SPECIAL: Should MSPs hire a chief growth officer?

[00:00:01] Speaker A: This is an MSP Marketing Podcast special. Could this be any more perfect? A fresh idea for a fresh new year. So you want to make more money from your MSP and you're looking for new ways to do it. Well, as we bring on a brand new year, it doesn't get much fresher than this. Welcome to a special episode dedicated to someone who's found the solution to the problem of how do you focus on growth if you're too busy with the day to day running of your msp, here's a fresh perspective that's definitely worth your time. Powered by MSP marketing edge.com Paul Greens and MSP Marketing Podcast hi, I'm Jake. [00:00:43] Speaker B: Gregorich, SVP of Growth of Lyra Technology Group. [00:00:46] Speaker A: And Jake, thank you so much for joining me for this special. It is of course your second appearance on the podcast you were on. I think it was episode two, 05 back in sort of late 2023 and ahead of having you back on the pod podcast again today. I've just listened back to that. It was such a great interview and you, you were so very generous with the things that you shared. In our special today, we're going to talk about what you guys are doing with this amazing MSP that you are building. And we're also going to talk about the concepts of something called Chief Growth Officers. And not only in terms of how you're doing that, because I think it's really interesting how you're inspiring a large and growing number of people to grow their MSPs, but also we can look at it in terms of how the average MSP owner can take some of the concepts that you guys are proving are working right now and actually apply that within their own msp. So let's start right at the beginning. Let's assume that everyone who's listening to this or watching this on YouTube has not heard you on the podcast before. Tell us exactly who you work for, what you guys are doing, what your mission is, and what you've achieved over the last few years. [00:01:55] Speaker B: Yeah, certainly. Paul, great to be back. Thanks for having me. Liar. Technology Group's a family of MSPs. We have now 77 companies across the US, US, Canada, the UK, Australia and New Zealand. Our business compared to most kind of highly acquisitive MSP is a bit different. What we're doing is we're buying these companies, but we're retaining their people, their legacy, their brand. And kind of the Warren Buffett saying, like, first don't harm the investment in the business and then we're Thinking about how we can help grow those companies so our businesses are decentralized. Lyra is a shared service to those 77 businesses. And what Lyra does to help is we arm them with knowledge, with talent and scale, kind of giving them some of what makes a big company great, but without the bureaucracy of top down decision making. [00:02:42] Speaker A: Yeah, I love that. I absolutely adore your business model. So I guess the customers, from the customer's point of view, do they even know that the MSP that they may have been in a relationship with for a number of years, do they even know that it's changed hands? Do you tell people or do you, do you hide it or is it a case of, right, we're part of something now, but actually it just gets better. You know, we don't change the name, we don't change the people. [00:03:05] Speaker B: Yeah. So most private equity backed MSPs will write into a deal that they're going to lose 30% of the customers within two years of doing the acquisition because of, you know, they're kind of chopping up the business and it causes a lot of pain for the customer. We're not hiding the fact that we've made this investment into the business, but to the end user and to the end customer, they're not noticing a whole lot of change because we're not coming in and forcing this MSP into our way of doing things. Some of our MSPs don't really need to talk about us. They're local, they're working with small businesses. Some of them find it advantageous to tell the Lyra story on how they have this network of companies that they can now provide geographical coverage maybe to their satellite office with boots on the ground, or a depth and breadth of services within compliance or cybersecurity or automation that they didn't have before. And they're now able to offer that to their client. So because we're decentralized, some of our businesses will tell their customers that this is a strategic advantage for them and why it benefits them and others will keep kind of doing business as usual. [00:04:08] Speaker A: Yeah. And I may have asked you this question when we, when we spoke 18 months or so ago, but when, when you sort of started down this route of acquiring other businesses, was the original intention to rebrand them and bring them all together or was this always the goal from day one to operate in that way? [00:04:24] Speaker B: So seven years ago is when the business started with a single acquisition in Pittsburgh, Pennsylvania. And I'm not sure that everyone knew exactly what they were doing at the time, but the idea was really founded of, hey, we're going to make investments, we're going to hold these companies forever and we're going to keep make sure that we first don't harm them. That was kind of the going model for four or five years. And then kind of recently, late 2022, Lyra started providing shared services to those businesses to kind of give them the advantages of scale that a big company has before that time mostly just kind of operating. And now we're really starting to see as one of the biggest and fastest growing MSPs in the world, that we're able to add quite a bit of firepower. If you imagine we have this petri dish of MSP, 77 of them and we really get to see what works and what doesn't. So we're able to create playbooks and peer groups and conferences where we bring our companies together and roll out those things or make them an option to be adopted at our other businesses. We can attract talent because of the Lyra story and, and we have scale. So just imagine buying power, right? We're the biggest customer to a lot of our vendors. You can adopt that geographical coverage, you know, depth and breadth of services. Those are some things that you can opt into that make