Episode 142: People, People, People

 

Transcript:

Rich: [00:00:00] You’ve rolled out MFA. You’ve run the phishing training. Your clients are still getting compromised. Kaseya says identity attacks are up 32%, and more than 97% of them start with a password. They’re not breaking in, they’re signing in. On Thursday, October 8th, MSP Chats’ Erick Simpson and Kaseya’s Matt Sivak will run a live account takeover demo.

Watch Matt phish a user and take their credentials, and then see what happens next. It’s all at 1:00 PM Eastern on Thursday, October 8th. Register at

bit.ly/takeoverdemo. That’s B-I-T.L-Y/takeoverdemo, one word. And now, on with the show.

And three, two, one. Blast [00:01:00] 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’m Chief Analyst at Channel Master, the organization responsible for this fine show. I am joined physically side by our other co-host, our CEO and Chief Strategist at Channel Mastered. His name is Erick Simpson, and just in case there’s anyone watching on YouTube who is not seeing swaying palm trees behind us, Erick, where are we and why?

Erick: We’re in Orlando, Florida at Informa’s MSP Summit 2026.

Rich: Fabulous event in the fabulous state of Florida. And yeah we… the two of us have been hopping around here and talking to people and learning and I’ve spent a little bit of time on stage with someone I’m gonna talk about in our story of the week in a moment here.

It’s been a great show.

Erick: Yes, it has. And it’s always a, a great show when you’ve got, a, a, [00:02:00] a show that is focused completely on helping MSPs, right? We go to a lot of different shows, Rich, and, there’s a lot of different segments and cohorts and resellers, partners, bars, but something that is focused like MSP Summit just for MSPs just feels like home, doesn’t it?

Rich: I completely agree. And I will also say one of the many exciting things about being here is we got a chance to hear both on stage and off from the great Jay McBain from Omdia. And stick around, folks, because he’s our interview guest this week, and he’s gonna get into it with us on a number of topics that will be interesting to you.

But before then, let’s dive right into our story of the week, and it comes from Shield Technology Partners. I got to moderate a panel here at the show yesterday. There were four of the biggest names in managed services on stage with me. One of the panelists there was Jim Siders. He is the CEO of Shield Technology [00:03:00] Partners.

Shield made headlines last week really for the first time since the company launched. They went public with some of the details around the AI platform that they’ve been building in-house. For folks who are not familiar with Shield last year, Thrive Holdings, which is part of Thrive Capital, big venture capital firm alongside a company called ZBS, put $100 million into a new MSP called Shield Technology Partners.

Early this year, Thrive on its own put another $100 million of backing into this company, and they have taken some of that money and they have invested it in hiring Silicon Valley-grade, world-class AI developers to come in and build an AI operating stack for MSPs from scratch last week they came out with some details about that platform.

It’s called Forge. As you would expect, there’s help desk automation built in there. There’s a project management module built in there. There is an account management module for [00:04:00] preparing for QBRs and finding insights that can lead to opportunities. There’s a component you can use to build agents.

And honestly, as I got a chance to interview Jim Siders and Mayank Jain, who owns the Forge platform and the product strategy at Shield, the thing that most struck me in my conversation with them is the deeper you get into it with Shield, the more you realize that Forge and the efficiencies that a platform like that makes possible, this is not the investment thesis that inspired Thrive and ZBS to put two hundred million dollars into this company.

The idea here basically is they are going to use leading-edge AI to automate a lot of the work that MSPs do. In the process, they are going to drive customer retention, satisfaction, and loyalty because not only will people be getting answers to their technical problems faster but they really believe at Thrive that they can…

or at Shield, [00:05:00] excuse me, that they can prove that the quality of those outcomes is better combining the AI with the technicians to handle the the more difficult tasks. Meanwhile, with AI handling the easier tasks technicians can now move on. Instead of reacting to problems, they’re addressing the root causes of those problems, so again, driving customer satisfaction.

And perhaps more importantly, there is now bandwidth freed up inside Shield that they can apply to customer-facing AI services and solutions. And right now, the specific contours of the services and solutions are still work in progress. There is a project within Shield that they told me about called Project Ember, which is where they’re designing these services and solutions.

We’ll start to see some of the output from Ember probably in 2027. But really, if you look at the strategy behind Shield, it is all about people. It is about the, the people who developed Forge. It [00:06:00] is about the people who are using it. Shield wants to have world-class AI, but they want to have world-class people.

They’re investing in those people. It is about the people who are helping MSPs benefit from Forge. They are putting forward deployed engineers including people f- directly from their business partner, OpenAI, into the field with the MSPs that Shield is acquiring. That… This is an important point.

Shield is a platform. They are acquiring MSPs. But they’ve got AI experts and operating experts in managed services working hands-on-keyboard alongside MSPs out there. The strategy is all about people and using those people teaming with, aided by AI to create bandwidth that creates solutions that create margin and profit and grow the business.

It is about the, the relationships and the opportunity to deliver high-growth, high-margin solutions to end users, and it is not principally about using AI to [00:07:00] drive efficiency and productivity inside, which is how people tend to think about the opportunity around service desk automation software.

So I would just encourage people who are reading about companies like Shield, about Titan, which was also represented on the, the panel I had there like TreeLine who was on the last episode of the show with us here before, don’t get too focused on what they’re doing with AI. It’s an important part of the picture, but there is a bigger picture that does not require you as an MSP to invest to the degree with the kind of dollars in the same way that they are in developing your own bespoke AI stack.

You can invest in your customers, in your people, and in the AI solutions and services that you’re delivering to your end users and on your scale, in your part of the market pursue the same kind of success strategy that has motivated the private capital world to put a couple of hundred million dollars into Shield.

Erick: [00:08:00] I think, Rich, I, I hear a collective sigh of relief from our listeners as you described the promise of AI in a way that settles everybody’s nerves down a little bit. And this is a very unique and different positioning from these folks that says, “Hey, it’s about the people.” And I think people should be a candidate for the title of this episode, because we’ve been hearing a lot of the other side of the conversation for a long time, and all of this fear, uncertainty, and doubt about, AI’s gonna take all of the jobs away.

