Episode 155 includes:
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00:00 How to shape your business with your future lifestyle
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07:39 Why you should charge an 'idiot tax'
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12:45 The right mindset to grow your MSP
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27:57 A great book recommendation about breaking through the ceiling to the next level
Featured guest:
Thank you to Chuck Canton from Sourcepass for joining Paul to discuss the right mindset to grow your MSP.
Chuck is a seasoned and dynamic technology executive with more than a decade of experience at hyper-growth companies, with experience in launching and growing startups, securing growth funding, acquisitions, and sales. Chuck attributes his past successes to two key areas of focus: building healthy and collaborative company cultures and always listening to his customers.
Connect with Chuck on LinkedIn:
https://www.linkedin.com/in/chuck-canton-a0152a13
Extra show notes:
Episode transcription
Voiceover:
Fresh every Tuesday. For MSPs around the world. This is Paul Green's MSP Marketing podcast.
Paul Green:
Hello and welcome to episode 155. Here's what we got coming up for you this week.
Chuck Canton:
Hi, I'm Chuck Canton, CEO of Sourcepass. Super excited to join Paul's podcast to share our journey that we're embarking on to build a billion dollar MSP and some of the ingredients we're infusing into that mission to accomplish.
Paul Green:
That's Chuck Canton from Sourcepass. Now, he's the kind of entrepreneurial big thinker that I love to get on this show. And later on we'll be talking about the kind of mindset that you need to succeed in business.
I'm also going to ask you about your clients. Do you have a client who very often acts like an idiot? If you do, let's ask the big question today of whether or not you should be charging them an idiot tax.
Voiceover:
Paul Green's MSP Marketing podcast.
Paul Green:
Your MSP exists to fund your future lifestyle. What a very strange thing for me to say. Let me go back a step and explain that a little bit. When you first started your business, do you remember back then that you had a passion, a fire, a flame that was deep within you and regardless of where you worked and how much you earned, you knew you had to do your own thing, you wanted to be your own person and it was partly about increasing your earning capacity. It was really more about getting control. That's why most of us start a business in the first place. We want to be the crazy person in control. So you start your business and initially it's wonderful because you've got control and then you start to bring onboard staff and you lose control and you have to systemize and you get caught.
I think everyone gets caught in two to three years of quite difficult work where you're almost clashing because you want to do things this way but you can't because you're too busy and you're reliant on your staff and a lot of people get stuck in that actually for decades. But, eventually, you will come out of that and the business starts making really good money. And when the business starts making good money, you can start to spend some of that money on even more staff and resources so you, personally, are doing less and less and less of the work.
And that's the point I think at which your MSP starts to need to, not just fund what you are doing today, but to start to fund your future lifestyle. Because, yes, whether we start the business because of a flame or a passion, regardless of why we start it, we all need to pay our mortgages. We've all got bills and children and holidays and all of that stuff that we need to pay for. And that's initially, certainly in those first few years, that's what the business is there to do. But once you start making good money and you start being able to replace yourself, I mean properly replace yourself in the business, that's the point at which you've got a really good lifestyle, a good work life balance in the business where you're choosing to do the work that you want to do.
Now is the point where there's excess money. That's the point at which you need to start to think about the future, because I don't know about you, but I'm not getting any older. I'm 48 as I record this, and swear I was about 45 or 46 when I started this podcast. In fact, I was. I was 45 when I started this podcast in November, 2019. How did I suddenly become 48? How come when I look in the mirror in the mornings, an older, grayer, tired version of myself is looking back at me?
So it's about now that I'm starting to think about the future and I'm starting to think, "Well, when will I stop this?" I mean, at the moment I can't imagine stopping, but I'm pretty sure that somewhere in my 60s or maybe early 70s, I won't want to do exactly the same things at the same pace. Maybe I want to do ... Well, I know exactly what I want to do. I want to do more scuba diving and hang out in cool hot countries. Hang on, there's a bit of a clash there, isn't there? Hot countries that are cool to hang out in. And I want to drink coffee in harbor cafes and hang out with cool people and that's what I want to be doing more of and perhaps less standing in my house doing a podcast. Don't get me wrong, I enjoy this but I can't see that I'll be enjoying it so much in my 70s.
