SPECIAL: 700 nights of “will the business survive?”

[00:00:00] Speaker A: This is an MSP Marketing Podcast special. [00:00:05] Speaker B: Hello and welcome to a very special episode of the podcast. As we celebrate 300 episodes every single Tuesday since November 2019. We have put out a brand new episode of this show and today I have an astonishing story that you will almost not believe. It's a feature length interview with a well known vendor in our space who, who nearly lost it all a few years ago. Imagine how you'd feel if your business lost all of its available cash in one day and you had to fire most of your staff and this situation was so bad that it didn't resolve itself for two years. Could you keep going? Could you push forward and still try to build something amazing? Well, that's what my special guest did. His story is so inspiring and I'm delighted to introduce you to him right now. Powered by MSP marketingedge.com Paul Greens and. [00:01:00] Speaker A: MSP Marketing Podcast hi, I'm Colin Knott, CEO and co founder of Gradient msp. [00:01:06] Speaker B: And it's great to have you back on the podcast, Colin. I think you were here in 2021. I say I think that seems like so long ago and that's the problem. Yeah. As the podcast is in its sixth year now and you know, we've decided to go for at least 10 years, we'll have to book you now to come back in like 2028 or 2029. [00:01:25] Speaker A: Sounds good, sounds good. [00:01:27] Speaker B: So thank you for joining us again. You have joined us today to talk about something is it kind of affects every MSP at different stages of their business growth and that is dealing with when things go bad. It's the issue of resilience and it's kind of. We're talking more today about mindset and how you get through problems and how you get through stuff that just seems too big to tackle. And you've got an amazing story to tell which, which we happily. You're the, you know, you're the other side of that story now, which is a, which is a great time to tell us. So before we get into that story and we talk about what the problem was and the lessons you've learned, give us a sort of a brief overview of who is Colin Knox? [00:02:10] Speaker A: Yeah, Colin Knox. I, I often refer to myself as the accidental entrepreneur. So, you know, had worked at an MSP or one or a few for a number of years and you know, kind of came to a place where started to get frustrated with things, never really had thought of or wanted to be a business owner and, and finally just said, never mind, I'll Step out and try it for myself. So, you know, kind of stumbled into entrepreneurship, work through all of the lessons learned, some the very hard way, some an easier way of what it takes to build a business, grow a business, exit a business, and maybe sometimes foolishly start a new business and go through it all again. Um, so, yeah, accidental entrepreneur, maybe with a bit of founder amnesia, as some people call it, but hopelessly devoted to building great businesses and impacting others. So I love it. [00:03:15] Speaker B: That's a great title. In fact, that could be the title of your book. If, when inevitably you write a book, because I think all of us have a book inside us, tell us briefly what gradient MSP does before we talk about what you were trying to achieve and the problem that you sort of ran into. [00:03:30] Speaker A: So we're all about making the back office operations of an MSP easier. The core way that we do that today is helping them make sure that they get paid for all the services that they deliver. We partially automate, but really kind of simplify and make easier the process of reconciling all of their vendor usage across all of their end customers into their PSA for billing every month. So that's kind of the initial core challenge that we sought to solve and got a few other little auxiliary add ons to that that we do. But that's the core facet is make sure that MSPs are getting paid for everything that they're delivering. [00:04:14] Speaker B: Yeah, now that's a great mission. And what inspired you to start this in the first place? [00:04:19] Speaker A: So we had an exit of the last company, did really well with that. I tried my hand at retirement, albeit for a very short period, but got way too bored and started just having conversations with MSPs again. I mean, I've been in the space now for, I think it's my 21st year, so known a lot of MSPs over the years, started having conversations with them and started well after we caught up. It was started it with one real question, which is what is one thing that you wish you never had to do again as an MSP owner? And time and time again they kept coming back and saying, doing my billing every month and figuring that stuff out. And so we kind of looked around. Nothing existed that we could find on the Internet at the time to solve it. You know, we started digging in on why this might not have been solved or why MSPs were so complacent on it. And for us it came down to a lot of lack of integration between all of the vendors and the PSAs. I mean, it no longer was this auto task and connect wise only entire market. They still do really well and have good market shares. But there were so many other PSAs involved. Integrations were lacking between vendors and all the PSAs and then the business owners, just a lot of them weren't in a place, I mean most of this industry is 10 people and under as a business and they just weren't in a place where they were ready to get rid of doing that. It's such a sensitive thing. So we said what the heck, let's give this a try. And hoping and thinking ignorantly and maybe arrogantly that this would be an easy problem to solve and the business would just explode and boom did not go that way. So it has been a lot of trial and error, a lot of working through things, a lot of patience and diligence and determination. But, but yeah, we've, we've finally and I landed at a place where we're effectively solving it for a lot of MSPs out there and you know, continuing to learn more every single day as to the nuance and lack of standardization and how MSPs build their customers. [00:06:38] Speaker B: So yeah, I can