696 Rob Rae on the Future of MSPs: Community, Marketplaces, and Growth

[Uncle Marv]
Hello friends, Uncle Marv here with another episode of the IT Business Podcast powered by NetAlly. And we are still live in Boston at the Ask the Edge event. And I've got another person here visiting me at the booth, the godfather of the channel, Mr. Rob Rae from Pax 8. Rob, how are you?

[Rob Rae]
I'm wonderful. How are you doing, Marv?

[Uncle Marv]
I'm doing good. So actually, it's been a while since I've seen you. I'm getting used to seeing you almost once a month at least.

We last saw each other at your event, Pax 8 in Denver. So didn't get a chance to follow up with that. How was life after that?

[Rob Rae]
Non-stop. Yeah. One of the things about our industry, as you know, is that every week there's a new industry event somewhere.

So if we haven't seen each other, it's because you haven't been out. Or maybe we're just not hitting the same events.

[Uncle Marv]
We're not hitting the same events. There's way too many events. Way too many events.

Way too many events. So I know that Pax 8, I mean, bigger than last year, which I didn't think was possible. Really?

[Rob Rae]
Well, I've got big, big aspirations.

[Uncle Marv]
Because the room was full last year. And it was, I guess, more full this year. You took away the press table, so that whole side was all now filled with attendees.

And so many people that the dance floor was shaking.

[Rob Rae]
It was a little unnerving until you find out that it was actually engineered that way. But I always, when I'm in situations like that, you always take a look at the staff, the people that actually work there day in and day out. And they weren't panicking.

They were holding on to the bottles to make sure they weren't going to fall over. But they definitely weren't panicking.

[Uncle Marv]
It was interesting. It was interesting. And of course, I had to think, this has to be on purpose.

So probably should tell people, expect a little give and take with the floor.

[Rob Rae]
Well, a couple of things. I mean, A, you don't expect people to be dancing at an MSP conference or getting that excited and jumping up and down. And then B, I didn't even know that that was a thing until we had that many people in the room.

[Uncle Marv]
It's funny. Were we in the same room last year?

[Rob Rae]
Yes. Yeah.

[Uncle Marv]
Because it didn't shake last year.

[Rob Rae]
It didn't. But we had twice as many people.

[Uncle Marv]
Yeah. Okay. That makes sense.

Yeah. All right. So you're here this year at the ASCII Edge and you're speaking.

So how'd they get you to come to a tiny little event like this?

[Rob Rae]
Actually, I mean, because there's a couple of different events, like our friends over at LionGuard are doing their conference over in Dallas. I was at Exchange Security last week in Dallas as well. But I was actually heading home and got caught in Dallas through that.

[Uncle Marv]
On the way?

[Rob Rae]
On the way. Got caught in Dallas with the little update that went wrong. So I was stuck in Dallas for a few extra days and couldn't get a flight back to New York and ended up here in Boston.

So just tack on. If there's an event here in Boston, might as well tack it on. But to be honest, I love this community, the ASCII community.

Actually, we're reminiscing today. I remember it was about, it has to have been about 20 years ago, where we, the vendor I was with, we were sponsoring this event and it was not going well. We were not generating any leads.

We weren't getting any. And we had one guy that was in charge of it. And I pulled the plug.

And I got a call from Jean Alexander, if you remember Jean Alexander, God rest her soul. She called me up and said, you can't cancel, come to this event. And I gave him, went and gave her an earful about how we weren't making any money.

We weren't generating any leads. And she goes, that's because you're doing it all wrong. And basically schooled me on how to do it properly.

And the very next event, she said, I'm going to give it to you for free. Come to this event, do this event. And lo and behold, we generated a ton of leads, got a ton of interest.

And she was absolutely spot on. And ever since then, I've been kind of coming back. But I mean, in my mind, if I hadn't had that experience with ASCII 20 years ago, I probably wouldn't have at least learned that quickly on how to go and do these types of events.

[Uncle Marv]
Now, that is interesting because everybody knows you now as the person, if you want something to happen, robberies, the man. But you're telling of a time when that wasn't the case. I mean, how?

I've got so many questions. I mean, can you share what the one thing was that, you know, made it click for you?

[Rob Rae]
So there was a lot. There was a lot going on. First of all, I mean, this is an association.

This is a group, right? You got to you got to look at this as kind of like almost like a hive mentality, like the board kind of thing. Like people talk to each other in this community.

They talk to each other about vendors. They talk to each other about people. If you are going to make a buying decision as an MSP, you're going to ask three of your friends before you go and make that decision.

