Hosted By
Luis Giraldo:
Fresh every Tuesday for MSPs around the world. This is an MSP Marketing Podcast special.
Paul Green:
Hello, and welcome to a very special edition of the podcast. Now this week, we’re going to get rid of the usual format, because there’s someone fascinating that I want you to listen to for the next 20, 30 minutes or so. He’s someone that I’ve come to know fairly well over the last couple of weeks, because we’ve been spending what seems like a never ending series of video calls and interviews, and just sitting, talking to each other, even though he’s many, many thousands of miles away from me.
Paul Green:
So I’m going to introduce you to a guy who has built an MSP from scratch up to a 1.2 million pound business. And in fact, he did that just with himself and a tiny, tiny number of staff. He’s going to tell us today exactly how he did that and how you can take some of the mistakes that he made along the way and many of the things that he got right and turn them into useful things for your business. He’s also going to tell you about a very exciting new project that he’s involved with, so that’s something that I’m involved with and it’s something I think you’re going to be absolutely fascinated to see. So let me introduce you to today’s special guest. In fact, let me ask him to introduce himself.
Luis Giraldo:
Well, thank you, Paul. My name is Luis Giraldo. I am a senior director of marketing at N-able, also an MSP owner, also professional musician and audio engineer, and a number of maybe other things I’ve picked up along the way.
Paul Green:
And we are going to back to your professional musician background in just a few seconds, because I know you’ve got some, some pretty cool names to drop of people that you’ve met. But you have been a… It does really feel like we’ve been on a video call once a week for the last two or three months. Isn’t it? So I was on your podcast, was it Café Con Luis? Is that what it’s called?
Luis Giraldo:
That’s right. Yeah. We had you coming over to talk about marketing and just drop in some amazing bombshells for people to just get some great value from the conversation.
Paul Green:
Yeah. Thank you. And it was such a good fun podcast to do as well. So I do recommend looking that one up if you haven’t heard of Luis’s podcast before, and then we’ve got involved with a fairly big project together, which we’re going to talk about towards the end of this, but let’s talk about you first of all. And I want to talk about you as the MSP owner. So as you already said there, you didn’t have a traditional start to your career. A lot of MSPs start out as tech people or just people who are really into computers and it goes on to become a consulting career and then becomes obviously a proper business. What was your route in? Tell us about your music background?
Luis Giraldo:
Yeah. It’s an interesting route because what happened was I was working professionally in music full time. In fact, I had been working on the cruise ships for a number of years at this point probably five years or six years or so. And I was getting to the point where I was getting a little bit burnt out from the cruise ships and the travel and just being away and not having a house. It’s interesting parallel that starts because your life sort of goes off into another branch and you continue along this branch and you feel like where you left off, everybody should stay the same. And then you return from the cruise ships and people have moved on, they’ve grown, they’ve gotten married, they’ve had kids and all of a sudden you feel sort of out of place.
Luis Giraldo:
And so I was ready to make a change and get back into real life so to speak, because cruise ships are kind of like this interesting crystal ball, if you will of another environment where time stops to a certain degree. Anyways, I found this retail job at a computer store, a Mac computer store here in Vancouver. And it was the time when GarageBand and apps like that were blowing up and they wanted somebody who could speak to the music part of doing computer stuff. And so I kind of found a little bit of a niche there. I became sort of the music computer guy at this retail store.
Luis Giraldo:
And from there, I started to say, explore a few of my opportunities. I thought, it’d be interesting to take a course, become a certified trainer in Logic Pro, which is Apple’s music production studio, a software that they have now. It’s a software they acquired from a German company called Emagic. And at the time this was sort of the boom of Logic Pro is really something special. Anyways, I went down to California, I took this train-the-trainer, training to become a certified trainer in Logic Pro. And I happened to notice a little pamphlet stand at the desk of the reception, where they were advertising their server courses.
Luis Giraldo:
And at the time Apple had actual server hardware with the X Serve and they had a server software with MacOS X Server. And so I was super curious and I picked up one of these pamphlets and I must have looked at this for months. And then, what happened is over the next year or so, I was continuing to work my retail sales job. I got in trouble. I made a little bit of noise about some issue that happened at the store and let’s just call it, I was asked to leave. I won’t say fired because it wasn’t that dramatic, but I was asked to leave.
Luis Giraldo:
However, it was a friendly and amicable departure to a certain degree, but I realised there was this interesting opportunity to turn around and offer them a service which was to say, Hey, I’ve noticed a lot of people buy iMacs and they go out into the public and they hate carrying them home. At the time that I’m actually sort of these really thick devices that were weighed like 30 pounds and nobody wanted to carry them home. So I offered them a home delivery and set up service that they would start reselling. And wouldn’t know it, they packed my schedule with home delivery set ups of iMacs over the next few months, and this is how my business was born.
Luis Giraldo:
Now back to the pamphlet story, when I saw this pamphlet, I had kept it and I remembered, Oh, there’s this server course. And I started getting more interested in things like business computers and servers and networks. And I went back to California and took this server course. And at this point I was smitten. I was like, “Okay, I love this idea of servers and networks. I’m going to get more into this.” And I started exploring sort of the business side of IT. And some of those home customers that had brought me over to do their iMacs setups started calling to say, Hey, could you support us in our business as well? And this was maybe, I want to say a two year or so transition. I started in 2006. In fact, today, the day we’re recording this, is the 15 year anniversary of starting my business, Paul. Actually-
Paul Green:
Congratulations.
Luis Giraldo:
… I don’t think we actually realised that this was the special date too, April 6th, 2006, which by the way, funny story happens to be in my wife’s birthday. On the day of her birthday, I called her to tell her I’d been fired from my job. So anyways, this is how things tend to just come together. You can’t control life, but how you react to it is really the biggest opportunity. Back to business IT within two years, 2006, 2008 I had some of customers starting to bring me into their businesses. And then there was this one customer that I was referred to by somebody I didn’t even know, a small medical clinic and I went out and they just wanted a second opinion on what the current IT provider was doing for them.