imagine. So I think, I guess when you. I've never started any kind of that business so every, I've started two main businesses. I've started a couple of other little side hustles over the years. But I run a marketing agency which is, you know, what you're doing, right? You're finding clients that have got problems, you solve those problems. And now with the MSP marketing edge, it's a version of the same thing. So we work with MSPs whose problem is where do I get clients? And we, and we help them to generate leads and win clients. So I've never, and it's never occurred to me to be of interest to me to start a, to start a business like yours where here's a big problem that there's such a big problem that no one else has even tried to tackle it or they've maybe they've looked at tackling it and thought nah, but we're going to, we're going to go in and tackle it, right? And we know we, we can anticipate what a lot of the problems are. But I imagine when you go into something like that and essentially it's a software driven solution, I imagine as you're going into that you are a conscious incompetent in that you don't know what problems you're going to come across along the way. So you could guess at the problems as you say we could all see that integrations will be an issue and lack of APIs. And I guess a few years back PSAs were less open than they are now. [00:07:46] Speaker A: Yeah. [00:07:47] Speaker B: And, but then you don't know who's going to enter the market. You don't know who's going to buy who. You don't know what, what's the, you know, PSA is kind of came out of nowhere, what, 10 years ago. What's the next tool that's going to come out of nowhere? You know that it would have to integrate this. What's the next billing thing? What's Microsoft? Microsoft brought in NCE a few years ago. What's the next Microsoft stupid thing that's going to mess all of that up? So was that, was that even going into it, knowing you were, you were a conscious incompetent, you know, you clearly thought there was, there was going to be. I don't know, was it, would it be riches at the end that you were driving or was it because I think we, everyone looks at eventually for an exit. Was it that or were you looking at, hey, we could actually build something here that helps people and we make money at the same time. [00:08:28] Speaker A: So when we did this, started this business, I'd say riches wasn't anything in the, in the sights for us. We had had a very notable exit before. We did not need to work, we did not need to do anything if we never wanted to do anything again. So for us, I think it was just wanting to have an impact, wanting to be busy on something and wanting to build something that was fun to work on, something that could have an impact and would allow us to make some money. I wouldn't say that we came in this ever looking for an exit. And as a proof point of that, I can't share the name of the company, but we founded the company in October of 2020 and that was the start of it. We announced the brand or launched the brand in December of 2020. We actually launched our first product which was just a sample to see if, hey, can we get attention in the market? Can we get time and effort from MSPs? We launched that in June and our great fortune and luck and timing and whatever else, you know, we got a few hundred MSPs within bullet. Three months, we got about 300 MSPs. Using that in three months we had a major platform in our industry come and offer us $10 million to buy the business. At that juncture, to put it in perspective, we had across the founders cumulatively invested and Put into the business at that point about a million dollars to just put it in. So we weren't out of money yet. So it's not like we spent a million dollars to get there. By the way. We can all just put it in as equal, equal investment that way. So 10x return in six months essentially, right? Maybe eight months. We, we turned it down. Right. We, we didn't come into this looking for money and looking for an exit. If we did, we would have been stupid to not just take that offer at that point in time and go. But, but yeah, we, we kind of sought out to, to solve a problem, have an impact, create something that we were proud of and something that was for a long, long term that we could, we could build and, and continue to operate. [00:10:46] Speaker B: So how many nights did you lie awake at four in the morning thinking why didn't I take the money? [00:10:51] Speaker A: You know, initially none. Right. Like it, I mean to a lot of people, I'm sure a lot of people listening to this, I mean $10 million would have been crazy to have at that. I mean I at that point in time probably owned 60% of the company. So call it 6 million in my bank account. All said and done after that. That's life changing money for a lot of people. It wasn't going to be life changing and altering money for us at that point in time and again wasn't what we were looking for. So at that point in time had no, no concern or no lost sleep. I mean you fast forward to November, we raised just over 10 million US as a series A and you know, things were, were very, very hunky dory as some people might say. I mean we, we were rolling and laughing. Things were just going really well for the business. We, you know, that all shifted when market headwinds came in and late spring, very early summer of 2021, which I'm guessing we probably chatted before all that happened is my best guess. Or maybe as that was happening, you know, we ended up having a period between, call it June and November of sorry, 2022. That yeah, we, we ended up going from 60 employees down to less than 30 employees. We had to, you know, try to reinvent and reimagine what the business was going to be because the path that we were on didn't match with the economic climate anymore. And you know, I'd say over about a two year period from, from, we'll call it June 2022 to June 2024, there were probably 700 nights where I laid awake and said Maybe we should have took that money because over that period of time, I invested pretty much down to my last dime back into this business to keep it alive and keep it going and doing