It's not just do the demo and sign up. You're going to go to Reddit. You're going to go to Facebook.

You're going to talk to other MSPs. You're going to come to an event like this. So treating it like that, which means that your reputation, not only your reputation as a business, but also your reputation as an individual is absolutely critical because you steer one person wrong once.

That could potentially ruin, you know, the relationship that you have with the entire industry. So it's just like little learnings like that over the course of time that you start approaching this as a community. And, you know, in all fairness, like I have community in my title today.

I had community in my title in my in my last job. I don't know many industries that have people that are focused on the community or and if you take a look across all the vendors now, pretty much every vendor has a community manager or a channel chief of some type because it is such an essential part of everything that we do. And again, it just goes back to that.

You know, you can't just come to one event, meet one person, generate one lead. It is a it's a whole program that you have to do for the entire community and even more so. It's not even just limited to the United States or North America.

It's becoming a worldwide thing because, you know, we have MSPs from all over the world that communicate with each other on a daily basis.

[Uncle Marv]
So the term community, you mentioned it, that now other vendors have that in there. But that wasn't the case, I'm going to say, even three years ago, because the word community seemed to really didn't take off until last year.

[Rob Rae]
Yeah.

[Uncle Marv]
And I don't know if there was something that clicked for all of the vendors, you know, the buzzwords or something just kind of clicked in. But it really seems that vendors have started to understand that. I don't want to say that there are previous approaches have been wrong, but I think MSPs have started to step up and say, hey, look, we want to be more partners with you.

Don't just sell us.

[Rob Rae]
Right. Right. It's it is it's all about relationships.

Right. Yeah. You know, I've always taken great pride in the fact that I'm a salesperson.

I started my career in sales mostly because I wasn't smart enough to do anything else with life. And sales just happens to be a place that you can go with little education, make a lot of money if you're good at it. But, you know, a lot of people think sales is a dirty word.

Right. I don't want to be classified as a salesperson because then you start thinking about the used sales, the used car salesperson, those kinds of things. You know, so I took the approach and have it's about relationship building.

Right. People like to do business with people they like and everybody does or consume some product that is out there, not because it's the cheapest, not because it's the best. It's because of the relationships you develop with people.

And there's a lot of forgiveness when that when that happens, especially when you're building out a community such as the community term, I think has been around a little bit longer. However, not necessarily as defined as it is today.

[Uncle Marv]
So let me ask this, I somebody took my schedule that I had, I don't know what the topic of your session is today, but what are you going to be speaking about?

[Rob Rae]
I spoke about the marketplace.

[Uncle Marv]
Right. OK.

[Rob Rae]
And it's not just the marketplace. Obviously, it's investing a lot into the technology behind an A.I. and behind the marketplace and the power and things that it can do. It's basically leveraging a lot of data that we have in order to help MSPs grow their businesses.

Right. On top of that, though, it's also why are we in this situation today is a lot of what I've been talking about everywhere. Why are the buying the ways in which we consume things changing?

And it's not just the way SMBIT is being consumed. It's pretty much every aspect of our life. And I talk about, you know, the two particular angles as to why this is happening.

Number one is the pandemic. I mean, it forced all of us to find new ways to consume things. You couldn't just go to the store anymore.

Right. Right. You had to find other ways to do it.

And guess what? We all found convenience. We all found, you know, sharing knowledge, being able to do research on things that you normally wouldn't care to do research on.

But now it's all there at your fingertips because the pandemic forced us into that situation. We got more comfortable with it. I know I use the example where I have this beat up old Dodge Ram that my kids, all my kids, I have four daughters, learned how to drive on.

So this thing is really beat up, as you can imagine, teaching four kids to drive. And it's got to the point where it's just it's just not worth like fixing anymore. So but I need a family vehicle for when the kids come home and they have something to drive because they're definitely not going to drive my cars.

So I use Carvana and bought a car. I sold my truck and I bought a car sight unseen. Right.

Other than pictures on the Web, didn't have any human interaction whatsoever between the bank, between the insurance company, between the DMV. It was the only person I ran into was the guy that dropped off the vehicle and picked mine up. That's the only interaction, human interaction that I had.

Now, I'm not suggesting that, you know, that's necessarily a pleasant thing, especially for people of our age. However, it is the way everything is going. And that leads to the second reason all this is happening.

And it's the next generation. It's our kids generation. It's the Gen Zer’s.

They grew up with, I mean, if you think about it, like a lot of their development years happened during the pandemic. So they for them, this is like completely normal. Right.