you a little bit, you know, better and have a bigger advantage against kind of a sole MSP or even a private equity backed MSP that does kind of a centralization and roll up strategy. [00:05:53] Speaker A: Yeah, I guess, I guess what you're doing feels more like the, you know, I mean, we're on the cusp of 2025, aren't we? It's tomorrow. So it feels what you're doing feels more like a more authentic 2025 way of doing it. Whereas the let's buy everything and change the name and centralize what we can and have a massive sock and a massive knock sitting in a city somewhere serving the entire country. That feels like a more command and control kind of way of doing it. It's interesting. I don't know if in the US you have the concept of garden centers. I don't think that, I think that might be a unique British thing, but I live in a village in the UK and a garden center used to be a place where you'd go to buy for your garden, but they've morphed over years into now they have restaurants and you know, anything outdoors or anything in improving your home. And we have one down the road from us called Frosts which has been family owned for since like 1940 something they used to grow the actual plants where the garden center is. That's how it kind of started as two people back in the 40s selling plants. And that was actually acquired earlier this year. And no one knew then. The only reason we know is there's a tiny little logo that has appeared on their sign saying part of the. I think it's the Blue Diamond Group or something. And it's exactly the same. Same business model that you're talking about here, where they've been acquired and now they've got all this backend support. They've got incredible buying power. They've got access to new services and skills they wouldn't have had before. But it's still locally run, it's still locally operated. And the local people who are running the business in the village, they can make the decisions, which is really cool. So I expect that business to just get even better. And I think actually locals, if they'd seen the name change to a national chain, you almost expect quality to come down and prices to go up. So that's why I say, I love your business model. I have to ask, what are the downsides? So, to you, because obviously you're part of the management team growing the overall business. What are the downsides of that decentralized model? [00:07:43] Speaker B: Yeah, so we talked about a bunch of the upsides, right? It's the decentralizations, the blessing and the curse. We get to align to customers and employees, like you said, and keep that local experience. When we find something that we think really, really works, it would be great to just pull a lever and say, everyone's doing this now and we can't. And we really actively make sure that we don't just go and start calling shots that are going to kind of have downstream effects. You know, we might be right in some instances that this thing is going to work across all of our businesses. But as soon as we take that local ownership and autonomy away from the operators, they care a little bit less. It feels a little bit more bureaucratic. And so that spirit of kind of entrepreneurship and decentralization is really, really critical to protect. And there are cases that if we pull the lever, yes, our profit and revenue and customers would get happier probably over time, but we would also make detrimental mistakes that other businesses do and really just hurt the culture, which is not something that we're willing to compromise on. [00:08:44] Speaker A: Yeah, yeah. No, I absolutely love this. So let's talk about the thing I really wanted to focus on in this special, which is Chief Revenue Officers. So if I'm right, you have hired and onboarded 36 different. Sorry, growth. Is it Chief Growth Revenue. You have to sum up the job title. [00:09:00] Speaker B: We're calling them Chief Growth Officers but it serves as a similar role. It's a little bit less intimidating title to the other employees. And since you've gotten that information, we've hired quite a bit more. So we've hired about 50 in the last 16 months. [00:09:15] Speaker A: Okay, so you've hired, and apologies for getting the title wrong, but you've hired then 50 people. Their job is Chief is great. Oh, I've got it wrong again. Jake, help me out here. [00:09:26] Speaker B: Cgo, Chief Growth Officer. [00:09:27] Speaker A: Okay, Chief Growth Officer. There we go. Cgo. I can. Everyone can do it from an acronym. So you've hired these 50 people, you've given them this job title. What is a cgo? What is a Chief Gross Cheat. I can't even say it. What is, what is that thing? [00:09:40] Speaker B: Yeah, yeah. So I think it's important to understand Most, where most MSPs are at. Right? We've got MSPs, thousands, tens of thousands of them. 98% of them are our founder led sales. Right. And that founder is selling in a few ways that are really critical and important to keep top of mind as we make a go forward strategy. They have executive presence because they're an executive. Right. They're active in the business community. They command influence with other business owners. This high trust sale, that's, that's really important. They're highly incentivized and motivated. They're more motivated than anyone else in the company because when they bring on that new customer, a significant amount of that is going straight into their pocket. And so you've got this will to win. These incentives align to really go and get the customer. You're in the community doing community based selling, which I think most people know to work really well within msps. And, and you have executive presence because the buyer wants to talk to someone that they can trust. They look to as a business advisor, not as a salesperson. And, and so what's the next thing? Right. All right, I'm a founder led sales MSP and I'm going to go hire someone. Well again every dollar is a dollar out of their pocket. And so they go and hire someone at, you know, US 50 grand base salary and maybe a year, two, three years of experience. They don't command influence, they don't have executive presence. The customer is not going to view them as a business advisor. And so we're going to not be able to