stuff. So, you know, fully in on the business, fully leveraged on the business. It is do or die. It is, can't walk away from this type of stuff. But, you know, we came through and I'd say at this point time, I'm now again super happy that we didn't just do that deal and, and everything and all the lessons learned and stuff over the last, what would be almost three years now. [00:13:29] Speaker B: Yeah, I mean, it's, it's an incredible story and obviously you're, I, we assume because you're talking about it publicly and you know it is out there and you've talked about it before, but that you're the other, you know, you've come out the other side of that and the business has gone back into growth. And we'll come on to that in a second. Let's talk about resilience. So the vast majority of people listening to this, as you say, it's, it's, it's 10 people or below. It's, you know, we talk to MSP owners and managers across the world and they're not typically people who raise, who fundraise not at the 10 million. You know, it's, we all read about that and we read about Silicon Valley, right? Oh, we raised a Series a, we got 40 million. 40 million. And it's just, you know, what is probably normal to some people is just mind bendingly nuts to other people. So, and I guess that means that when, when economic situation, so things happen, as you were saying, and suddenly the money stops and, and you've got, you've got 60 employees and they're not being maintained by cash flow from products, they're being maintained by investment funding. So, you know, so we can all, we can all see, you know, we've, we've, everyone's seen this story and, and, and, and, and it will, it will happen again. It will, it will keep happening because these things are cyclical, right? And you, you just got unlucky being in that place at that, at that very time. And what I'm more interested in is the resilience. So from one business owner to another and to the thousands of other business owners who will watch this on YouTube or listen on the podcast those 700 nights where I'm guessing if the business had gone under, you'd have lost your original investment. So that's, we can assume $600,000 from the numbers you were giving us earlier. [00:14:58] Speaker A: So you're more than that over time. Yeah. [00:15:00] Speaker B: Okay. Yeah. So, so you're, you're, you're significantly invested into this business. And of course you then end up with, you're then a, you've then got a failed business and you've got no income, you know, and, and you've probably sunk all your assets into it. And not only your assets, you've sunk your energy and your time and your love. [00:15:15] Speaker A: Yeah. [00:15:15] Speaker B: And that's almost, I guess there's almost a grief process that you would have had to have gone through. So how did you keep yourself going, Colin? What was, what was the, what was the. Because that's a long time. That's two years where you're, you're in the, you're in the. Battling every single day. How did you keep yourself going? [00:15:32] Speaker A: Yeah, it's, it's, it's tough, right? Like this is not a boohoo story. And poor me, by the way, right? We were, and I believe we're always creatures of consequence of our own decisions and actions. Right. And yeah, I mean I was, I was fully leveraged. I sold my big old house, I moved to a much like half the size house, put that money back in. I sold all of the fancy cars that I had. I put that money back in. I did everything that way. And you're in a position and I'm sure there's MSP owners out there that have been in the position or maybe are today, where it's not even just like the light at the tunnel is tiny, but you could see there is no light at the end of the tunnel. You have no idea if you're making it out. Right. And you are running out of breath fast. So it's tough, right. And I think there's a few things to it. One, there's a lot of power in desperation. And that is a reality when you sit and look at, you know, what, what happens if I give up here? You know, you can fuel yourself pretty quick. Look, I've, I'm left with, you know, still have, I have a roof over my head and a vehicle, but my life savings is gone. My, my stuff is gone. Right? When, when you start to think about, you know, reputation. Most people are employable. How hard is it to go out and find a job when you've been the boss for the last 15 years when, you know, you very notably had these highly publicized raises and growth stories and exits and, you know, and then layoff and turmoil and all of this stuff, you know, you start working through and thinking through that. So I mean, desperation is one part of it. Two is, you know, I'm fortunate to have two children who are younger and you know, I tell them all the time and always told them, never give up, never, you know, always give your all and, and pursue things. What, what would the message be to them to, to see me walk away from it and give up and, and do whatever. Right? And so there was that for me. And three, I think the big thing is, I guess there's probably four. So three. One of the big ones was the purpose. Why did we, why did we start this in the beginning? Right? And I've talked about that on other podcasts before and stuff. But, you know, finding your why and knowing your purpose as to why you're doing something is probably the number one thing that will get you through the toughest times and darkest days in the business. And we truly believe that we could find and build a product in a company that would turn around that status quo in our industry, that 50% of MSPs don't make money. And still driving on that, still wanting to be able to provide something that turns that. Whether that's from 50% to 40% or 30% or maybe one day zero. Everybody making money is a big thing that drove us. I think the fourth thing was that we still had a team. Even after our second layoffs. I think we got down to about 12 or 13 people at the smallest point of the layoffs that I still had, you know, call it 11 other people that were showing up to work every day giving their all, knowing we had no certainty, knowing that there was no guarantee that they could all be making more money