And their comfort with technology as well. Like if you take a look, you know, you give a baby an iPad, they can figure it out pretty damn fast. So, you know, the comfort with technology, the want and desire to not engage with human beings or salespeople, the belief that they need to be able to do and have their own research like they're making buying decisions and bypassing even vendors and MSPs out of this process.

So, you know, we need a place to be able to bring all this back together so that the MSP can continue to keep everybody safe and continue to stay involved in everything SMB IT sales.

[Uncle Marv]
So everything you just mentioned, and if we throw in Amazon, we throw in Uber, we throw in a lot of these new platforms where I would think that people can buy 95 percent of what they want through an app on their phone. And it's almost as if they're expecting the same out of their IT.

[Rob Rae]
Heading in that direction, I would like to think that there's still enough weariness or, you know, is this the right solution? Is this the right product that and still not enough knowledge around IT that, you know, I think we have some time. However, it is heading in that direction.

[Uncle Marv]
Well, I mean, there still has to be somebody that comes on site, understands the network, understands what you're doing as a business. How can we make employees more effective? Some of that stuff you can't do.

No remote. You can't do an app, which is one of the reasons why. And I have this argument all the time with other MSPs, why I still I work on a local presence.

[Rob Rae]
Yes.

[Uncle Marv]
I go see my customers. And but they're the type of customers that that's what they want.

[Rob Rae]
But it's a different it's a different relationship when you are in the buying stage versus. All right. I've made my decision.

I like you. You're trusted. I'm going to let you come in and we're going to have a relationship.

It's different when they are. They don't know you. Right.

And think about it as an MSP. Okay. You're not happy with your backup solution.

What do you do? You do a little bit of research. But prior, you would do maybe a little bit of research on your own, maybe talk to some buddies.

And then you would call five different backup companies. Now you're on their call lists. Now you have to sit through five demos.

Now you have to figure out what you like. Don't like pricing, all those types of things. Whereas those things kind of have been accelerated to the point now with again, with all the information that's available out there that you can actually take a look at these things, make buying decisions without even talking to them.

Oh, yeah. However, once you become or once you've purchased from that vendor, you will take that account manager's call to see what else is going on. What else can they do?

That relationship build. So it's more of the early part of the buyer's journey that I think is being influenced quite heavily right now. But the MSP at the end of the day, going exactly back to what you said, the biggest value that we have is that community reach.

And there's some data that actually backs this up. So I'm actually just in kind of thoughts here. I see my role at Pax8 because we are a marketplace.

We work with both vendors as well as MSPs. My job isn't just to get more MSPs to buy more stuff from the marketplace. I also see my job as working with our vendors to push more business through the MSP market.

So how do I do that? I've got to go and continually convince the vendors as to why the MSP route to market is the proper route. So I'll give you a number.

If a SMB end user, end user goes and buys technology directly from a vendor, the lifetime value of that is only three years because there is no relationship touch, because there is no ongoing account management. There isn't the face to face, eye to eye, handshake type situation.

[Uncle Marv]
They're looking at it as a commodity. Correct.

[Rob Rae]
Correct. And that's why it churns out after three years, because there's no real management of that. If that same end user buys that same technology, but through an MSP, because of the reach of the MSP, the relationships, those kinds of things, that lifetime value of that contract is actually 15 years.

So if I'm going to vendors and saying, yes, you might lose a little bit of margin. Yes, you've got to build a partner program. Yes, you've got to work with the MSPs instead of directly with the end users.

However, at the end of the day, you're going to make way more money doing it. So, you know, I also see myself and my team as advocates for the channel going out there and making sure that vendors understand the lifetime value of these relationships.

[Uncle Marv]
Well, it's a lifetime value, which is how I try to look at my clients. But it's also the friction where if you can get more value with less friction, it makes life so much easier.

[Rob Rae]
Absolutely.

[Uncle Marv]
You're not chasing that. You're not running around chasing and putting out fires. You know, you've got a good working relationship.

And if it's all good with the MSP, MSP is going to sell the hell out of it.

[Rob Rae]
Yeah, absolutely. And they're going to, it's a way overused term, but that trusted advisor piece, that trusted advisor title where, you know, next time they do need to buy something, they're just going to call you. They're not necessarily going to go to the web and do their own research, you know.

So you get yourself into that spot. More and more, though, right, more and more companies are outsourcing IT, more and more companies, and we've seen the shift as well into co-manage. So more and more companies are also understanding the value of an MSP being involved in IT and the decision making and the vetting, especially as, you know, more and more hackers, ransomware, all that type of stuff continues to grow.

