practical perspective how does that show up on the bill, and how do I price for both? It’s a hybrid pricing approach where you can say, you’ve got a baseline level of services that helps you with AI services, and then we’re gonna try and take advantage of some of this, outcome benefit on the upside.

So still listening, still early for that [01:02:00] but exciting that, we’re gonna crack the code on that because, our partners are exploring what makes sense for the customers.

Rich: You were talking about good first steps a moment ago, Ryan, and I will just reiterate what I said at the beginning of the conversation.

A good first step for everyone in the audience is to read this most recent white paper. We’ll have a link that’s where you can download that in the show notes for this episode. I will also make a note to include a link to that most recent Pulse report which I think covers Q2. I always look forward to- Yes, it has

your reports. So you’ll be able to get that as well. And then like I said, this is not the first or only white paper from Pax8 on AI. In fact, I think it was the first one that had some pretty in-depth material about the pricing topic you were just covering. So that’s worth-

Ryan: Absolutely

Rich: Taking a look at as well. But in the meantime, Ryan, thank you so much for making some time and joining us on the show.

Ryan: This was great to see you guys. I love to see you out there, at the events and to have a little personal time with you is, I was really looking forward to it today.[01:03:00]

Rich: All right. Folks Erick and I are going to take a quick break right now. When we come back on the other side, we’re gonna share some final thoughts about this interesting and timely conversation with Ryan Walsh. We’re gonna have a little fun. We’re gonna wrap up the show. It’s all coming your way in a moment.

Stick around. We’ll be right back.

Thanks again to Ryan Wall for joining us on the show and for giving us that excellent guided tour through just some of the really interesting information in that report. We’ve linked to the white paper in the show notes here. I really do encourage you to take a look at it. There’s lots of good stuff in there and plenty more we could have explored with Ryan there.

Two, two quick thoughts jump to mind. One we we were both at the Pax8 BEYOND event early on in June and the message from the main stage there to the MSPs in the audience was, “Be customer zero. You’re customer zero. Do something internal, get a little confidence, and [01:04:00] then go to customer one in your customer base.”

And in just the two months, two and a half months since that show, the view from inside Pax8 has changed to actually you need to be looking at customer zero and customer one simultaneously, and that tells you how quickly things change in the AI market place, and just what that winds up meaning. We, the, time is of the essence basically in terms of capitalizing on the AI opportunity right now, and the w- what better reflection of that than how quickly this bit of advice has adjusted just a little bit from Pax8. The other thing was a data point that we, we talked about with Ryan, and it’s one that really jumped out at me when I was reading that white paper, which is just this idea that the average line of business worker is saving 3.1 hours a week, but only approximately 20% of organizations know what they’re going to do with that time, right?

And it’s interesting because I remember when I was reading the white paper on the flight in to [01:05:00] Dallas basically, thinking to myself, that’s a scenario that a lot of MSPs can identify with, right? Where it’s like I- I’m saving time at the help desk, or I am going to be saving that time.

What do I do with that time? That’s an important question for an MSP. And precisely because the MSP is kind of customer zero in that case it becomes a conversation they can have with the customer. Here’s how we approach that question. Here’s what we decided to do. And then it be- it can become potentially a a, a service, a, a consulting or part of the consulting gig with the customer.

Let’s talk about what these hours, how the hours can be reapplied. Yeah, I think those are probably the, the two biggest things that struck me. One, kinda the way it struck you. The other one, a little bit different. Yes, absolutely, like figuring out what you do with that bank of hours that you are recovering, right?

So [01:06:00] how do we always say, “Oh we reapply it and, have our team do more valuable work,” and this and that. But we should already have those job descriptions already written and moving people into those. And I don’t think it’s as easy as saying, “Rich, oh you’re now doing the role of a level two technician,” or something else.

It has to be, I think, more strategic. Or if that is the effect, then you’ve got to end up with someone who is much more strategic about helping build the value of the organization with your end customers. It should be, in my opinion, a more client-facing role. Unless you’re underwater with support tickets and things like that, then obviously this, you have different decisions that you have to make to address that, that backlog.

But for me, it’s like if that frees somebody up below me and that frees me up now to do something that is valuable to the organization, depending upon where that [01:07:00] rolls, if you think about, visually the domino, and it gets to a person that now is freed up to spend more direct time with a, with your clients, being strategic, that’s the way I would try to figure out how this benefits.

Because that is stickiness. That creates more opportunity. That allows us to work much more closely with our A and B clients and grow those existing revenues. That net revenue retention and revenue growth over time. So that’s one thing that I’m thinking about. And then the other one was, what was the first one, Rich? Remind me. Just that in the two and a half-ish months since PAX8 Beyond, PAX8 has gone to actually- Yeah … let’s do customer zero and one. Customer zero and customer one. Yeah. So this is the one where I’m gonna look at it a little bit differently. Thanks. So that’s gonna make MSPs Nervous, right?