So as I'm starting to think that way now I've got to make sure that my current business is feeding that future lifestyle because that future lifestyle, I want the option of not having to work. Now, that's actually my idea of hell: not having to work, but that's what 48 year old Paul says. Go ask 71 year old Paul if he wants to work and he would rather have the choice of whether to work or not. Therefore, today I've got to make sure that the excess money that the business is generating is funded into my future lifestyle and perhaps this is the time for you to do exactly the same thing.
So we've got the basics, things like your pension. Now, I don't know what your pensions are like wherever you live, but certainly here in the UK, pensions have undergone a bit of a revolution in the last 10 years or so. So back in the day when it was my granddad, he's pension ... He died at 70 ... I think it was about 73, so he, basically, didn't get to take much of his pension. He spent, literally, 45 years of his life paying into a pension pot and wasn't able to take much of it. So my gran, who survived him by nearly 20 years, she had some of that pension, but did they get back the money they paid in? I don't know. But that was how pensions used to be, certainly here in the UK.
And now a pension is just a very effective tax rapper. So you can save up to a million pounds in your pension here in the UK and you can take all of that out at your retirement age and go and blow it on Las Vegas if you want to and Mustangs and stuff like that or you can invest it. In fact, you can invest it along the way into commercial property. There's just many sexy things you can do with a pension these days. I never thought I'd be describing pensions as sexy, but they are because they're just efficient tax rappers. And maybe there's similar things where you live.
But there's more than just pensions, isn't there? There's investments, there's property, and certainly now I've covered my bills. My bills are covered for my day to day living. And now with any excess cash in the business, I'm thinking about how do I give 71/72 year old Paul more options? What's another investment I can do today? Is there another rental property that I can buy today which will be generating an income, essentially an income generating asset? Can I put that together today because that gives me more options in the future?
And I want you to be thinking about your business this way. If you're still at the startup stage or you're still at the stage where you're desperately trying to get the business just to meet your bills, then park this one for a couple of years. Come back to this one in a few years time. But if you are at that stage where your MSP is comfortably covering all of your bills and there is excess cash, now is a great time to think about how you can give yourself more options in the future. And that starts with going to talk to experts.
Here in the UK we have something called independent financial advisors. I have a great one of those called Graham. In fact, if you want an introduction to Graham, just drop me an email, hello, at paulgreensmspmarketing.com. I get no financial benefit of that other than looking after someone who is looking after me very well. So Graham just tells me about options, comes up with ideas and, of course, he makes money off investments that I make. Maybe there are financial advisors in your area that can do the same thing for you.
But the message is if you've got excess cash in the business, don't do anything frivolous with it. Think about your future and how you can give yourself more options so 72 year old you is looking back and thanking you for the clever and smart decisions that you made today.
Voiceover:
Here's this week's clever idea.
Paul Green:
Now here's a contentious question: Are any of your clients idiots? And you know what I mean by idiots? The kind of person that when their number comes up on the phone system, everyone in the office goes, "Ugh," and, in fact, the atmosphere just dies because no one wants to pick up the phone. They're a hassle client, they're an idiot, they're the kind of client that really you should fire. They're in the bottom 20% of your bottom 20% of clients. Do you have a client like this? So let their name come into your mind right now.
Right. I've previously said on this podcast that you should fire that client and I still stand by that. I genuinely think we don't have energy, we don't have the cognitive energy or just the life force energy to have to deal with idiot clients. But here's the thing: Sometimes their idiot is tolerable. So obviously the very, very worst clients, they've got to go. You've got to fire them, if only to protect your staff, to protect yourself so you'll sleep better at night. But someone who is just mid-level idiot, I don't think you should necessarily fire them, but I do think that they should be ... What's the word I'm looking for? They should be paying more money to you.