Luis Giraldo:
And they just wanted to know if they were getting the right technology, they felt like there was something not right. And I went in and it was a completely oversold system that they put in. They had made things extra complicated. They had to VPN into their network at the business to get their email and they just didn’t need that much complexity. And so I kind of laid it out for them. I said, “Well, I don’t think this should be this complicated.” And low and behold, they dropped the other provider on the spot and gave me the contract.
Luis Giraldo:
Now I had never done a managed services contract before. And so I just found myself in this moment, just trying to reverse engineer what should be in a contract that they’re now paying me whatever it was at the time of 1500 bucks a month, a hundred dollars a user for 15 users and trying to figure out what am I going to do with this? And that was basically how the IT consulting business, and my, let’s just say a silver platter transition to managed services was born.
Paul Green:
But you have missed something fairly key from your story there, which is the famous people that you met when you had a music career.
Luis Giraldo:
Oh, well, I didn’t even talk about the music career. Yeah. So I guess, this goes way back to my high school years, I was in a rock band in high school. When I left high school, I studied in university and I was actually in an industrial engineering major initially. I actually also went to the army. My class of 1992 was the last class that had to do a ballot draw to decide whether you went to the army or not. And so I remember going to a theater where everybody from my class was sort of assembled and you had to go up on stage and stick your hand in a bag and pull out either a green ballot or red ballot. And if you pulled out a red ballot, you basically were going to go to the army and through your one year of service I went up on stage and pulled out a red ballot.
Luis Giraldo:
I remember my dad actually telling me I was an idiot for pulling out the red ballot and everything. And so, and my mom had said, “Oh, I can’t come to this thing.” Anyways, I ended up going to the army and I had played a little bit of trumpet when I was in the sixth grade, elementary school band or whatever. And so I auditioned for the marching band, because I was at the Presidential Guard Battalion. And I ended up playing trumpet and becoming the lead trumpet player for the presidential marching band over that year. During that time I also was continuing to talk with some of my colleagues from high school and moving into other music projects and such. When I left the army, I now started in university, I start playing with this ska band and this ska band, we started doing concerts.
Luis Giraldo:
We entered some contests and stuff like that. We actually won a little radio station contest. We got some recording time. It was at that recording studio that I met this really great audio engineer who became a mentor of mine. Mauricio Cano, he’s actually now a Grammy award-winning audio engineer. And he was sort of the guy that took me under his wing. We wrote songs together. We recorded together. We did all this really cool stuff. And from there I decided I was going to make the switch into audio engineering career at my university. And they had just started an audio engineering focus in the music program. So you could either become an instrument major or become a singing major or an audio engineer major. You would still do all the music courses along with that but I chose the audio engineering route.
Luis Giraldo:
Now through this university program, I started meeting a bunch of other folks in music. This ska band continued to have a little bit of notoriety and I was introduced to this band called Poligamia with a… By the way, I grew up in Bogota in Colombia. So some of these names I’ll say in Spanish and translate them. Now Poligamia literally translated is polygamy, which is not a great name for a band of teenagers, but those are the decisions teenagers make, by the way that band name was decided before my time. So I take no ownership of that decision. Poligamia had a keyboard player, a dear friend of mine today, Juan Gabriel Turbay and he was starting to explore a solo career.
Luis Giraldo:
And he started looking for his own opportunities and stuff like that. So Poligamia was now looking for a replacement keyboard player. And Juan Gabriel and I had met at university and so he brought me into the band, introduced me and I joined this band who was on a record contract with Sony Music. And we’re just about ready to go into the studio to do another record. So we went into the studio, I recorded a couple songs without Juan. I had written a couple of songs that the band recorded, and here’s where the stuff becomes really interesting.
Luis Giraldo:
The producers for the record were Shakira’s bass player and guitar player at the time. And so these two guys were in the studio with us for a good couple of months. And through working with me, they also brought in the keyboard player for Shakira at the time, he just appeared on one of the songs and that summer, I remember I was teaching a music class to eight year olds at my old high school. And I got a page, back when you use pagers, by the way I got a page from Arnold, the keyboard player. He said, “Hey, I’m in a little bit of a pinch. I’ve got this theatre gig that is launching this weekend. And I just can’t go on this Shakira gig to Ecuador.” And it was one of the Shakira’s first sort of international appearances and it was a double bill with a soap opera star that was also a singer.
Luis Giraldo:
I wonder if you could sort of fill in for me this weekend. And I remember I went out to the rehearsal, he invited me to the rehearsal I showed up and there’s all sorts of parts of this story that I have to sort of fill in as I remember the details. But Shakira at the time was dating the bass player in the rock band I was in, in Poligamia. So I actually already knew her. She’d been to my house for my birthday and stuff like that because she came accompanying my friend Gustavo. And so anyways, when I got to the rehearsal, she obviously knew who I was, but she was wondering why the hell I was there.
Luis Giraldo:
And so she came and talked to me and, “Hey, what’s up? Why are you here?” Arnold was not there yet. So he was actually late to the rehearsal, that’s when I realised he hadn’t told her that he was going to miss this rehearsal or that he was going to be late. I said, “Oh, Arnold invited me to come and hang out.” And she is like, “Okay.” A suspect eye, a squinty eye wondering what the hell is going on, and when Arnold gets there and finally delivers the News, “Hey, I can’t go to Ecuador this weekend.
Luis Giraldo:
I have this theatre gig. I couldn’t find a replacement. And I’m the main guy I can’t really leave.” But Luis is going to come here and do the rehearsal and he’ll go to Ecuador. And so everybody starts losing their mind because this is the last rehearsal before the trip. And so anyways, they run the show. I’m literally watching with like a hawk, I’m recording on my cassette tape recorder, follow, this is how back this goes, it’s 1996. And so we do the cassette tape recording. I go home that night. I spent all night going through the whole records. No, even though I knew who she was and knew her music, I hadn’t played her music was very pop stuff. And I was more into the rock scene, whole night just learning all the tracks and all the songs.