And in fact, the large technology organizations that, that we’ve read about that have done some of that are hiring folks back now. To think about this in a way that isn’t about the promise of AI being something that [00:09:00] replaces people, what I really appreciated was you using kind of the term solving prob- a- allowing the people to solve the problems while AI takes care of the noise.

And I’m gonna interpret that from kind of an ITIL service desk perspective. So the job of Incident management in the ITIL framework is to restore business continuity as quickly as possible to a user, to a platform, to a service, whatever that is. When an incident recurs, then it is categorized as a problem, and now we have to spend time understanding the root cause of that problem, and dig deeper takes, takes a lot more time, takes smarter people, dedicated people to do that thing.

So what I’m interpreting from the story of the week is, oh, this platform is taking care of the incident management stuff that restores [00:10:00] continuity business continuity quickly, while allowing the people to address the problems which are the occurring incidents that the AI platforms can’t solve, and that is a com- that is a a CTO’s driving desire, is to allow the people to focus on the things that only they can do, and clear the way of all the noise that keeps them from doing the things that only they can do.

Rich: Yeah. A- and a, a few quick things to follow up on that. Right now, Forge is closing 50% of the tickets Shield encounters, and 92% of the time it is doing that with no human in the loop. And those numbers will go up but Shield makes very clear they will never get anywhere they- they’ll never hit 100%.

Th- there are al- there’s always going to be a need for and a place for people in the process, and and that makes the quality of the people you hire, and and the [00:11:00] ability to apply those high-quality people where they can make an impact like what you were talking about there, root cause analysis as opposed to password resets, that much more important.

And so that the, the line that Jim Siders, the CEO over there, used that I thought was great is he said that “We as a company are long humans.” It is a company that is known as AI forward. They’re not betting around AI, they’re betting around humans in all the different ways that we’re talking about here.

Erick: Yeah. And it’s very interesting when they realize that, yes, it’s never going to close 100% of all the tickets, but when we’re looking at service management, from a service manager’s perspective, I’m trying to categorize the tickets that should only go to a, a queue or a level or an individual technician.

So if you say, “Hey, we’re going to categorize the tickets that [00:12:00] AI should always be able to solve” Then we have a better shot at it getting closer to 100%, because of course not everything that we throw at it can be solved, nor should we throw every ticket to the AI, right? And that’s where the human becomes important, is identifying how to route those tickets, right?

Now we can relieve ourselves of that service dispatch function and reapply those those saved hours to more valuable services or more customer-facing services, as we discussed in a recent tip of the week.

Rich: Speaking of tips of the week we don’t know a whole lot. Shield isn’t saying a whole lot about Project Ember right now, but I wouldn’t be surprised if some of the customer-facing AI solutions they’re working on right now get tested out inside Shield first, which is a setup maybe, Erick, for what you’re talking about this week.

Erick: And a fine setup it is, Rich, yes. We’re talking a lot about, what MSPs [00:13:00] are comfortable with when they’re introducing a new technology or a platform or even a new, device or a service to clients. They want to make sure that when they’re delivering it, that they can stand behind that product, service, or solution.

I think I’ve told a story on the MSP Chat podcast maybe once or twice about, the times when, in my MSP, we’d go out and we’d be pitching a client, a solution that we weren’t using internally. And of course, when they’re talking to a technician a week later who’s, helping them, restore business continuity, and they say, “Hey, Erick was over here talking to us about, solution XYZ.

How do you guys like it?” And the technician says, “What? We don’t use it.” Not a good look, right? So I’m using that as a parallel to the story of AI now. As we see AI, we’re all still trying to figure out how to … As MSPs now, the collective we as MSPs are trying to figure out, [00:14:00] what’s the best way to guide our clients in using AI responsibly and managing it and making sure that we’re implementing guardrails and keeping them safe and providing the support that’s necessary?

That same lesson I learned way back in the day applies now. MSPs should become customer zero For the AI that they are going to be supporting their clients with, I recommend that MSPs put their own internal teams through the same prompt tho- promptathons and g- and coding sessions, and live coding sessions, things like that, with all the different LLMs that they feel that their clients may be using now.

The shadow, AI that some of the users are downloading and installing and using, and maybe exposing, data to, the outside world inadvertently. MSPs should understand what the value is, how to manage it, how to contain it, how [00:15:00] to monitor it, and then go out and begin piloting now customer one, customer two, customer three.

Get some of those early adopters. Clients will pay for that service if you let them know, “Hey, we’re just gonna charge you time and materials while we figure this stuff out, and if we can show some improvement, a performance improvement to you, then we’ll scope out a larger deployment and a rollout, and you’ll agree to pay us, however we figure out we’re going to charge for it.”

Again, all kinds of different ways to charge for these services. We’ve talked about that on the program before. But the important thing is, Rich, for the MSP to adopt AI responsibly first so that when a technician is working with a client who’s been talking to someone on the team that wants to introduce a pilot program for managing their AI, they can answer completely [00:16:00] truthfully about the benefits that they’re getting and the things that the client can experience like they are

Rich: Now I’m gonna flag a trade-off just for people to consider ’cause we not that long ago we had Ryan Walsh, chief strategy officer from Pax8 on the show.

And, you and I were both at the Pax8 Beyond Show in June, and the Pax8 team was on stage at v- very forcefully encouraging the MSPs in their audience to be customer zero and get started. And then whatever it was, two months later, not even three months later we have Ryan on the show with us, and he’s saying, “We still believe in customer zero, but this market is moving so fast, there’s so little time to wait, you might wanna be doing customer one simultaneously.”

Now I am a bit of a cautious soul, so I’m right there with you. If it’s me I’m starting with customer zero, and I’m making sure I can speak with confidence and authority to the to the end user about that customer one solution I proposed to [00:17:00] them. But there is a trade-off, which is that the market is moving very quickly right now.

SMBs are really eager to get started with AI and for someone to help them with that. And even just the few months you spend focused internally could make an … so it’s something to consider.

Erick: I’m with you, Rich. I think MSPs are risk-averse. Engineers from my generation, let’s say, our favorite word to say once a client wants to do something is no.

So we wanna make sure we get things right. I, I understand that, there’s this kind of momentum and, this buzz around AI and, customers are gonna … are using it now, and we need to get ahead of it. But boy, oh boy, I would hate to be, the MSP that has

That finds some flaw in the way that, we’re simultaneously rolling out AI in our organization and two or three of our clients at the same time and have to backtrack. You know It’s not a good [00:18:00] look. But I don’t think it would take that long to actually develop, to roll it out internally, to establish your AI policy internally.