There is a concept and it's called idiot tax. It's not actually called that. It has a much ruder word, but this is a family podcast so I want your family to be able to listen to this podcast. They won't? Why would it be of interest to them? But you get the idea. No rude words here. So we won't call it what it is commonly known as. It's known as idiot tax on this podcast. If someone acts like an idiot with you on a regular basis, then they should pay more than your clients who don't act like idiots and this is done through idiot tax.
So how do you apply an idiot tax? Because idiots don't always reveal themselves before you've actually sold to them. So someone could come on board as a brand new client and you wouldn't know they were an idiot. Well, I think the first thing you can do is you can just put the prices up. So you can say to your idiot client, "Hey, this is what you're currently paying per user or per device, that's rising to this much from this date." And, in fact, you might put through a larger than normal price rise. In fact, you might even put through a price rise when you're not doing it for any other clients because you're just charging them more money for the hassle that they create. And if they choose to opt out and leave you, oh, well, it's not the end of the world, is it? Because, remember, they're within your idiot clientele.
So just putting up the price is something I think you can when you sell them something extra so when you do strategic reviews, you can do covert idiot taxes. Covert idiot taxes is where when you add on a new service or a new bundle, you just charge them more. So you might buy something and you might wholesale it at, I don't know, $3 per user per month and for everyone else you might retail that out at $6 or $9 per user per month. For your idiot clients, you retail that out at $20 per user per month. So you're just adding on extra margin. This is actually one of the ways of doing a covert price increase. You can apply this across other clients. You just need to be careful because it is a slightly underhanded thing to do.
I think the third way that you can charge an idiot tax is just to be out and out blunt with your clients and just tell them, "We're going to charge you more." You can say to them, "Look, of all of our clients, these are all of our clients, you take up this amount of our resource. So you're on the help desk creating or registering problems and chasing us on this many occasions. You take up this amount of resource and, we'll be honest, we charge you for this amount. So if you want to stay with us as a client and you're more than welcome to stay, we just need to charge you more because, essentially, we don't make any profit on you."
Is it a bad thing to tell a client that you don't make any profit on them? I don't think it is because we're all in business to make profit. That's what we were just talking about in the last bit. All of that extra profit is paying today's mortgage and it's paying for the future lifestyle. It's generally accepted in business that unless you work for not for profit, you're here to make profit. So I don't think it's a bad thing at all, depending on the way you say it and the words you use to say to your idiot client, "I've got to be honest. We don't make any profit on you so we need to charge you more." And that sparks a conversation about how you either need to reduce down the level of service or you need to charge them more.
They may leave. Again, I don't think this is a bad thing at all. I think when we've got an idiot client and we are not making money on them and we are not happy with them, charging them an idiot tax at least makes some of the hassle worthwhile.
Voiceover:
Paul pulls latent plug. Latent plug.
Paul Green:
I'll keep this message as simple as I can. Tell your friends, tell your mum if you want to improve your MSPs marketing, me and my team are here to help you. Go to mspmarketingedge.com.
Voiceover:
The big interview.
Chuck Canton:
Paul, thanks for having me here today. And hi everyone listening in on the podcast. Pleasure to be here. I'm Chuck Canton, the CEO of Sourcepass. We began our journey in December of 2020, that's embarked on elevating the IT services and security industry.
Paul Green:
And thank you so much for dropping in, Chuck. Now, I was having a chat with your PR team ahead of getting you onto the podcast and they sent me through your resume. That was a long email. You've done a load of very, very interesting things in your time. Without going into it in too much detail, give us an overview of your career and some of the more fun, the cool dinner party things that you've done?
Chuck Canton:
So, happy to do that. And I appreciate the kind words. Our PR team has done a good job. So I've been predominantly in the tech space my entire career. I pride myself in a lot of hands on multifunctional expertise, whether it's working in support, sales, project management, engineering. I've done the full gamut. My first entry in the space was a company called iCore Networks and I was there to see that company grow from its inception to about 200 employees, 72 million revenue, and it was, ultimately, sold to Vonage business. That is what we merged together and built out what is known as Vonage business today and was recently sold to Ericsson. That's also where, which we'll talk about shortly, I got the vision for what Sourcepass is today.