Luis Giraldo:
And then they call the second rehearsal, for my benefit the next day and this was a Saturday night. Now, we ran the show. Everything was great. Everybody kind of breathed a sigh of relief. And we went to Ecuador on the Sunday, the three shows and that turned into basically six months, seven months of touring as her career snowballed in the Latin American market, as more countries found out, Oh my God, Shakira, Shakira, Shakira and so we ended up going to Mexico and New York and Los Angeles and all over central and South America. So that’s basically how my music career began, and from there I continued pursuing the audio engineering thing.
Luis Giraldo:
And at one point I was like, you know what? I want to explore an audio engineering career and I moved to Vancouver to study audio engineering. I came to do one of those 12 month programs. That was kind of, sort of the breakaway from Columbia and my past history at that time Shakira also moved to the US started working with the Estefan Family. And that was sort of how I transitioned, as I say, from the obvious transition from touring internationally with an international pop star into IT.
Paul Green:
That’s such a great story. Really is. And you know what, that beats my story of the most famous pop star I’ve ever met? I met Meat Loaf in 2003 at an award ceremony. I shook his hand. I was a bit drunk at the time. And I actually said to him, “Meat Loaf, I do anything for love, but I wouldn’t do that.” And he just nothing, his face didn’t move. Your story has completely blown my story out of the water. Let’s get back then to, so we’ll fast forward back to you as the MSP. So you’ve got these contracts, you’ve got your first managed services contracts.
Paul Green:
What’s really interesting is, is what you did next. So tell us how you built that business as we now know, 15 years, how did you build that business up from that first contract? And I know you did it with quite a small number of people as well.
Luis Giraldo:
Yeah. Well, to be perfectly honest, there was zero plan, zero idea of what was going to happen. At the time I was doing IT consulting, most of the home users and that kind of thing, and sort of had this first business customer. It was only then that I started to think, you know what, I wonder if I could actually build sort of a business offering around this. But the whole time I was still doing music full-time and performing and doing gigs and stuff like that because I had to have an income. So it was a two year stretch where I was taxed quite a bit. I was doing all the music stuff, but also trying to build an IT business. But even when I started thinking about let’s build an IT business, I still had no idea like what to do next.
Luis Giraldo:
And being a Mac focused IT consultant at the time, who are really very fewer or none, other IT businesses that were focusing on this idea of recurring revenue or managed services. So I had this contract that had literally been laid on my lap and I started reverse engineering, sort of, how do I build value into this amount that I’m being paid every month to essentially assemble an offering? Okay, well, there’s 15 people, maybe it’s a user thing. And obviously MSP was not new in general. There were a lot of people doing this in the windows world, just not in the mac world.
Luis Giraldo:
So I didn’t have a lot of peers that could identify with how to do this. And a lot of the Mac folks were just doing a little IT consulting hourly break fix, if you will. In 2010, I did a partnership with a training center, an Apple training company that was Toronto based, and they were looking to open a Vancouver operation. Now, in order to do that, they needed to have a trainer that was associated with Apple. And because I was a certified trainer, I’d done that Logic Pro training before and then had become a MacOS 101 trainer as well and server 101 trainer as well. They partnered with me, they rented some office space.
Luis Giraldo:
I was renting part of the office space for my IT business, and they set up a little classroom in there and we were basically launched a training centre. And this is how I got into a physical space. At this point I brought on an additional engineer who was doing just some of the break-fix IT. And we were looking at finding more clients and starting to figure out how to market the business, creating business cards, all that stuff. There was also a friend of ours, of my wife’s and mine that was starting to explore business administration.
Luis Giraldo:
And she came in and was doing a little bit of the marketing work for us, business development. And what’s interesting is back then, one of the hires that I did is through one of the local universities, Simon Fraser University. They had a sort of internship program and I hired this guy who was a process writer. And so this person came in to sort of observe and learn the processes of the business and start documenting processes. And I think it was this experience early on that I thought, it would be great to have the corporate manual, so to speak, processes really well-defined so that when people come through the business, it’s easier for them to take on the new learning or the way we do things and whatnot.
Luis Giraldo:
And so he worked with us for about six months, eight months and helped start this idea of a process-driven business. And that’s kind of, from there, the training business had a little bit of falling out. I split off from the training business. I left the office space and in 2011, I was offered to join a Fully Managed, which is a large Canadian MSP because they didn’t have any Mac support, and I had already been doing some white label break-fix Mac support for them. Back in 2009, when the MacBook Air came out, guess what, a bunch of CEOs started showing up at offices with MacBook Airs and telling their windows MSPs, “Hey, can you make this work?”
Luis Giraldo:
And a lot of them just didn’t know what to do with it. Oh, Mac not supported, whatever. Instead I actually cold called a bunch of windows PC, MSPs in the city. And this one, the respondent, it was CDOT Networks at the time they later renamed to Fully Managed and then they acquired a business in Edmonton. They started growing, and this is the business that Chris Day started, and Chris Day later, founded IT Glue. And that’s how I came to be at IT Glue later on. And then, I left Kaseya in January of last year and joined SolarWinds, now N-able. So anyways, that’s a bit of the story, but in 2011, when I sold the business to Fully Managed and I went to Fully Managed, I basically started the Apple practice inside of Fully Managed for them to become a platform agnostic IT shop, so to speak.
Luis Giraldo:
But I also got exposed to bigger clients and bigger deals and bigger projects. And this was sort of my opportunity to take it all in and learn how to do sort of the big projects and the C level conversations and be able to justify a project and a quote and all those things. And I was there for about a year, in true fashion of not being able to work for the man. And I left about a year after and in 2012, I restarted my own MSP. And in that year I shaved all the break-fix work. I came back out and only had my managers as clients. They chose to come back with me, and I basically had a clean start of only managed services customers in 2012. And I think that was the boom.