So, you know, that opportunity still continues to be massive. And I think we're just scratching the surface. I think there's going to be way more business.

We made a prediction this year at Beyond, you know, I used to get really excited when I ran into like a five million dollar MSP. You know, for me, I have regular calls to three hundred million dollar MSPs. We made a bold prediction that we will more than likely see our first billion dollar MSP probably within the next year.

Imagine that.

[Uncle Marv]
I'm thinking in my head who those might be, because I know a couple of large MSPs. So it's probably going to be somebody we don't know right now.

[Rob Rae]
You know, there's a lot of private equity companies that are investing in the MSP space. And there's a lot of very good organizations that are growing very, very quickly in the MSP space under a single brand. The good news is, is that there's still a ton of business.

[Uncle Marv]
You could say it.

[Rob Rae]
I'm not going to say it. There's still a ton of business out there that there's still enough. Like, so for me, I get, you know, I've been going around shaking hands and kissing babies for twenty five years.

And I always ask the question, how's business? One of the first questions I always ask, how's business? And it's been a long time since I ran into an MSP that's struggling.

You know, we all have our things, but like financially, everybody's up and to the right.

[Uncle Marv]
The struggle is. The pumpkin plant approach where we've got great clients, we're trying to get more of those and less of the pitas, you know, that's where we are and that's where I am.

[Rob Rae]
And it's a good time. I don't think it's an MSP specific problem, though. I'll give you a perfect example.

My wife started an interior design business and she's now been doing it for about five years. She's making some really good money. She's growing her clients.

She's got some recurring revenue. She has four employees. She struggles.

So, you know, the conversations I have with her about managing a business as an entrepreneur are exactly the same conversation.

[Uncle Marv]
Yeah.

[Rob Rae]
And she read the pumpkin plant, too. So, you know, it's I think it's pretty relevant. But again, that's, you know, that's the SMB world.

[Uncle Marv]
It is. It is very nice. So, Rob, you're here.

I don't want to say by accident because of the flights and everything. But will you be attending any of the other events for ASCII, specifically the ASCII Cup in St. Petersburg?

[Rob Rae]
Yes, my goal. And it's in my schedule right now. I'll be in Toronto for the ASCII event up there.

I think that's next month in St. Louis the month after that. And then, you know, the goal is to be down in St. Petersburg. I think that's in October.

[Uncle Marv]
Are you going to dress up for the Cup?

[Rob Rae]
No, I don't dress up. And I don't dress up. You know, actually, this is it's interesting because I see vendors do this all the time.

You know, they get caught up into the costumes and all that type of stuff. I don't understand it. We're also businesspeople.

We're still making business decisions. And I'll reference an old competitor of mine who at a Robin Robbins event, the theme was the Wizard of Oz. So all the employees of this vendor are all dressed up like Wizard of Oz characters.

So, A, I turn to my staff and I always say, you're welcome because I'm not making them do things like that. But B, you know, I'm having a conversation with a friend of mine who's a really good sales rep that works for this company. And he is dressed like the Cowardly Lion.

And I'm looking at him and I'm going, dude, how is anybody going to do a lift and shift of backup technology to you with the Cowardly Lion?

[Uncle Marv]
So here's my perception of this, because the vendors are looking at the younger generation. For some reason, there is this I don't even know what the right word is. I was going to say ad nauseum effect of looking back.

They're getting caught up in, you know, looking different, being different and trying to make a splash. And it's all about, look, is that how you're going to go and approach regular businesses? Who was it, Sean and Dave, this morning in their presentation?

You know, the reason that they wear suits is because one of the attorneys looked at them and said, if you're trying to sell me stuff, why are you dressed up like a tech? I mean, you've got to be what your client is.

[Rob Rae]
Yeah. We learned that a long time ago, right? You always dress to what your clients are looking at you or how they kind of approach it as well.

Yes, it's always kind of in the way. I know it's an attention grabber, but in my mind, I'm not going to do business with a clown. I'd rather sit there and have, especially when it comes to tens of thousands or hundreds of thousands of dollars.

And, you know, you're putting your clients' necks on the line to buy from a Cowardly Lion. It just doesn't make any sense. And I think, yeah, we as vendors get a little lost in that stuff sometimes.

And it's a sideshow. But at the end of the day, we're still businesspeople.

[Uncle Marv]
We are. So the comments and expressions and personal opinions of Rob Rae do not reflect those of the IT Business Podcast.