And then, say, “Okay, maybe we can take a little bit of a baby steps with a client or two,” and just phase it so that you can, manage risk and manage the project properly like engineers are trained to do.

Rich: Okay. We promised you Jay McBain, and we’re gonna come through for you, MSP chat viewers and listeners.

Erick and I are gonna take a break here. When we come back on the other side, we will be joined right here at the MSP summit by Jay McBain, chief analyst at Omdia. We’re gonna be talking about some of the things he’s been writing about on LinkedIn recently. We’re gonna get a look at his take on the state of play in managed services the state of play in partner-led AI services the importance of community, GTIA buying ASCII, all sorts of good stuff.

It’s coming your way right after the break. Stick around[00:19:00]

And welcome to part two of this episode of the MSP Chat Podcast, coming to you live from the MSP Summit in Orlando where somehow we have managed to convince one of the busiest people at the show here, ah, Jay McBain of Omdia, to join us for a bit and take us through some of the latest information and analysis from Omdia.

Jay, welcome back to the show.

Jay: Thank you for having me, always a pleasure.

Rich: Most of what we’re gonna talk about here is based on some of … And anyone out there in our audience who is not following Jay on LinkedIn is making a big mistake, ’cause he’s posting all week long, and it’s very interesting stuff, pretty reliably.

And so everything we’re gonna be talking about here is from your LinkedIn posts just within the last month or two. And I wanna start with one that grabbed a lot of people’s attention just from within the last week or so. You were- folks reported that 65% of channel partners, so not MSPs specifically, but 65% of channel partners based on [00:20:00] an Omdia survey, were projecting flat or declining profits for Q3.

Talk a little bit about what’s causing that from your perspective, and how durable a trend, long-lasting a trend you think it’ll be.

Jay: Yeah. First of all, I’m not a huge fan, as an analyst, of sentiment. The how you feel question can, depend on how you woke up that morning and what side of the bed you got off on and stuff.

So the only real sentiment benefit is, like you said, having a baseline. If you ask the same question of you every quarter for the course of decades, then the comparative nature of sentiment a- analysis is better. Rather than just how you feel today, it doesn’t roll up to a lot that you can, take away.

But when two-thirds of the industry, and, we asked a subset of 25,000 partners, which scientifically, on about a half a million, you know, 19 times out of 20 is solid. But when we asked them last quarter and the quarter before, and, they go to events like this one, and they’ll hear that, the tech industry’s been the fastest-growing for [00:21:00] 50, 60 straight years.

AI is just about to double the size of this industry in the next three. This $7 trillion bill what a time to be alive. Growth rates double digits. Managed service is growing double digits. Cybersecurity growing double digits. Now AI service is growing 32 and a half percent compounded. It just sounds like this hype cycle is off the, charts.

And then, you get these MSPs that look introspectively and say, “This doesn’t appeal to be, my books. I’m not winning at the same pace. Am I missing something? Or is there some other segment, or is there some other partner type? Is there someone else collecting most of this gain and I’m stuck over here?”

And what jumped out is that two-thirds of, the industry right now, when you’re in front of an audience like this one here, like 1,000 people, two-thirds of them are not feeling the exuberance- … that maybe the vendors do, and maybe the new trillionaires that are being minted do in our consumer press.

A- and that’s what we wanted to step back on, is what is happening, who is winning, a- and getting to the details below that [00:22:00]

Erick: You know, Jay, that same post that Rich mentioned it included data around what today’s partners want from their vendors. What is that now, and how might that impact profitability and what you’re seeing?

Jay: Yeah, so one of the other, questions behind this is i- if this new 20-year era, this AI era, we’re just, at the beginning of the, the business side of this era i- if it’s gonna be as big as everybody says, and it’s gonna be as game changing for every managed service provider and every service provider of every type where are you now?

Do you feel like you’re ready to grow at these 32 and a half percent compounded growth rates for the next five years? So if you ask that question again to the, 25,000 sample, 82% came back and said no I don’t feel I have the skills. I don’t feel, I’ve hired the r- or I may be hiring the right people.

I don’t have an M&A plan. For 100 reasons, 82% aren’t really [00:23:00] feeling comfortable that they’re there. So that’s a big number, and it’s a scary number, but it’s not that different than asking in the early days of cloud. When Salesforce came out in 1999, you asked people back then, “Are you really ready for this cloud era?”

Same 82%. And maybe it happened in 1981 too, with the client server era. So we’re going through that again. So the second question always when 82% say they’re not ready is, why? Who do you blame- … th- that you’re not ready? And, the number one, you know, cohort that was blamed was vendors, was says that, every time we go to one of your shows, every time we log into one of your webinars or program updates or something, it’s just a whole hype cycle.

It doesn’t seem like you’re spending the time necessary to help me get ready a- and to help me build these capabilities and the capacity to grow at these rates, to get out in front of my customers and deliver real value. So tone down on the hype now, we’ve got enough of that in the last three years, and let’s put it at a real thing.

So the third question and final one was if y- if you’re blaming this [00:24:00] cohort, what could they do better? And the number one thing was just down to the give me the training, give me the workshops. I need to roll up my sleeves. I’m not talking using ChatGPT as a consumer. I’m talking about agentic, really having a business conversation with my clients, getting out in front of this, driving advisory, consulting, design, architecture, driving dollars that I may not have got or may not have earned from where I was yesterday.

So this was the three-part analysis to your answer is, what we need to do now… And after this came out, by the way we’ve had vendors come out and spend some billions of dollars. Google wrote a $750 million check on enablement. You had Anthropic write 100 million. OpenAI wrote 150, SAP 100, Salesforce 50.

Even Michael Dell, s- moved a whole bunch of money from the point of sale, billions of dollars back to this enablement, knowing to win AI factories doesn’t happen at the point of [00:25:00] sale. So we’re watching almost every other day now big vendor announcements, writing really large sized checks to get partners ready.

But on a scary side, they’re also writing for forward deployed engineers to hedge the fact that if I don’t get the channel ready in time, these 82% I have to be there in front of the customer as a hedge. And maybe being there, I can help the partner, by holding their hand in front of the customer.