Paul Green:
So you've done a huge amount, and those MSPs watching this interview on YouTube, as opposed to just listening to the audio, will see that you look really young. So how old are you Chuck? So 24/25?
Chuck Canton:
I appreciate that. I'm 36. It's most indicative in my hairline if I tip over there. But my battle scars probably are that of someone who's been in the space for 30 or 40 years. At iCore and Vonage we did so much M&A and such hyper growth, we joke it was like dog years in that one year there, seven years' service anywhere else. But, yeah, no, I'm 36 years old but I have over 15 years of experience in the specific sector.
Paul Green:
But it's that's experience, it's those dog years, those hard won dog years that made me want to get you onto this podcast, because obviously the vast majority of people who listen to this are MSP owners. They're running their own business and that can be from ... I know we have listeners from one man bands up to tens of millions of dollars worth of turnover and we've got everything in between.
You talking about scale and by the very virtue of talking about scale, the drive and the leadership, that's what's most of interest to me. What's the thing that you think are the most important things in driving any business? Because you've been involved in multiple big projects that have moved at speed and you are still relatively young, says the 48 year old. What would you say are the most important things? Is it about having the right mindset? Is it about surrounding yourself with the right people? Is it the right business idea or is it all of these things?
Chuck Canton:
So I think it's definitely all the above, but there's some priorities to them. I think the most beneficial thing that's helped me and the teams around me along my journey is, first, surrounding yourself with the right people. Your reflection of your team as a leader, you've got to be super self-aware of your strengths and your weaknesses and build a team that complements your weaknesses and, at the same time, build and recruit a team that, from their interview, you believe is better than you could ever be on your greatest day because, ultimately, that makes your job easier and that's the right thing to do for the business. And so I've always been super mindful and spend a lot of time on recruiting and selecting the right folks, align them with their strengths and making sure that the leadership team is a very complementary nature.
The next thing is once you have that great team is clear focus on a mission. You have to have a mission, a vision at a very high level, 10,000 foot view, and be able to distill that down to every individual employee, whether it's your executive team, mid-level manager or frontline employees taking phone calls, they have to understand how [inaudible 00:16:57] they are to help accomplish that and their purpose and then that all translates to a super healthy culture. At Vonage, we went from ... When I started there, I think our valuation, our market cap was something like 300 million at that time. When I left, it was about a 3.5 billion valuation. And it would not have been possible without our team being so maniacally focused on integrating all these assets, building a portfolio of cloud services and voice services that was never out there, but also being super excited having a healthy culture.
And so one of the biggest things I say that made Vonage so successful is we had an awesome CEO with Alan Masarek and he just built such a great culture where everyone was super empathetic, everyone embraced servant leadership, but people enjoyed showing up every day and doing something new. And so I think culture and resiliency is so important because you're going to come across so many challenges, you want everyone to bounce back and just keep coming back and be focused on that mission.
Paul Green:
What's interesting is you've given us a whole bunch of big headline things there and I agree with all of the items you've mentioned. Would you argue it's ... Let's take something like culture. So you talked about how important a culture is, and I can see in an exciting startup, something like Vonage, it's an exciting moment. Everyone's going there knowing they're going to have to work really hard and there's going to be two to three years of really hard work to do something new that's never been done before and then there will be a landscape change in some way. And we see that a lot in Silicon Valley and other big startups.
Would you argue that it's easier to have that positive culture in that big business versus a smaller business, say, where you've got an owner-operator and two or three staff and there is no exciting three to five year plan, there's just, "Lets do a great job?" Is it fair to think that a smaller business could have that exciting culture that a bigger business could have?