Paul Green:
That’s a beautiful, beautiful way to restart a business. And I know that over the years as you’ve grown the business, because you still have that business today, don’t you that second MSP?
Luis Giraldo:
Yeah, that’s right. In 2012, I started back on my own and I was working with those eight or nine managed services customers, and that was taking care of my needs, but I knew I wanted to expand into something else. And so some of the guys I’d met at Fully Managed, one of them continued to help me on the side with windows related projects. I wasn’t very window savvy myself yet. So Simon Richardson who was my first business partner. I remember one day we were just chatting on the phone about one of the windows projects he was helping with. And he said, “Hey, you wouldn’t be interested in a windows guy, would you?”
Luis Giraldo:
Just out of the blue. And it just got me thinking, it’d be interesting for me to bring somebody into the business. And the way I thought about it was like, at the time I felt the pressure of accountability was quite high. It was tough because as a single operator, you can’t go on vacation. You’re where the buck stops. It’s really difficult to own all the accountability. And I thought it’d be nice to have somebody else to share that accountability with. So I pitched them on the idea of buying into the business and becoming a full partner. And low and behold, he accepted me.
Luis Giraldo:
He took the leap of faith and jumped in and we sort of set some targets of growing the business by X amount of dollars in the first year, I think we wanted to go from 15,000 in MRR to let’s say 25,000 MRR. We reached out and blew past that in the first year, because obviously we created a rhythm and we just had a good working relationship. Clients loved what we were doing, clients that had worked with larger IT shops saw this interesting opportunity to work with people that were a little bit more boutique focused and just focus on the experience. That actually became our calling card and is still the calling card.
Luis Giraldo:
And we steal a lot of business from the big shops based on experience alone. And that was sort of three years of growth with Simon and myself, just the two of us, 2012 to 2015. In 2015, we brought on Mike. Mike is our third partner who is also at Fully Managed at the time. And Mike and Simon actually go way back because he worked together in Australia many years ago. And so he came and became our third partner and we’ve just continued growing from there. At the end of our fiscal year 2020, we actually hit I think $2.7 million Canadian, not British pounds, so funny money but we hit $2.7 million with a staff of five. But at the point where Simon and I were at that cost period, we were doing $1.2 million with just the two of us.
Paul Green:
That’s fascinating, really fascinating. So, Luis, I know you’ve broken down for me at nine different areas that have really contributed for you over the years, if you like the nine most critical areas to focus on, tell us what those nine areas are?
Luis Giraldo:
I will admit. None of these were things that I knew to do beforehand. I never went out and said, “I’m going to do these nine things to build a successful business.” These are almost entirely hindsight of realising, Oh, you know what I realised we did this back then, and that actually turned into something that was valuable or was useful or help the business grow. So keep that in mind as we go through these, that most of them were hindsight, but my hope is that these will help somebody address these before they become something that they have to pivot and change or lose time or lose profitability as a result.
Luis Giraldo:
So the first one is this idea of, why, of the why of the business, the brand promise. Simon Sinek is quite famous for his Start with Why, book. And he has YouTube videos and stuff like that, that sort of get into the circle he talks about Apple and the why of Apple. And I think IT companies have to understand this as well, because you’re good at tech is not a good why, for example, because there’s a big distance between being good at tech and being good at helping people or businesses with tech.
Luis Giraldo:
And I think a lot of people conflate those two things and they get in trouble because they realise you know actually running a business is a lot harder. And so there needs to be an emotional connection to why people want to buy from your business. And so I think it’s really important for people to think about their why. In my case, the why, initially was, Hey, I am where the buck stops with me that famous expression US ex-president. I think I had that on his desk and a little plate that said the buck stops with me. And I thought, this is great. I think people want accountability.
Luis Giraldo:
And the relationship with IT is accountability driven. And so that was kind of my anchor point is the buck stops with me. And that was the why, obviously we love technology, but this is what got me thinking in terms of business outcomes. And that’s actually one of the later points, but it was sort of the basis for how I think about the why.
Paul Green:
And do you think the buck stops with me or that personal accountability, do you think that works for any size MSP?
Luis Giraldo:
I think it starts to erode as the business grows. I think that buck stops with me or the individual accountability has to turn into a rallying cry that the entire business gets behind. Example, if your staff and your growing MSP do not jump out of bed in the morning, and they’re all excited to work for the business or create value for the customers, they are not going to be accountable to the business. And it’s just one of those sort of one equals one type of thing.
Luis Giraldo:
You have to create the opportunity for people to feel empowered through that accountability, to care for the value they’re delivering to customers and care for their growth, and to see sort of that I guess, transition or transitionary value that happens from taking care of your people to taking care of the customers. So I think it just needs to evolve when you’re a single operator. You’re the only person, you have to create that accountability personally. But as the business grows, you have to empower accountability with your people. For sure.
Paul Green:
Tell us about the second item, which is all about pricing, isn’t it?
Luis Giraldo:
There’s this idea that, the pricing fallacy, I call it. Your budget does not determine our value. And I think this is so poignant because one of the challenges I think that MSPs have when they’re starting to grow the business is, Oh, I can’t charge that. I’m not worth that is really what is happening in their heads. I’m not worth this amount that I feel like I need to charge, but in many cases IT people have just never gone through the process of understanding what margin they have to have in the business to be profitable. It’s just a math exercise, nevermind what you think you’re worth, what you think customers will pay.
Luis Giraldo:
You just need to understand where is the actual breaking point of, I can support my business and its growth or not. It surprises many people in Paul Dippell talks about this a lot, but like 80% of MSPs lose money. And the reason is because they’ve not understood their growth algorithm or how to be profitable in their business. And so it is really important to take care of the math and understand like where is the minimum breaking point that you need to have to be able to stay profitable and be able to grow the business.