But if not, I’m gonna spend the money necessary to make sure that I can get there for my investors. And this is really different. It’s true. It’s deeper business enablement than what we’ve, historically seen more technical enablement and things like that. This is what the partners are wanting is what I’m hearing.

Yeah, and an old challenge is popping up again, and I was very vocal in the early days with open letters and things on the MSPs missing the SaaS era. And there was one, quick and easy reason why we did, is that SaaS was bought by [00:26:00] line of business. A, a head of sales, a head of marketing, a head of operations, finance, HR built their own tech stacks.

And they’re the ones that went to Salesforce and ServiceNow and Workday and Marketo and NetSuite, HubSpot to build these tech stacks. And over time we had 250,000 SaaS companies. And we were busy calling on IT, solving IT level and CISO security level and, kind of federal government, level problems.

A- And we weren’t con- combined into the business outcomes that the SaaS industry is. So now what we’ve learned in AI over the first few years as we’ve got through the consumer phase, is that most of it is showing up in SaaS. Even last week at Dreamforce. It’s now Claude Force.

Rich: So y- you guys at Omdia, you’re projecting $85 billion of partner-led AI services this year, rising to 347 billion in 2031. You [00:27:00] mentioned exuberance before. There was a great line in one of these LinkedIn posts where you said, “AI’s irrational exuberance isn’t meeting many partners’ quiet reality.” Talk about the quiet reality.

What is the reality in terms of partner AI services and revenue right now? So if there’s ever a sent- a sentence written by AI, that sounds like one, doesn’t it? No, the, the answer to the question goes back to what we just said. Where is this $85 billion happening? And for the first time in our industry, again, going back 56 years, AI is more of a segment story than it is an industry story, a geography story, a buyer story.

Jay: A- and what I mean by that is depending on how large your client is, it depends on their vision of AI. For example, no one in SMB, up to 499 employees, is ever gonna meet, Sam Altman or Dario or Jensen from NVIDIA. They’re never gonna be in the room. It’s all white [00:28:00] labeled. Even if you go into mid-market beyond that, up to 999, it’s mostly, SaaS driven.

So when you get to the low end, SMB itself is broken into six categories. So if you’re in front of a flower shop, with nine employees- There is nine flower shop SaaS companies. If you go to their convention in Vegas, at the back of the room, they built up like ConnectWise and Kaseya, and stuff like that, homegrown kinda thing.

But there’s 1,012 categories of SMB. So if you don’t own a flower shop, you own a tanning salon, or if you own a daycare center, you have your own nine visions of somebody went out on microsoft.net and built something- … to manage your entire business. And just like the ConnectWises and Kaseyas of the world and Enables and others it does a bit of sales, but it does it poorly.

It does a bit of marketing, but does it poorly. The, the piece it does well in our world is the service tickets and the things that, we have to run our businesses and some of the remote management. But again, if you run a tanning salon, I need my oils that I [00:29:00] sell at the front, and I need access to those through the tool.

I need, the bulbs burn out in my machines, and I need that linked, and I need to be predictive and order a new bulb. Now, these are the things that just keep you up at night if you’re in that business. AI’s gonna show up through these platforms. So someday, through AI, the, the bulb is gonna talk to the, s- a machine, and it’s gonna happen, and probably gonna replace itself.

Just in the middle of the night somebody’s gonna show up and replace that bulb before it ever breaks. And all parts of running that business is gonna get better via E- AI. The way they market, the way they sell, the way they run customer success, the way they do ordering, the way they do customer you know, different relationships.

So that’s … There’s a lot going on there, but it all comes through SaaS. You’re never gonna know, like today you don’t know if you run that business, if the thing you actually use runs on AWS or Azure or Google. You have no idea. It’s white labeled. And today, if th- if that little thing that talks to the light bulbs goes and talks to Anthropic or talks to OpenAI or talks to Google or talks [00:30:00] to, SpaceX, you have no idea.

It’s all white labeled. And if it ever touches an Nvidia processor, you have no idea. Or ran locally on my little, enabled PC, you don’t know. So when I think of segments, it’s not ’til about 150 employees do you start to have these vice presidents that are building out their own tech stacks. Buying Salesforce, buying ServiceNow, buying Workday, and then building a seven-layer stack on top of that. But still at that layer, you’re not buying from Anthropic. You’re still buying in the tech stack they’ve already invested in. The MSP has to enter that conversation, understand that AI’s gonna happen through that conversation.

It needs to be secured, needs to be governed. You need to talk about FinOps, not burning tokens. You need to talk about all these things. But in the framework o- of a place that MSP’s probably the sore spot over the last 20 years is getting into these VP level business discussions, and history’s repeating

Erick: Jay, you guys break out [00:31:00] partner-led AI services into seven revenue categories.

Which are the most meaningful for MSPs today?

Jay: Yeah, so this was an interesting thing. The first thing we did before breaking it into categories was just the services themselves. So as Rich said, there’s $85 billion happening, so we wanted to… Last year we wrote the same report, but we didn’t get to this level of granularity.

Because so many partners, are struggling, two thirds to 82%, somewhere in that range, we actually wanted to get to the next layer of research, which is to say, when it hits the invoice, when it hits the PO, what are customers actually buying? Show me the exact service with the exact outcome they’re expecting for spending that money.

So we were able to roll up hundreds of services. So the first thing that jumps out to you is most of the services today, as you would expect, are really before the point of sale everyone’s starting their journey in AI, so the advisory, consulting, early design and [00:32:00] architecture of pro- proof of concepts.

It was a year ago today that the number one headline in newspapers was the MIT report 95% failure rate. Today, we’re less than 95. We’re at 70, and we’ll be less than 50 probably by the end of the year. That’s the good news. But understand that, in that world, the customer’s spending the most money on services in those early moments.

So i- if you’re an advisor, if you’re a consultant, you’re doing really right now. If you’re a designer of, AI, you’re doing really well. But if you’re a managed service provider, there’s nothing being sold today. We don’t … We haven’t operationalized this. Actually, 95% of it hasn’t even got to production.

To even be able to govern or com- make it compliant, make it secure. We’re not in those conversations, and then there’s this … From 85 to 347, there’s this growth of post-sale services, which MSPs will do a good job… Excuse me. But the challenge is right now we’re finding is if you’re not in these early conversations, on average as the [00:33:00] customer gets bigger, there’s 6.3 partners surrounding every single customer.