Chuck Canton:
So I think that the only thing that separates the smaller businesses from the larger businesses is the willingness to take the risk and invest in those differentiated strategies and put it all out there in an attempt to propel the business forward and to elevate our clients' experiences. So I don't think it's necessarily easier for a smaller or a larger business. I think a growth business is where it's easier, but whether a large or small business, you have to be willing to challenge your team, take risks, be entrepreneurial. And I think the smaller business with these entrepreneurs, which, in this space, there's 45,000 or more IT service companies in the US, every one of these individuals at some point decided to embark on their own and start a business took a huge risk. They've been benefactors of a very great growing tech sector and a lot of them have woken up 20 years later and they have 10 to 20 million revenue streams.
But it gets to a point where you get so cautious about protecting that nest egg and that asset that you forget to take those risks like you did when you first started it. And I think you have to protect ... Perpetually think about not preserving the asset or growing and investing it at any size. I don't care if you're a billion dollar revenue stream or two, keep thinking about ways to challenge the business and propel it.
Paul Green:
Yes. That's almost mindset related regardless the size of the business, which is just fascinating.
So let's move on to Sourcepass. So what was the business that you left and what was the big idea that you had that made you want to create Sourcepass?
Chuck Canton:
When I was at Vonage, which was a great company, there's a charter from the board to single early focus on cloud communications, specifically voice services. So that was our charter. Do it very well, be specialized, dominate that sector, and that built some great customer outcomes and we helped a lot of businesses grow. What I noticed, because I was very client facing there in my role, was when we go into a client they'd be super happy at the voice services. We're doing unified communications, doing their contact center, but always translate into, "Okay. Great. You're helping with voice. I need help with security or I need help with network. I need help with cloud migration." But because it wasn't our charter, we couldn't help them so they were forced to work with multiple managed service providers, software providers, carriers, et cetera, and the client experience became difficult because there's just a lot of finger pointing, there's a web of confusion, the economics weren't that great.
And so although we started this business in December, 2020, the idea actually began in 2015 where I came up with the concept that, "I think we need to do a service provider that has a very broad portfolio. It's the best thing to give the customers a great experience. It has economic benefits to them. And, by the way, I think it's an underserved cohort where they still just don't seem super satisfied with the technology services that they're getting and that's distracting them."
And so that's why I came with the concept. The timing wasn't perfect. It was right before the pandemic, but I just said, "You've got to take risks and left Compass to start Sourcepass.
Paul Green:
Yeah, that makes sense. So in a second I'm going to ask you exactly what Sourcepass does and what the benefits are for MSPs.
Before I do, when you first got started with Sourcepass, you've come out of this stream of high energy dog years companies, you've lived a thousand lifetimes through growing these, what were some of the most important things for you from day one that you made sure that Sourcepass had?
Chuck Canton:
One, a very clear mission and vision, which I could talk about in a bit. Distilling that down to every individual, how to make sure that they can align with that mission and vision. Making sure everyone on our team embraces service based leadership and knows the leadership expectations we have of the business. We grew through M&A so the first year was building out the product strategy, raising the funds. We raised about 74 million in capital. But then also making sure that once we made that first acquisition we had a platform that we could sermonize and mobilize all of our employees around day one, which helped us tremendously. Just everyone pivoting from ... NST was our first acquisition and [inaudible 00:23:20] the platform for Sourcepass, we immediately were able to give that mission vision, those core values and that operating rhythm to work with and that was super helpful, one of the benefits to having that first year in 2021 to lay the framework for the business.
Paul Green:
Okay. So final question then, Chuck, what exactly is Sourcepass? What do you do and what's the benefit for MSPs?
Chuck Canton:
So we are an IT security and services provider. We have a charter that is somewhat similar to the 45,000 companies in the US doing it. What's a little different about our strategy and that separates us is we are trying to elevate and mobilize the industry. And so we don't believe in competition in this space. We call it co-opetition. We just want to elevate the experience that every MSP in this space can give to small businesses.
And so the way we're trying to do that is, one, we mobilize and merge or partner with MSPs that have some type of product benefit to our clients. So as a [inaudible 00:24:26] broad portfolio in the space, we have one that's specializes in network, one that's specializes in cloud, one specializes in service and then there's sub-microverticals within it. Some do municipalities and law enforcement, some do education, some do financial services.