Luis Giraldo:
And I think this is one of those things where people look in their market and they try to price fix with others to be, “competitive.” As it turns out, and we’ve seen this personally with our MSPs. Prices becomes a non-issue as long as the value is there, as long as the differentiation is there. In our case, we over-rotate on presenting value and business outcomes and price sort of melts away. It just becomes like we actually want to work with these people, price stops mattering. And I think a lot of the transition people go through in the process of building an MSP is understanding, which are the right clients to work with. Not every client is a good fit. And I think that’s sort of one of the things that happens too late in a lot of businesses.
Paul Green:
Completely agree with you. I’ve always said that pricing is one of the factors, but not the factor when you’re talking to the right kind of clients. And that, that reflects as well, that the best place to be is at the very top of the market. If only owned an MSP Luis and I’m sure you feel exactly the same way about this. If I owned an MSP. I would want to be the most expensive MSP in the marketplace because actually a lot of people are going to look at the cost of that and they will automatically make a connection in their head between quality and cost.
Paul Green:
And I’m sure you see it as well. We’ll just look at Apple. You spent years working with Apple and Apple is in most marketplaces, the most expensive. Now it is also incredibly good quality. You could argue it’s no longer two, three, four times the quality of its competitors. Everyone’s kind of in roughly in the same boat. Yet Apple still remains the most expensive.
Luis Giraldo:
I think it’s definitely one of those hindsight things back in 2011 or 2012, I would have not thought this way necessarily. I would have still been doing trying to put together different plans of different prices. And back when the cybersecurity was not an issue, generally speaking for a lot of businesses, there was things that people could, let’s just say, choose or menu. And you feel that this is sort of the common knowledge or the accepted wisdom in many industries is to have multiple pricing choices. But as it turns out, and as we’ve learned, we’ve definitely moved to a single price offering. It’s more operationally efficient for us. It’s less ambiguity for customers. You have the opportunity to sell a complete solution, which I think is very valuable. And so all of this factors into pricing.
Luis Giraldo:
And so if you are offering a lower cost option because Oh, this customer is not going to feel that this is the right price, or it’s going to be too expensive for them then you’re going to cut corners. And here’s the thing about cutting these corners is you might think it’s okay to offer a different plan to one customer today. And that at some point you’ll upgrade them to the full plan. Most of the time that doesn’t happen, is very difficult to change the mindset of customers and if they don’t simply don’t get the value, they’re just not going to do it.
Luis Giraldo:
And so in our case, I decided let’s just remove the ambiguity altogether, single plan, single offering you’re in or you’re out. And that became a much cleaner operationally efficient way for us to price and to sell and to focus and over-rotate on value and business outcomes.
Paul Green:
So we’re talking about Luis’ nine critical things to build a multi-million dollar MSP. Tell us what number three is.
Luis Giraldo:
I probably learned this one a little bit too late. In fact, I probably didn’t realise how important standardisation wasn’t until I spent some time at Fully Managed. And Chris Day was very particular about standardisation. In fact, sometimes, when we pivoted away from a backup solution here over to this other backup solution here, it was a monumental and monolithic pivot because we would switch every single customer, whether they accept it or not, we would take the ownership and we’ve moved them to a different solution.
Luis Giraldo:
And the reason is every customer on the same solution is easier to support when you have a growing business. Now take the example of bringing on customers over the years. And one has a Sonicwall another one has a Cisco firewall. Another one has a Juniper firewall. Guess what you end up having? You end up having the one person in the business that is the security expert that knows all the different ways to create IPSec tunnel on all the different firewalls, becoming the bottleneck of your firewall configuration.
Luis Giraldo:
And so this is kind of what happens, and so when you standardise and you get everybody on the same platform, whether they want to, or not, now the entire business can support that one customer. Also, you have to ask yourself operationally speaking, what’s easier to do, document the process for one firewall that everybody can do or document the process for a tonne of firewalls that only one person can do or two people, maybe three, if you’re lucky and you have a large MSP with lots of experts in these fields. Take that also and multiply that by the different number of switches and wireless access points and all the other technology that gets deployed in customer stacks.
Luis Giraldo:
And it starts to become a losing game. There’s just no way you can operationally overcome that kind of effort in order to become profitable and efficient and ultimately give the customer a better experience. So standardisation is the choice of consistency over chaos. 100%.
Paul Green:
You mentioned customer experience there, which I know is your fourth item. I guess standardisation absolutely is at the core of creating a great customer experience.
Luis Giraldo:
I’m going to quote Paul Dippell quite literally, when he says, when you have a consistent service delivery model, you can deliver a better and more consistent service to your customers, which makes them happier, which makes them spend more money, which means you can still service them better. It’s a self-fulfilling cycle of experience. There’s just nothing more frustrating as a customer than calling one day and getting a fantastic tech on the line today because they knew the process. They knew your network and then calling the next day and getting somebody who just knows nothing about the business has to go ask somebody, Hey, how do you do this over here? How is this set up? And they just create these gaps, these experience gaps as I call them. And it’s just a terrible experience for the customer. It’s just frustrating.
Luis Giraldo:
And it takes a lot more time. Instead, obviously documentation plays a big role in that, but when all the customers have similar environments, it becomes much easier for everybody to support. So the experience obviously comes from a lot of the standardisation and the consistency that you create, but also experience is the things that you’re measuring and the things that you’re tracking and the focus that you place on something. A lot of people get obsessed with metrics and there’s that expression from Peter Drucker, you can’t manage what you don’t measure. But there’s also the follow-up comment or expression on that, which is nothing becomes more important just because you’re measuring it.
Luis Giraldo:
It becomes more measurable. That’s it? And so what’s really important about the things that you measure is having a plan of what you’re going to do with the data of the things you’re measuring. So whether it’s the prioritisation of tickets or the number of tickets that you close today, and not tomorrow, we used to have this metric at Fully Managed called TNT today not tomorrow. The kind of metrics need to have an action plan for when you fail those SLAs, or when you miss on those particular accountabilities, be able to say, okay, well, we failed here. We missed this. Some of these metrics might be internal also not necessarily customer facing, but it’s important to have a plan to fix and action those things.