But if you don’t own some of those boardroom conversations and when people are drawing clouds on the walls and connecting clouds a- and labeling those clouds, if you’re not in some of those earlier conversations, everyone that does that now has massive managed services practices. Some of them, like the GSIs and stuff, are really large, multi-billion dollar MSP practices.

And now you’ve got 94 roll-ups, and you’ve got all these new billion-dollar MSPs. So a lot of the people that do consulting really well, that do advisory, do design and stuff, they’re there to win the post-operational business, which is to do the optimization work and the security work and the governance work.

And this is the richness of being there early. It’s not gonna be like the client server game where I’m just having these huge total cost of ownership problems. I can solve this bigger, better, faster, cheaper by calling the local MSP. I- it’s gonna be different this time. So we’re kinda pushing MSPs, like if you wanna stay in that [00:34:00] lane, not a lot of the 85 billion today is there.

It will be in five years, but by not being in the room today before the sale, in this business level, SaaS level, consulting, it may hurt you later on ’cause those people are in the business that you’re in.

Rich: There was another Omdia slide in one of your LinkedIn posts that had an interesting title.

The title of the slide was “Resell isn’t dead, but the economics around it are changing fast” and this got into vendor incentives and vendor incentive models. How are those changing? What does it mean? And not just for resellers maybe, but for MSPs as well.

Jay: Yeah, so it was years ago that I kinda called out that, the point of sale was a really bad time, to cover all of the greatness that the channel delivers.

There’s 28 measurable moments before the sale where the channel adds value. It could be in that early e-book that the customer reads. It could be in that advisory. It could be in the design or configuration. Whatever [00:35:00] moment. The fact is, what you did when you only paid once at the point of sale is there’s this huge assumption that the partner you’re working with, the reseller, did all those 28 things, and now we know with 6.3 partners, they definitely don’t.

So when you start to talk influence, when I said Michael Dell, moved money back from the point of sale ’cause AI factories aren’t bought at the point of sale. It’s not a gas station. You don’t show up and buy a pack of gum. In a considered purchase, when somebody’s that you trust the most is drawing pictures on the whiteboard and connecting them, and if they label that with Dell versus Lenovo or HP or they label it with AWS instead of Microsoft or they say Anthropic instead of OpenAI, the deals are done back in moment 12, not at moment 28.

So if you’re only paying at moment 28 your risk is that you’re only paying one of the 6.3 partners, and you actually might not be paying for the influence. The deal is probably long done, and they’re just collecting maybe the order. So always the mantra, and [00:36:00] now 65% of our entire industry, $6.2 trillion industry, is recurring.

So of all the software, of all the hardware, winning the customer at that point of sale is only the first 30 days. Now I need to upsell, cross-sell, renew, and enrich every 30 days forever for a customer for life. So Microsoft was the first ever to kinda say, “This doesn’t make any sense. We’re trying to beat AWS, as our biggest, competitor, and we need to recognize more moments.”

So they went to a point system. “So we’re not just gonna pay 20% margin at the point of sale. We’re gonna spread that 20% out like peanut butter. Make a point here, make two points there, make…” And they start to measure what the most important moment’s. Since the day they did that, for 26 straight quarters, Microsoft has outgrown AWS So I caught that early and I started yelling from the mountaintops.

And since that happened, up until last year, there was 400 companies now that have done point systems, and today it’s 1,000. So out of the 35,000 total vendors that we follow that have a channel [00:37:00] program, 1,000 of the top ones have taken money from the point of the 20 or 30% margin you could have made at the point-of-sale and lowered that.

And Microsoft also lowered their marketplace fee to 3%, which told the end customer that the actual service of procurement is the same as a credit card swipe, like Visa or MasterCard, 3%. So whether you buy in a marketplace, whether you buy indirect through a distributor, through a direct partner, doesn’t matter.

You should be only paying 3% is the value of somebody collecting the money on behalf of somebody else. And so what happens to the other 17? That freed up everybody to then go spread the other 17. What hurts is if you’re the reseller and the distributor who have to share 3 when you used to share 20. So it forces everybody into these other moments and showing vendors that you’re, you own the whiteboard or you own those moments that are the most important.

And so the checks that I told that are being wrote, you know, $100 million checks that are being written for enablement are going into these moments so [00:38:00] that vendor can win and maybe outgrow their competitors 26 quarters in a row- … for making these economic decisions. So this is not just the, it’s not the end of resell.

As you don’t sell magazines anymore with big, shocking covers, but the economics of resell changes everything. It’s just another service among the hundreds of others you might deliver as part of your AI services

Erick: Jay, you posted recently about GTI- GTI’s purchase of Askey. Before we talk about that deal itself, can you talk a little bit about why community is such a growth engine in the channel and not just a, a feel-good get together of partners every once in a while?

Jay: Yeah, at the very top, being an analyst we used to live our lives on frameworks, on flywheels, and on force multipliers. We f- we tried to look like McKinsey or Boston Consulting. We’d have really fancy, PowerPoint slides, that you’d have the channel chief or the channel manager go to the [00:39:00] board and go to the C-suite and try to convince them of, “Hey, the channel’s important.

Hey, look at the partnerships. Hey, look at alliances. Hey, look at ecosystem.” And it was always this… we were very poor salespeople. They’d say, “Yeah, that’s nice. Just go do your dealership stuff. We don’t understand what you do. Just go drink with your partners and…” So a lot changed, ’cause the AI era is built on ecosystems.

You’re always gonna be the parent or child relationship in every deal, and you could be a really big company but still be the child of a AI multi-trillion dollar company. So how you build out this era, has changed a lot. So what I’ve always looked at, past these multipliers and past this kind of hype cycle, is it comes down to, names, faces, and places Most people don’t realize that when we did the Omdia 1000, which is the first time a global Fortune 500 list has ever been created of partners, starting at Accenture with 776,000 people, looking at a big reseller like CDW, and looking at all the, major MSPs and stuff, but realize that [00:40:00] only 1,000 partners out of a million deliver two-thirds of all tech services.