[Rob Rae]
Did I say something wrong?

[Uncle Marv]
I just want to make sure because I'm in my head. I just started thinking, OK, I know like three vendors that dress up that have been on the show. I know some friends of another group that dress up a lot, and I don't want to discourage them from dressing up if that's what they want to do.

[Rob Rae]
Hey, you know what? To each his own. I just I found that if for me, I'd rather have a more effective conversation with you that way.

It's not to say that we can't have fun, you know, but that's it's just not it's just not my jam.

[Uncle Marv]
Goodbye, Karen. Yes, folks, we are live. People walking by and.

[Rob Rae]
I can't say what they're intentionally trying to distract us in interesting ways.

[Uncle Marv]
All right. So you're going to be at the remaining ASCII event and you've got another big PACS 8 event across the pond, sort of.

[Rob Rae]
Yeah, we do. So, you know, beyond 2023, it was our first user conference in Denver, Colorado. We did it again in twenty four at fifteen hundred MSPs in Colorado.

About twenty two, twenty three hundred people in total, including yourself.

[Uncle Marv]
Yeah.

[Rob Rae]
And, you know, our European business is growing very, very quickly. So it makes sense to bring it to Europe. So we're doing beyond Berlin in October.

We'll have the goal is to have five hundred MSPs there. I'm already close to selling out. We still have a few more months to go.

So probably six or seven hundred MSPs, maybe about a thousand people in total. And yeah, we're excited to take it into Europe and then beyond that.

[Uncle Marv]
All right. I already know some MSPs I spoke with here that are making the journey over flying over. Have you gotten a lot of feedback from those that are going to go over?

I'm assuming they're doing it to turn it into a personal vacation as well.

[Rob Rae]
I would assume so. I mean, I would think that that, you know, the opportunity to go to Germany, for example, or even over to Europe, you know, we don't get many opportunities like that if you can make it a business expense at the same time to go and learn something. Why not?

So but yeah, I do. We have probably about a hundred Canadians, Americans, Aussies that are all registered for it. So that's a good opportunity to get out and do something a little bit different, you know, rather than going to Newton, Massachusetts.

Berlin sounds way more interesting.

[Uncle Marv]
Again, the opinions and comments expressed in the show.

[Rob Rae]
He told me to say that. Absolutely.

[Uncle Marv]
So, yeah, I mean, I've got a conflict or I would consider going to Berlin. I did live there, but I was way, way young. My dad was in the Air Force and stationed in Berlin.

So it would be nice to go back and visit. My mom tells me all the time I should go back.

[Rob Rae]
But it's a beautiful city, tons of tons of history. I mean, obviously, you know, we're all familiar with that. But I mean, beyond that, the history there that in that part of the world, the people are just fantastic.

The food, I just love German food, period. But yes, it's a phenomenal experience. And, you know, I try to when we do these events, I try to bring people to places that they wouldn't necessarily go to.

It's not number one on your bucket list kind of thing so that you get an opportunity to experience things that you might not otherwise and get to do it from a work perspective, but also have some fun at the same time.

[Uncle Marv]
Does that mean that next year beyond won't be in Denver?

[Rob Rae]
So we actually get, you know, having this conversation because, again, I mean, Denver is a wonderful city, the facility that we do it in the Gaylord there. I mean, there's no reason to leave the property like everything is there. And, you know, Denver's a great city.

Airport's not so great, but it's an easy place.

[Uncle Marv]
There's a Gaylord in Orlando.

[Rob Rae]
There is a Gaylord in Orlando, but there's too many events already in Orlando. Remember, I'm trying to find experiences. So I will share with you that our plan is to move it because I think that, you know, the conference experience needs to be a little bit more than just the content that you're getting from it.

You could get that online if you're really motivated to do it. There has to be many, many different other aspects to it as well. So, yes, we will be moving it around.

[Uncle Marv]
All right. I will be anticipating that news to see how far I have to fly.

[Rob Rae]
We will be announcing that at Beyond 25 in Denver. And then where we're going to do Beyond 26. Ah, gotcha.

Yes. OK. Yes.

[Uncle Marv]
All right. We'll talk then. Awesome.

All righty, sir. Thank you for stopping by. Always a pleasure.

And I love talking to you. I love chatting with you. And I'll see you out on the road.

[Rob Rae]
Thank you.

[Uncle Marv]
All right. There you have it, folks. Rob Rae, Pax 8, godfather of the channel.

Now, we'll see you soon. Holla.