Luis Giraldo:
And this ultimately all is in the service of experiencing when the customer has a consistent, great experience, it’s a self fulfilling thing. They are happy. They spend more, they continue to do projects. They feel like they’re being taken care of. They refer you to other businesses. So it all sort of expands from there.
Paul Green:
This is really good stuff, Luis, it really is. Now item number five, you called the pursuit of process. Can you explain what you mean by that?
Luis Giraldo:
Process is one of those things that I think is learned. I don’t think you wake up one day and you say, I need process. You kind of start to realise through a little bit of the growing pains of, Hey, this is inefficient, or we could have done this faster, or this person that just joined the company has to sit with somebody now for six months to learn ropes. All this stuff starts to become a weight down on the company. And so I think this is where IT businesses start to realise, it’d be great if we had things, a well documented and a process for all the key tasks and things that need to happen. The perfect example is, do you have onboarding and offboarding document for each of your clients?
Luis Giraldo:
Do you have a firewall set up? Do you have an IPsec VPN process that is documented for every type of firewall that you support? Hopefully only one as we were talking about earlier, but these processes also applied to many other aspects. It’s especially true in growing MSPs that the techs are the least bottleneck in the business because you have multiple techs. Guess what MSPs had the least of, they have the least of accounting and finance. They have the least of sales and marketing. And so do you have processes for your accounting when your bookkeeper leaves you, can somebody else walk into the business, look at the processes and figure out how to do everything that had to be done in the business?
Luis Giraldo:
The answer is probably no, and this is what turnkey means, but for the entirety of the business, and guess what down the line turnkey also means a higher valuation. So if you’re ever thinking of selling the business, the well documented process driven business is going to be more valuable than a business that’s basically flying by seat of their pants.
Paul Green:
Which is of course the message in the book by John Warrillow, which is called Built to Sell. And I’m sure you’ve read that Luis. I read it actually, after I sell my business and I was kicking myself, literally kicking myself because some of it I’d figure it out along the way. But if I’d read that book two, three years before I’d have made a hell of a lot more money and we did very well out of that, but it certainly wasn’t as good as it’s pictured in the book, Built to Sell, very good, read if you haven’t read that.
Paul Green:
As is the sequel actually it’s called The Automatic Customer. She’s all about monthly recurring revenue and we all liked that one. So let’s talk about this is one I’ve been really looking forward to getting to. It’s item number six, and you call this the daily double down.
Luis Giraldo:
It’s a bit of a play on the TV show, Jeopardy. They had this category called the Daily Double. And it was this sort of interesting category where you would just by surprise, get the opportunity to earn twice as much money for answering a normal question. But it just kind of transliterated in my world to this idea of the daily double-down and here’s the thing. IT is super hard and it’s not hard because technology is hard. It’s hard because people come at us with a lot of their negative stuff, their problems, their deadlines, and the issues of things that are not working.
Luis Giraldo:
And this can build up on people and start to make you feel like you just don’t get a breather anytime because everything is negative, negative, negative, and hardly do we get recognition for keeping the network up and all that’s the way it’s supposed to be. Why should I congratulate you for that? It’s almost, I feel like I should have a sign at the back of my room, days without downtime and celebrate that some kind of way, but I’m being facetious obviously, but my point is, IT can be hard. And so it required that I made a daily decision to just go out and do my best every day.
Luis Giraldo:
And it required a conscious approach to say, you know what, today’s a new day. Let’s see what the day brings today. I was always excited to see what new challenge I had. And I try to tackle each day like that and just take it as an opportunity to impress somebody, to make somebody a fan to help them grow their business. If that person will go out and tell their friends or family about us and then we’ve won that day.
Luis Giraldo:
And so I think that was sort of this idea of the daily double down. The other thing is that when you do these things consistently, and the same is true about marketing by the way, when you do these things consistently, you get to that point where the one plus one equals three. And this is so important because you can create additional momentum and momentum is so important in business, where you start to feel like you’re in a downward spiral, it’ll take everybody that’s near you, around you, down with you. And it’s really tough to do this.
Luis Giraldo:
That’s when people feel like they’re cancerous to the business or poisonous to the business. So you got to make that daily decision to just be your best. And that also hopefully raises the expectations and drives that momentum, which is so important. Now that’s not to say that every customer is an amazing customer because sometimes they’re not. And this is a really key piece of doing business is the fact that you have to manage your book of business. And this is actually item number seven. It’s one of those things that I think people always reflect on as something that they would write a letter to their younger self saying, fire your worst customers.
Luis Giraldo:
It would be the first thing I’d write to my older self because it creates this, I think you keep customers because you think you have a relationship. You think you have this emotional connection and it’s tough. Like who wants to say no to business, who wants to fire a customer, especially in a down economic climate. But it’s just interesting to me, every time we’ve had to let go of a customer because it wasn’t the right fit, they just didn’t see the value we were providing or there was some kind of loss of trust for whatever reason. There’s always been something that has manifested itself that was a better opportunity, at a better margin, at a better value, in a better relationship with a better customer, just in general.
Luis Giraldo:
And so, and it’s been consistent that way every single time. Perfect example is earlier this year we had to part ways with a customer who was just growing in a different direction than we could really support. And we sort of parted ways, and it was a large customer, 50 or 60 seat customer in rapid succession. We had two or three new deals that amounted to actually more seats than those 60 to come in. And they were better relationships with a lot less work, a better margin in those deals. And just generally speaking, a better outlook for people in the company to be associated with the work that’s being done for those customers.
Luis Giraldo:
So this is the other thing is, when you start to realise that this customer is dragging down your people, that there’s, in my case, zero tolerance for somebody that speaks out of turn to an employee or says something nasty or not nice to someone like that’s an immediate dismissal. But I think part of the trick here is you have to treat the customer relationship is a two-way street. So one of the things we talk about a lot because I’ve been telling this story over the years is the QBRs are critical. And we use QBRs to set the standard for the relationship, not just for cross-selling or upselling, which is really important, but also to just make sure that the customer is being held accountable for their part of the relationship as well.