They sit at the top, though. Enterprise, remember when I talked about the segment? About 80% of every vendor’s AI opportunity sits in only about 1,000 partners. So now it’s not a flywheel, it’s a logo by logo conversation. Now, with AI, you can have Claude hammering- … these partners for how much they represent in your TAM.

Your addressable market, your available market, and your obtainable market can now be delivered in an actual granular account-by-account, partner-by-partner view. So you wanna go win double the size of your company? We can have a partner-by-partner conversation on how that happens. So we have always known 80/20 rules.

In our world, it’s 99/1 rule. But that’s what it is. If you wanna go top down on 80% of your opportunity, that’s what it is. If you wanna win SMB, you wanna go talk to the million partners and 10 million people out there talking to customers every day about AI, that’s bottoms up. [00:41:00] And I always was obsessed with super connectors like the two of you.

I was always connect… who connects this industry, and who are the 30 people here in Orlando that really, have their tentacles into everything, and know all the gossip, and you knew the person in high school that knew every party and knew everything that was going on. So w- when I started to study it, I just studied it with three simple questions: If I had 10 million people, what do they read or listen to, where do they go, and who do they follow?

‘Cause you can compress 10 million people, and when we ended up doing it, it was only 1,000 things. So when we started looking at it and doing the psychology, we found out that 12% of people love podcasts like this. It’s their number one way they’re influenced. Yes. So when we went and looked at the entire world, there’s only 121 podcasts that they listen to that are meaningful to them.

Got it. 121 for 10 million people. And you’ve covered 12% of the primary way that your channel is represented. So I would be rushing to get on your podcast. . To talk to [00:42:00] that, incredible… But 35% of your audience love events. So they’re here in Orlando or they’re, next week they’re in Barcelona maybe at our event, or they’re…

There’s 352 events that cover this 35%. They love the hallway conversations. They love the hotel lobby bar. The whole event experience. It’s the number one way partners are influenced. They travel twice a year to get this experience. But if I looked at all 100%, I understand that there’s these powerful associations, CompTIA, now GTIA being the largest, but there’s 68 other associations below CompTIA.

I look at peer groups. There’s people that are really driven to sit down with their peers, sometimes competitors, and have it out in a boardroom and have these relationships, but we’re tribal people. There’s 106 people that still… sorry, 106 magazines that still drive people, in the old world of reading a magazine.

Some of them are still physical. So there’s 15 different spheres of influence. So if I wanted to get a, my new [00:43:00] product or if I wanted to get a new, idea about AI out to the world, there’s about 1,000 total watering holes. If I think of podcasts, if I think of social media, the LinkedIn groups and Reddits, if I think through all the peer groups and association, I think of the vendor communities.

If I go to IT Nation or KaseyaCon. If I go through all these different ideas, there’s only 1,000 watering holes total covering 100% of the psychology of 10 million people The companies in, when I did a panel yesterday, this is what my opening was. I was sitting with Pax8, I was sitting with NinjaOne, and I was sitting with Huntress.

Three companies that all got formed in the cloud era, born in the cloud. All three of them are multi-billion dollar unicorns. All three of them were founded thousands of miles away from Silicon Valley. No Silicon Valley money, so they weren’t destined for success, and they’re all community-driven. [00:44:00] They’re known, in the broader sense of millions of people as just being part of us.

They go to the events, they’re in the podcasts, they’re in the magazines, they’re in all the places we’re in. And we went back to these companies who made these investments at the community grassroots level, and we poured business into them ’cause they were part of our family. And again, we’ve created multiple billionaires now, and there’s three more there that I just mentioned that got created, not through a Super Bowl ad, not having a great sales team with a sales methodology.

Literally here in the hallways of Orlando, on this podcast, you can create this ridiculous sized company and, ridiculous future IPO and billions of dollars that go to the founders in community. So that’s what I mean by, when you talk this, how this world really works. I can give you 1,000 names.

It’s public on the website. And what you do at Accenture or what you do with CDW, we can kinda go into [00:45:00] detail, but how you do this bottoms up and how you communicate to 10 million people every single day There’s winners and losers at the unicorn level- … that win there.

Rich: So Erick mentioned GTIA has purchased the ASCII Group so that, arguably biggest trade association/community in the channel buying one of the oldest communities in the channel, 43 years old- Yep

The ASCII Group. You touched a little on this in your LinkedIn post, but just give us your take on that deal. What does it mean?

Jay: Yeah, there’s a lot of power in this, When you think about the thousand watering holes, ASCII would be separate than CompTIA or now GTIA.

GTIA split. Thoma Bravo took the, the certifications, A+ side of it away. And now, with Dan Wensley as a leader I view them much more as a community organization than that traditional association based on a certification and all the money that came from that.

But the trust fund that was created out of this has a real opportunity of [00:46:00] taking, maybe some of these other smaller communities that don’t have the resources to invest to get to that next level and can, combine with a great brand, a great legacy, maybe over four decades, and then give them some fuel.

Not like a, not unlike a venture capital or private equity company might come in and put some money to add some fuel to something that just needs to break free. But I think that GTIA has an opportunity now for the next 18 months to look across the thousand watering holes. Maybe there’s a couple of smaller associations that could need some fuel to really drive this AI era.

Maybe there’s some peer groups. Maybe there’s some media. Maybe there’s some podcasts. Like there’s all kinds of exits available now for some of the community leaders and entrepreneurs who created these watering holes, and maybe they’re long in the tooth. Maybe, decades gone by.

Some of the… unfortunately, some of the founders are getting older and some of them are passing away as well, so there’s definitely a legacy side of our business. And the ability to monetize and commercialize [00:47:00] what you’ve built, is now there and GTIA is providing an opportunity for this given what happened with Thoma Bravo a- and things like that.

So I think it’s good for the community. I think it gives them, a runway to run on and, maybe things that ASCII wanted to do beyond the buyer group and beyond the nine events, per year. If they only had another million dollars, they could have done this with the community, and I think that this now can be on, put on the board.

Erick: Rich will be seeing you in a few weeks at Canalys Forum, but this might be my last opportunity to get your take on Q4- … and projections for 2027. What are your thoughts?

Jay: At the very top, the industry’s growing this year at 12.7%. Again, it’s a tale of two cities. There are partners growing at triple digits.