And so we try to be broad with our capabilities but narrow with the focus with how we execute. And so, as a part of that, no IT service company is our competition because we want them to join us and see that with our capital position, our leadership expertise as operators and our technology, that I'll talk about a minute, that they can better serve their customers by joining us.
The next thing that we're focused on is making that experience significantly better and empowering our employees to be more strategic advisors. So we spent a lot of money on back office systems that leverage AI, robotic process automation, digital insights so that when someone reaches out to us, we're not spending time trying to diagnose the issue and determine what it is. We can go right to troubleshooting. So it translates to faster resolution times for our clients, but a more satisfied employee because they feel so great that they go right to the strategic consultation.
We try to eliminate the mundane. So everyone that's in our community, every MSP that merges with us, every employee we hire, they get fulfillment because they're not doing data entry, they're not doing basic tasks, they're doing super strategic work.
The third layer, we're building out this digital layer for modern experience. And so it's called the elevate portal. It's interactive web portal mobile app that our clients can use to interact with us in a more modern omnichannel fashion. And it's designed to be multi-generational, kind of like Amazon with their interface and their portals. It's catered towards millennials, Gen Z and baby boomers where you can adopt the style of service that you want. If you prefer to just hop on a phone call, you can use the portal and get on us via voice and video. Prefer someone to be in person, you can select that. Someone will be dispatched to your site. If you like to self-serve, it has all the learning knowledge base in there to troubleshoot on your own, reset passwords, provision PCs. If you want to co-manage with us, you can see all your IT assets. You can see the uptime of every site.
And so that makes it easier for our customers to have a 360 view into the health of their IT and security systems, but interacting with us, it's very omnichannel catered to that individual, which makes a better end user experience. And for our main counterparts or main important contacts, the office managers, the COOs, the directors of IT, the CIOs, we can make them look good.
Paul Green:
Yeah, I love it. And do you know what? Let's get you back on the podcast in the years ahead so we can follow that journey and see as you're trying to, as you said, elevate everyone up to a whole new standard with everyone getting there together.
Thank you, Chuck, for your time. Just finally remind us what your website address is?
Chuck Canton:
Our website is www.sourcepass.com. You can see it here on my shirt. Feel free to take a look at the website. My email address is on there, my contact information. Please reach out any time. Love to hear from all the IT service providers out there to share our common struggles and successes and we'd love to join forces with a lot of you and collaborate how to move the industry forward.
And, Paul, really appreciate the time today.
Voiceover:
Paul Green's MSP Marketing podcast.
This week's recommended book.
Fiona Challis:
Hi there. I'm Fiona Challis. I'm an MSP sales expert and my book recommendation, my favorite book of all time, is called The Big Leap by Gay Hendricks. And it's all about how to take yourself to the next level, how to raise that last glass ceiling in your business and how to break through to the next level to be even more profitable and successful than what you are today.
Voiceover:
Coming up next week.
Brendan Kane:
Hi, I'm Brendan Kane, the author of the books One Million Followers & Hook Point: How to Stand Out in a 3-Second World. On the next episode I'll be talking about what it takes to go viral on social media and how to maximize these platforms for your B2B marketing efforts.
Paul Green:
You know the platform that you are listening to or watching this podcast on right now, go on, hit the subscribe button so you never miss an episode, because on top of the interview with Brendan next week, we're going to be talking about whether or not your techs are really as busy as they think they are. Let's find a way to measure that so you can measure exactly how much capacity you've actually got within your MSP.
We're also going to be talking about the concept of BHAGs, big, hairy, audacious goals or moonshots. Is there a moonshot that you are pushing your business towards?
We've got a ton more content for you on YouTube. Just go to youtube.com/mspmarketing and join me next Tuesday. Have a very profitable week in your MSP.
Voiceover:
Made in the UK for MSPs around the world.
Paul Green's MSP Marketing podcast.