Luis Giraldo:
Hey, we have a couple issues with staff and these people when they call they’re rude or this kind of thing, this is the perfect point to do this kind of check-in because guess what, when you don’t talk about it, these things fester, and then everything blows up at one point to the point where you just can’t recover that situation. And it happens both ways. So the point of the QBR is obviously to give your customer the opportunity to express their challenges with you or your service or anything that might be going on and be willing to receive that feedback and do something about it. But managing this book of business is really important.
Luis Giraldo:
So grade your clients figure out which are your least profitable clients and make a plan to free up their future. As I like to say, and let them go on and find a business that’s better suited to them so that you can make room for better clients that understand your value that are willing to partake in your type of relationship that you’re trying to create.
Paul Green:
Free up their future. I absolutely adore that. And I shall be pinching that Luis. So thank you for that, in a couple of weeks time, you’ll hear me on the podcast saying, yeah, you should free up their future as if I had invented that. I completely agree with everything you have to say about firing clients. There’s nothing better for releasing you and your staff from the negativity or the toxicity, or even as you just say someone that’s just moving in a different direction to where your business is moving. And I think firing clients has sometimes can have a fairly dramatic, positive effect on profitability. And that’s your item number eight. Isn’t that?
Luis Giraldo:
Yeah, profitability was one of those things that I realised, you know what, we’re not in a position to grow like crazy. We don’t have a sales team or marketing team, and I’m quite terrible at those activities by the way. And it’s kind of ironic that I’m in a direct, a senior Director of Marketing at N-able but here’s the reason why that is by the way, a little tangent is I have this knowledge of being an MSP and having built an MSP. And I think this is the value that I’m trying to bring to N-able is make sure that what we’re saying makes sense that it’s the real world and not just fluffy words on a webpage. And so anyways, back to the story about profitability it’s that I was not a marketing genius. I was not a sales genius. And so growth was very slow for the business.
Luis Giraldo:
And I don’t want people to confuse growth with scalability or growth with profitability because they’re two different things. So once I started to realise, you know what, maybe we can just figure out through QBRs and other ways that we can grow the revenue with our existing customers. Some people call that the share of wallet or the profitability matrix, sell every product to every customer is the idea essentially. But the idea that you could go and look at your existing customer base and become more profitable without bringing on a single new customer was like a fascinating thing to me.
Luis Giraldo:
And so whether it’s tweaking your services and talking to your vendors and figuring out how to reduce costs or just finding efficiencies in the business. I think all these things add up to being more profitable over time, but also all the things that tie into profitability that we’ve talked about already like the standardisation is going to be a crazy thing that ties into profitability. People don’t realise how much time it takes to support 10 different firewalls. So all these things become a profitability matrix, essentially. And so as soon as you have the opportunity to hire another person, guess what, if you can generate 2.5X is the number that Paul Dippell gives.
Luis Giraldo:
If you can generate 2.5X of revenue for the cost of that employee, you’re in a great place. And that was always our marker because I didn’t spend a whole bunch of time doing crazy accounting or financial models for the business. We were a simple two person business, three person business. And so, but what we knew is that if we brought somebody on whatever we’re going to pay them, we wanted to make sure we were generating 2.5X of revenue that became sort of our model for profitability because you can reverse engineer gross margins and everything from there.
Luis Giraldo:
The other thing is that profitability, I see so many people in the Facebook groups or Slack channels or wherever MSPs are hanging out asking the occasional question about, Oh, how do you deal with clients that don’t pay? Maybe I had this problem and I’ve forgotten about it. I’ve chosen to forget about it at one point, but I think it’s so key that you are not a bank. And so one of the things we do with every customer agreement is right on the agreement that says, we require a pre-authorised electronic debit on the beginning of the month. There’s no alternative. There’s not, or maybe you can pay with credit or maybe you can pay by cheque. None of that, none of that, we’re not a bank we’re going to focus on, we earn our money on the first of the month. It comes in.
Luis Giraldo:
And guess what, when you go from break fix to managed services, and all of a sudden you transition from having to earn your keep every month to starting with your keep and delivering value instead, you can actually run a much better business for the sake of your clients. And so anyways, we removed that whole financial ambiguity and customers say, Oh, well we do net 30. I’m sorry. Okay. No problem. Let us know when you’re ready to reevaluate our requirements and we can talk about a contract then.
Luis Giraldo:
And sometimes we pushed back really hard. Other times, it’s a well-established business, a larger business that does not have a ton of flexibility and we’ll figure out how I work with them in that situation. But for the majority of small clients, there’s just no ambiguity. We make it very clear that we are focused on the finance. We’re not a bank and that’s it.
Paul Green:
So we’ve been listening to Luis Giraldo’s nine critical areas to build a multi-million dollar MSP, and we’ve got to the final item.
Luis Giraldo:
The final item. Yes. And by the way, I will reiterate, these are all hindsight items. I’d never had a plan for these things to be the things they are, but these things had weights in my life posts being an MSP owner. I think these are universal, in some kind of way. So this ninth item is the idea of speak business. And what I mean by that is I think it’s so easy for a person who starts an MSP who is technically minded to just be focused on the tech. It’s the thing that we love. It’s the passion that we have is for the technology. But part of the, I think process or evolution of growing MSP is that you need to also develop a passion for people and helping people and helping businesses.
Luis Giraldo:
And more specifically of being able to trade in business outcomes. This is how you can differentiate in the marketplace. This is how you create value for businesses. So the question you need to ask yourself is, will I be a cost centre or a profit centre? And what will the client think that we do for them? When they look at our budgetary line item in their yearly financial planning, are they going to think of IT or the MSP as a cost centre or profit centre? And if you’re a cost centre, guess what? You may not stay stick around very long, or you just may be hitting those brick walls all the time and trying to get projects done or trying to get initiatives, sort of transformation done and initiate some of those things because customers that don’t see value just don’t want to spend money on technology.