elsewhere, that they could all probably have less stress and less work to do elsewhere. But these people were showing up to work every single day with bright eyes and smiles and just ready to get down to business is probably that last bit. [00:19:38] Speaker B: That's just amazing. I mean, I, I can't imagine how you felt and you know, where you were emotionally, where you were mentally. I think probably having a family was, is probably one of the greatest assets you can have in a situation like that. Because as much as children, you know, I have a 14 year old and I'm a sole parent, so I'm the only parent she's got. So, you know, if, if. And I have good days and bad days, but she's the, she just makes everything, puts it in perspective, I think. And my lows have never been anywhere near as low as your lows. But everyone has good days and bad days. Let's, let's wrap up. Colin, there's two things I want to ask you. So one is I want. Well, we're going to talk about gradient MSP and where you are now and what you do in a second. And I think you deserve a very good free plug at the end of this, just as a reward. You're collecting all the rewards now, which is. [00:20:28] Speaker A: Thanks. [00:20:29] Speaker B: Before we do that, I want you to imagine. So as I said to you earlier, we have thousands of people listen to these podcasts and we have a few hundred views on YouTube, which is great. I want you now to talk to just one or two people who are listening to this who right now are in that bad place. And you said yourself that 50% of MSPs don't really make money. And at any one moment you can assume that there's an MSP somewhere in the world who's just, they've hit that real bottom place. They've just been served notice on their biggest client. They've just had that unexpected bill come in. You know, it's maybe a bit of a health scare. And you and I both know it's often a number of things that come together and it just makes you, oh my goodness, how am I going to get out of that? If you, if that person was in front of you right now and you had 60 seconds to just say something to them to help them realize that there is light, that no matter how bad it gets, you know there's something coming, what would you say? [00:21:19] Speaker A: Yeah, I think one is to always remember any situation in life is temporary. So, you know, if you go, whether you want to go to the, to the acclaimed movie series or I think Tom Hanks said it in a, in a video thing, this too shall pass. The top thing to remember the other is that you know, as an msp, that there's money that can be made as an MSP because there's thousands and tens of thousands of them doing it successfully. So this is not a case of your business model, right? It's a case of maybe some tweaks and stuff of what you're selling and what your package is, what you're charging, you know, how you're pitching it, how you're going to market, how you're doing. There are countless people out there that are successfully selling it, successfully delivering it and successfully making money off of it. So you don't need to sit there and say that this is impossible and this can't work. And I'm going to give up. It's just about watching and learning from others and making and applying those changes to your business. There's a point of being humble in what you're doing and recognizing maybe I'm just not doing it right, and then taking and putting in that effort and going through those iterations to get yourself to a point that it is. But I guarantee you will get through it, stick with it, and I guarantee it can work because it works in any market, in any condition, in any geography. So, yeah, you can do it. [00:22:52] Speaker B: I love that and I completely agree with everything you said there. So thank you, Colin. Just let's finish up. Tell us about Gradient msp. Tell us what you do for MSPS now and what's the best way to either go and have a look at Gradient MSP and get a demo, but also for those people that perhaps just want to reach out to you, perhaps tell us if we can reach out to you on LinkedIn or some other better way. [00:23:12] Speaker A: Absolutely. Reach out to me on LinkedIn. I think my handle on there is reality. Knox. Look me up or just search out Colin Knox. You'll find me smiley bald guy on there. But Gradient msp, I mean, if you're an MSP owner or work at an MSP and you are just sick and tired of the frustration and hassle every single month to go out, collect, look at how much all of your customers are using of every single vendor and product you resell them. Go through the million mouse clicks in your PSA to check and update all of those, and put in the hours, if not days of work every single month before you can click generate invoices, then come check out Gradient. We have, I think we're around 90 integrations with with channel vendors to go and automatically pull that usage in for you. We tie into six of the most popular PSAs on the market to do the comparisons and give you just a clean, easy, single pane of glass productivity tool to go and update all of that stuff. So it's all about making life easier. It's all about getting rid of that hassle you go through every month. And if you're at a point where you just don't even want to do it anymore, we actually have a team of people that we will do your reconciliation for you as well. So, you know, if it's I just want a better, easier way to do it, we've got the software and the tool that can make that happen for you. If it's I don't want to do it at all we've got the team and the technology to make that happen for you. So yeah, come check us out. Meet gradient dot com. You know, read, read through the website, book a demo. Somebody on our team is happy to go and walk you through it all. [00:24:51] Speaker B: Coming up, coming up next week. Thanks for listening to this special episode. Next week I'm going to give you a warts and all review of our experience with HubSpot. We started migrating all of our marketing over to it at the end of last year. Eight months on. Would I recommend HubSpot to MSPs? Join me next week and you'll find out for MSPs around the world around the World, the MSP Marketing Podcast with Paul Green.