There are vendors growing at triple digits. I- it’s not evenly spread. So we’re at a critical inflection point that every entrepreneur, and you can run a billion-dollar [00:48:00] organization, I still view you as an entrepreneur, you have choices to make. I always start keynotes, and, I might even say this at our Canalys forum, but i- if you go back 20 years on the Fortune 500, 53% of the companies in that magazine 20 years ago no longer exist.

There’s a 20-year cycle in business. By the way, these are the biggest companies in the world that have cash in the bank to buy their way out of problems. So these are the biggest. If you’re not in the Fortune 500 and you’re in tech, 71% of companies don’t even make it 10 years. So those are the overlay, but that 20-year cycle’s important because our industry grows in 20-year cycles.

The mainframe era, the IBM mainframe and mini era, DEC and HP, was 20 years. August the 12th, 1981 triggered 20 years of client server. 1999, San Francisco Salesforce.com triggered the next 20 years. A few years later, AWS Triggered 20 years of cloud. And in March of ’23, ChatGPT triggered the next 20 years.

It was a [00:49:00] consumer trend. Now, as we said, it’s becoming a business trend. But knowing that half of the biggest companies in the world will not make it to the end of AI. These are the companies we know and love today as consumers. Over half of them are not gonna make it. When we get out of that conversation without people with big fat wallets, most companies are not even gonna make it through the first 10 years of AI.

So every entrepreneur, regardless of how you got here, what got you here is not gonna get you there. This is truly is an inflection point. It’s bigger than the hype and the numbers and the 7 trillion and all these new trillionaires. It’s bigger than that because every business, regardless of what you do and how you serve customers, is gonna pretty radically shift.

And there’s gonna be new winners that form in this era that start to do things, bigger, better, faster, cheaper than you can. So if you’re not at the point of paranoia right now and staying up all night and you don’t have your own Claude server or your own OpenClau running on your own Mac Mini at home right now 24/7, you should.

And these are the types of things [00:50:00] where, if you could take a multimillion-dollar business and have a billion-dollar, idea, this is that inflection point that it’s gonna happen in. But on the flip side, if you have that business that you think that’s just gonna run through this era the same way it ran through cloud, it’s not.

And so yeah I think 2027 is that critical year that we’re gonna pick out winners and losers pretty quickly, on who understand platforms, who understands these new economics, who understands, how partnerships actually work. Whether you’re ch- parent-child, whether you’re an alliance, whether you’re an integration, whether you’re a co-sell, co-market, it doesn’t matter where you fit.

There’s gonna be 6.3 partners, services partners. There’s gonna be seven vendors in every deal, and there’s gonna be 13 members of a buying committee. If you don’t find your way into enough of those 27-person groups You’re not gonna make it through many years of the AI era, and you’re not focused on the right things.

So that 2027 for me is really that critical point [00:51:00] of, defining winners and losers, and the entrepreneurs who we write the books about 10 or 20 years from now looking backwards, the critical mistakes that were made. I think, right now we’re living through those times.

Erick: Quick follow-up question.

Jay: Yeah.

Erick: Because of the tremendous speed that things are advancing in the AI era-

Jay: Yep …

Erick: do we have 10 or 20 years, or is that timeline being compressed? You’re looking at 2027 and saying, “This is the critical year.” But are there 10 years or 20 years beyond that, or is it just super compressed now because of AI?

Jay: But you could make the argument, but I think the legacy of business, I think of the $125 trillion world GDP, most of it’s locked and loaded. You keep paying your utility bill, you keep paying your car payment, your mortgage payment. If you look across 27 industry, most of their revenue is already booked for 2027.

We’re not liv- leaving our house. We’re not gonna, all of a sudden drive in robo- robo [00:52:00] taxis next year and sell our cars. So y- you think of most of it, and it does take time. And companies… And I was looking at BlackBerry the other day, and while Apple crushed them in 2007, the best years of BlackBerry and the best years for stockholders was 2008, 2009, 2010, 2011.

The four years after the iPhone, they were on a rocket ship which was pre-booked prior to that iPhone moment. They hit a cap, and then they almost dropped to zero, within a few years. So most companies it doesn’t take months or days ’cause of just the inertia of the world. But I think that 10 to 20 years still sticks.

It’s just we may be in… Companies might be growing for the next three or four years that are dead men walking. As an investor as somebody watching this industry, there’s things happening today that may not show up, till 2030. But at that point, it’s too late. That Kodak moment of inventing the thing that killed you or the [00:53:00] Xerox moment might have happened back here in 2026 or 2027.

And I always, talk about demographics. I talk about the changing world, talking about these inflection points, and that’s why you can’t miss and catch up to a lot of them ’cause they’ve already happened. And the best managers in the world and the best Harvard MBAs, i- if you walk in a day too late, the inertia is already there.

Rich: I said before and I stand by it now y- if you are not following Jay on LinkedIn, you need to be doing that because as 2027 unfolds, and it sounds like it could be a pivotal year, he’s gonna be documenting what he’s seeing day by day, week by week. I’m directing people to your LinkedIn, but where else should they go to get in touch with you, Jay?

Jay: Yeah, absolutely. You can get in touch with me directly. One of my personal rules is I never say no. I’ve got a Calendly link that I pretty, liberally share. If you wanna have a 25-minute conversation like this, I’m … I can fit it somewhere on my calendar if I’m not somewhere in the world.

But, the best part of my life is just, waking up and talking to a startup and then, [00:54:00] talking to a multi-trillion dollar entrepreneur, and then going back and talking to a startup, ’cause everybody has a role to play. And you can be the child one moment and the parent the next.

The thing about partnerships is everybody plays a role, everybody’s there, and then while we celebrate, the big winners, the great thing about the channel, the great thing about partnerships, is it takes the village. And I know the three of us live in this village, and all, all three of us live to, raise all boats in this village.

So yeah, reach out to me on LinkedIn or Facebook or the Pri- X or any other platform. I’m everywhere. And if it’s worthwhile to have 25 minutes on how these trends, work with what you’re thinking about or the company you’re creating or the company that you’re running today, happy to have the conversation.

Rich: And tell him MSP Chat sent you, folks when you make that appointment.

Jay: Get a 10% referral fee for-

Rich: Yeah. Oh,

Jay: perfect … in the true partnership fashion. 0% …

Rich: 10% of zero is, is- Exactly what we’ve [00:55:00] earned. Yes. That’s right. Magnificent. Jay, I really do know how busy these shows are for you, so thank you very much for taking some time out and joining us.