Luis Giraldo:
And so the value is really the business outcomes, understand what that business does, how they make their money, how they create value for their customers and figure out how to do that connection point between the value they create for their own customers and the value you create for them. I think that’s the trick. And we try to think about that conscientiously with every customer. Now it’s tough to do, but it’s really important. I think it changes the whole scope and outlook of a relationship when you are trading in business outcomes and not in passion for technology.
Paul Green:
That’s an absolute ton of hindsight there, Luis, thank you very much. Now I want to just loop back to something we talked about right at the beginning of the podcast. I can’t believe we’ve been talking for and getting on for an hour now, and this seems to happen every single time that we talk because you and I did a mammoth interview just a few weeks ago. So I had a shave, put a clean shirt on and actually put a jacket on that day and went to a very, very posh hotel in Windsor in England, which of course is where the queen lives.
Paul Green:
And we were actually sat about half a mile from where the queen lives, which is very showbiz. And then you were in an even more showbiz location in Canada, which I’ll allow you to say where that was. And we sat and talked with some very professional TV equipment filming each side of our interview. And I think it was around about two hours, wasn’t it that we were talking? So tell us a little bit more about what was actually happening that day.
Luis Giraldo:
Paul, well, I don’t know what to tell you. Every two hour interview could probably go for nine hours or 20 hours, to be honest, you always have so much value and amazing things to say just about the business of marketing and the business of being an MSP. So I appreciate all the insight and knowledge and just value that you give to your audience all the time. So yeah, I was at the Warehouse Studio in Vancouver, which is the recording studio that is that was founded and owned by Bryan Adams, the famous rock star. So we went into the Warehouse to do this recording, my side of the recording anyways while you were in this posh spot in England.
Luis Giraldo:
And we just had this interesting chat and I think I had a couple of prepared questions for you and this evolved into this amazing conversation of you just giving so much interesting data and value around the marketing or the business of marketing and MSP, which I think is so important to the growth story that many MSPs just need to have. This is part of a larger series that as SolarWinds MSP becomes N-able. One of the things that is happening is obviously the rebrand of the website and a launch of a new website, which is now there, but also this interesting initiative that we’re calling studio.
Luis Giraldo:
Now, studio is just a place where we wanted to put out some great conversations, but what we like to call smart conversations with amazing people that are doing great things for the community and the MSP market in general. And while you were one of those people, Paul, but we also have conversations that we’ve queued up with Mark Copeman, the author of Helpdesk Habits and MSP Secrets. In fact number six from my list, the daily double down, it makes an appearance in Mark Coleman’s MSP secrets book as well. We also had conversations with Paul Dippell and Chris Wiser and Nigel Moore and all of this content, these amazing interviews, we’re going to be showcasing on the studio page of the website, and we hope people come and just get a chance to learn from them.
Luis Giraldo:
One of the key things I feel of this type of conversation is that it’s obviously the people that have been working the closest with MSPs on helping them build their business and just the amount of value that I was able to let’s just say, extract from our conversation is just crazy. So I’m hoping these things will just be lasting episodes and series of people just keep coming back for those nuggets. It reminds me of one of my favourite books actually, it’s a book called Value-Based Fees by Alan Weiss. And this book, I’m not even kidding. I have to reread it twice every year, because every time I read it, there’s some new nugget of information and I’m hoping people will get a little bit of that same effect with these interviews.
Luis Giraldo:
It’s like, Oh my gosh, there’s just so much stuff here. I need to come back to this interview and listen to Paul talking about just this one section because I have to go blow something up in my business. And I think the feeling and effect we want to create.
Paul Green:
Well, I love to do that interview so much. Because we had, I don’t know what it was like at your end, but we had a proper TV film crew. These were guys who were working on TV projects just a few days before. And I think the investment that N-able has made in that content is so high and the quality threshold was so high. I can’t wait to see Nigel’s interview and Mark’s interview and all of the others that you’ve lined up. So tell us what the website address is Luis.
Luis Giraldo:
You can find it on the studio section of the website, which has hopefully launched by the time you’re hearing this. And you can find the website at n-able.com. Also solarwindsmsp.com, still redirects to N-able.com. So you can find us in either spot.
Paul Green:
Okay. And thank you so much for being so generous with your time yet again, I really, really do appreciate it. And I think we’ve got an absolutely solid podcast there. It’s been really thoroughly enjoyable for me to spend more time talking to you. I’m going to challenge you now to do one final thing. Luis, give us your final word on growing your MSP.
Luis Giraldo:
How you do anything is how you do everything. This is what will create a continuum of integrity for your business and help you grow to levels that you never imagined possible. How you do anything is how you do everything. Just keep committed, stay strong, do the things that you know need to be done and just don’t waver off the path. It’s so important.
Voiceover:
Coming up next week.
Andrew Eardley:
I’m Andrew Eardley from MSP Easy Tools. Next week, I’m going to tell you all about the security problems that are in Office 365, that you don’t know, you don’t know.
Paul Green:
We’re also going to be talking about why you must put something called trust badges on your website. I’ll explain exactly what they are and how you would best use them in next week show. Plus, we’ll be talking about taking proper holidays. This is a theme that we touched on quite a lot last year, because of course the pandemic for many us took away our ability to have a proper holiday.
Paul Green:
And you know what I’m starting to see again and again, that people even just this many months into the year are starting to experience a little bit of burnout because they haven’t had the normal, proper breaks they would normally get in a normal year. Well, this isn’t going to be a normal year, so we’ve got to make sure that we all look after ourselves. We’ve got that and so much more coming in next week’s podcast. See you then.
Voiceover:
Made in the UK, the MSPs around the world. Paul Green’s MSP Marketing Podcast.
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