Nervous to be piloting something internally [01:08:00] while they’re piloting it with their clients at the same time. So that’s my, sitting from the, risk-averse engineer role, it’s man, I’m discovering things with AI every day, right? So how do we address that? How do we address that nervousness?

How do we… ‘Cause I, I know that there is– there are large MSPs that are actually accelerating and doing that. They’re much more mature and ready and see the opportunity and can respond and react a little bit differently than the majority of the MSPs who make up our audience, right?

So they’re gonna need a lot more help from their strategic vendor partners and distributors to make that happen. Like just asking an MSP to be customer zero and customer one for any technology brings a little bit of hesitation, right? Oh, you want me to, roll out this solution to my clients while I’m rolling it out internally?

So that one is, I’m gonna put a pin in that, and maybe we can talk about it later on as we– [01:09:00] as things develop here. But partners are gonna need a lot more assurance and security and hand-holding and, arms around the shoulder from vendors and distributors so that they feel like they are actually, confident in doing that concurrently.

I’ll leave it there Yeah, and two quick follow-ups based on conversations I have had with MSPs or would like to have with MSPs. And so first of all, in terms of, reassigning employees within a, a managed services provider to more strategic roles, customer facing roles, universally that, at the companies that are in a position to do that or anticipate being in that position soon, that is what they are doing.

And they are either moving these people into consulting roles, into customer success roles, but it tends to be a much more consultative, strategic, customer facing kinds of act as opposed to, “Okay, I’m gonna bump you up to a level two,” [01:10:00] and and so on. That’s what I’m seeing out there so far.

And by the way, it ties right back to the tip of the week. This is why you want people on the team. You wanna delegate decision-making to people on the team, and you wanna make sure you’re hiring people who are gonna be good in those strategic customer facing roles. On the other side I, I would like to have more conversations with MSPs.

I, I have had I’ve touched on the topic with some MSPs who will say they are working in some cases with end users who are eager to be a little bit out there, not bleeding edge, but leading edge on AI. They’re almost pushing the MSP, “Let, let’s do some things.” And there are MSPs out there who are telling the customer, here’s what I know now, but I’m still learning as I go.

Are you willing to go on this journey with me?” kind of a thing. And that, and setting it up that way, not making promises they can’t keep, but it’s like, “Would you like to try some things with me and do it in a way that doesn’t create [01:11:00] enormous risk or danger for you?” I, a- again, I haven’t do- I would very much like to talk at some, in some depth with people who have experience with that and how you broach it and how they respond and, what, what tends to work and whatnot.

I think that’s part of ultimately a, a piece of what might enable MSPs to deal with that very real concern that you were talking about. Yeah. And, do you charge them for that? Who pays for that time? Those are all big questions. Audience comment below and let us know what your thoughts are on this subject, ’cause this will probably create a little bit of conversation I’m sure, Rich.

Very good. It it leaves us, though, with time for just one last thing Erick, which comes to us from, I’m gonna mispronounce it, I’m sure, Arcunano in in Italy’s northern Veneto region. Where, here we are in August. Maybe some of the folks in our audience were vacationing in Italy.

Maybe some of them were vacationing in [01:12:00] Veneto, in northern Italy, and maybe they have fond memories of visiting a an ancient Greek amphitheater in Arcunano taking home pictures and memories and sharing them with friends. It turns out that the site you visited was neither ancient nor Greek.

It was basically something manufactured by a property owner there and presented to the world as a an ancient site. And, he was charging admission, and people are going in and thinking, “This is amazing.” It was constructed within recent years is all I can say. I know there was about a 10-year legal battle in which people were trying to get this guy to, bring this person to justice.

And he has in fact been jailed for forging works of art, carrying out building works without authorization. That’s the part that I love, that the real crime here, it’s like getting Capone for tax avoidance. He did construction without permits. But the, this guy has been busted, and no [01:13:00] longer will people be visiting the not Greek not ancient, not amphitheater.

The worst new wonder of the world, apparently, Rich. I like it. I like it. And folks, that is truly all the time we’ve got for you this week. Thank you so much for joining us. We’re gonna be back in one week’s time with another episode of the show for you. Until then, I would simply remind you this is both a video and an audio podcast, which means that if you are listening to us right now, but you’d like to check us out on video, go to YouTube, look up MSP Chat.

If you’re watching us on YouTube, but you like to listen to podcasts, go to Spotify, Google, Apple, wherever you get your audio podcasts, you’re gonna find us there as well. 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, and optimize thriving MSP channels.

You can learn all about the many ways we do that for our customers [01:14:00] at our website, which is located at www.channelmastered.com. Channel Mastered has a sister organization called MSP Mastered. That’s Erick and his team working directly with MSPs to help them grow and optimize their business. You can learn more about that at www.mspmastered.com.

So once again, we thank you for joining us. We’ll see you in a week. Until then, folks, please remember, as we always ask you to, you can’t spell channel without [01:15:00] MSP.