Interesting conversation as always, and we will have you back on this show.

Jay: All right. Looking forward to it.

Rich: So for now, folks Erick and I are gonna take a break. When we come back on the other side, we’re gonna share some parting thoughts about this conversation here at the MSP Summit with Jay McBain from Omdia.

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

And welcome back to part three of this episode of the MSP Chat Podcast. Thank you again to Jay McBain for taking some time out to join us here on the show and share his always stimulating thoughts with us. It’s funny the way these things can work out, Erick. A- as it happens, I’ve done a, a, a bunch of interviews today.

This one with Jay that you just saw or heard was the last of those, and it is funny how several of the things that Jay said echoed with, rhymed [00:56:00] with stuff that I was hearing from people before. So he was kinda talking about how MSPs kinda sorta missed the SaaS wave. Earlier today, I was interviewing Jeff Totten one of the co-founders of Evergreen which is one of the biggest MSP platforms in the industry.

160-plus MSPs right now. And he made the exact same point, basically, and and was kinda saying that that out of awareness of that and how dangerous it can be to miss a wave of that magnitude, all 160-plus MSPs within the Evergreen portfolio must be doing something. Doesn’t have to be sophisticated, but they must be doing something in AI with all of their clients now so that Evergreen doesn’t miss the AI wave.

They don’t wanna kinda see that happen to their MSPs. Another thing that Jeff was talking a- about … Or, excuse me I did another interview with a gentleman from a company called Abacus, which is a pretty good-sized MSP platform as well. Their whole strategy is built around vertical [00:57:00] industries, and now they’re investing particularly heavily in vertical AI.

And, Jay was kinda talking about the f- the flower shop equivalence of PSA products and so on. And it was a great sort of illustration of how you can find sorta blue ocean opportunities as an MSP in vertical industries, and verticals within verticals basically.

And that can be a great way to get started in AI without having to compete with every other MSP in the business. And in the process increase your valuation, your attractiveness to acquirers because in addition to AI expertise, you have vertical industry expertise. And then l- last but not least, w- you and I were both meeting with Rob Ray of Pax8 before, and I told you Evergreen now wants every MSP doing something AI with every client.

Rob’s been polling MSPs about this, and only about 20% of the MSPs he’s talking to are ha- have, adopting that kind of rigorous [00:58:00] rule about doing something in all of their cl- accounts right now which means that there are a lot of folks out there who are in danger of missing the AI wave.

Interesting echoes and notes and consistencies across our conversation with Jay and others I’ve had today.

Erick: I’m not surprised that Jay has all of this data at his fingertips because I’ll tell you what, AI’s got nothing on Jay. Yeah. Jay, Jay is gathering all of this data, reporting back, talking to the same folks we’re talking to, hearing the same types of things.

I think I really liked what you called out about his idea that, hey, every vertical market has its version of PSA, and maybe there’s eight or nine, s- options for each one. Coming in and saying, “Oh we’re gonna be kind of the AI provider for this niche of a niche,” and then just building that out and, growing it from…

what’s what really again strikes me about the opportunity with [00:59:00] AI, Rich, is, you can start with just one deliverable, and it could just be a little bit of a, an assessment. It could be some data normalization, some tagging. And then creating some workflows, and then move into agents, and moving into a different business unit and doing the same thing, and then expanding it and creating digital twins for people.

It’s an endless opportunity that doesn’t exist with any other single solution that I can think of that an MSP can introduce into a business. Think about it. You’re gonna deliver a firewall. Okay you know what? You replace it every five, four or five years, and that’s pretty much it.

You patch it, you update it, sell a warranty to it. But there’s no, there’s a limit to what you can do with that thing, and you have to find something else to layer on top of your bundles. But with AI, it’s kinda like you can create your own journey. It’s… Remember those books we used to read as kids where you can pick your own ending?

Rich: [01:00:00] Yeah.

Erick: It’s very interesting.

Rich: And last note, Jay made it pretty clear 2027 could be a pivotal year for vendors, MSPs, e- everybody around AI. So one more reason, folks, circling back to Erick’s tip of the week, make yourself customer zero if you haven’t already. And folks, that leaves us with time for just one last thing, and it comes to you from Gotham City.

No, excuse me, it comes to you from Norwich in the UK, where an evildoer made a big mistake. He grabbed a woman’s handbag and went running only to be tracked down by none other than Batman. That’s right. Now it wasn’t actually Batman. It was Sonny Mason, 25 years old, dressed as Batman, on his way to a, a costume party.

And he went after the the handbag thief there, joined, I should say by Mr. Fantastic from the Fantastic Four, and Poison Ivy, also from the, the Batman franchise. So three superheroes went after this thief, who I guess [01:01:00] panicked at some point and tossed the handbag. It was later recovered, returned to its owner.

And actually, the superheroes did not tackle and apprehend the thief, but they flagged down some cops, who was arrested and taken away. And peace and law and order have been restored to Gotham City once more, Erick.

Erick: Wow, Rich, that’s probably the only time I’ve ever heard of the DC Universe and the Marvel Universe teaming up to fight crime together.

So you heard it here first, folks.

Rich: And I’m, I’ll bet you anything, that the attorneys are working it out behind the scenes right now. And best of luck to them. Folks that is all we’ve got for you, coming live from the MSP Summit in Orlando. We thank so… thank you so much for joining us. Erick and I are gonna be back in a week’s time, coming to you live from another event.

Tune in to find out which event we’re talking about. In the meantime, I will remind you as I always do, this is both a video and an audio podcast, which means that if you are listening to us right now but would like to check us out on video, go to YouTube, look up MSP Chat. If you’re watching us [01:02:00] on YouTube but you like to listen to podcasts, go to Spotify, Google, Apple, wherever you listen to podcasts.

You’re gonna find us there, too. And wherever you find us, please subscribe, rate, review. It really help will help other people find the show and enjoy it 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 more about the many ways that we do that on 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. All the details you need are located on their website at www.mspmastered.com.

Once again, we thank you for joining us. We’ll see you in a week. Until then, we will simply remind you as we always do, you can’t spell channel without [01:03:00] MSP