build on any momentum or what has worked in the past in the way that the owner is sold, that's the fundamental flaw that I see within MSPs when they do hiring. And so that owner tries, doesn't work. Tries, doesn't work, tries, doesn't work. Maybe after three or four attempts at hiring this type of profile, they just kind of quit and they say, I guess I own sales forever. And so typically when a company joins Lyra, that's the state that they're in is they've accepted, you know, they've done well, they've been in business for 10, 15 years. They've gotten to, you know, $1 million of EBITDA or around there and they've just thrown in the towel. And so what we've done is we've taken this approach that now, you know, the owners de risks, we're going to go up the PA scale. We're going to get someone that commands influence, executive presence, active in the business community, can become the trusted advisor to the client and also kind of has that strategic sales and business mind that they're going to do some things to get intentional, not just kind of work the community, but maybe add in some process that's going to really scale this thing up. And so what we found is, is that when we place that chief growth officer to kind of take over the growth function and the sales and strategic partnerships and marketing function from the owner, is that after a ramp up period, their MRR is increasing by 60% across those 50 chief growth officers. So we're kind of breaking through the glass ceiling of that owner that's got his hand in too many different things and we're arming these businesses with someone that has the will to win, that's highly incentivized to go and do it and can kind of build on what the owner's done and then really take it to the next level with some more institutional sales knowledge. [00:12:47] Speaker A: So how do you make this person different from just being a sales director? Because the problem that you just described there with the owner struggling to lose sales to someone else, potentially you've got exactly the same problem. So what does a chief growth officer do differently? How are you sourcing them? What kind of person are you looking for? How are you motivating them? What kind of scope are you giving them to get in and roll their sleeves up and get their hands dirty? [00:13:16] Speaker B: Yeah, great question. I think the answer of how we attract them is also how we set them up for success and do this differently. So when I'm going out and I'm having these conversations with potential candidates. We're looking for people with really high attributes. Maybe they have three at the minimum to seven or ten years of experience. But we're giving them their first C suite title. We are putting them on the leadership team. They're setting the strategy, they're building it while they fly the plane. Right. And so you can imagine the flywheel, right? So you give someone that leadership position and you give them decision making power to set strategy. They're becoming an executive. So they're gaining executive presence by doing that. And they, you know, if you own that decision, just like in the decentralized business, you are really bought in and committed to making it work. Rather than being told, hey, this is our sales process, this is how we drive leads, go do this. Well, that hasn't worked in the past. And so this person comes in and they're able to build the engine, have the seat at the leadership table, which then they carry that out into understanding how executives thinks and acts and they're able to command influence with the end customer. [00:14:26] Speaker A: That makes perfect sense. So earlier when I asked you what some of the downsides are of running a decentralized model, you said that you couldn't roll out an initiative which might work well. You couldn't roll it out to everyone immediately. Do you have the same potential problem with your chief growth officers that being given the keys to go and do you know, whatever they think is best that actually they go off in the wrong direction? Or is that mitigated by the fact you're hiring experienced people who've been there and done it? [00:14:54] Speaker B: Yeah, it is absolutely a challenge. If my recruiting and HR team here is, they're cringing right now in the pain. So every time we kick off one of these searches, it is basically a consulting engagement of what is the go forward structure and strategy and setup for this person look like. We're not really selling them yet at that point. The way that we sell them is we put someone in front of them that blows their mind and says, wow, this person knows more about my problems and the potential solutions to my problems than I do. I want to give them the ball. And if you find the right person and you get them in front of them, we've hired at 100%. I've never had them be rejected by the operating company because that person kind of takes it and blows them away. It gets easier as the reps come in. Right? Because we've got case studies, we put our other CEOs in front of the group at our conferences that we have two or three times a year and they hear the success stories, they see the metrics that this is driving a 60% increase in MRR. And so now it's getting a little bit easier. But each single, every single one of these sourcing engagements is a challenge. It's a consulting engagement. It takes three to six months from getting their buy in to actually finding someone, to trying to hire them, to getting them onboarded and set up for success before they're really kind of like set free. And the CEO needs to be bought in the entire way because they ultimately have that decision making power. [00:16:24] Speaker A: Okay, that makes perfect sense. So I'm just thinking how this relates to the sort of, the average MSP owner who would be listening to this or watching this on YouTube and essentially what you're saying is you can't just hire someone off a 30 minute interview and expect that person to become a superstar within a few months. I appreciate that's a very, very stripped back answer, but what you're doing is you're as much selling to the candidate as you are to the person they'll be working with. And it's a very, very long process and you be prepared to sort of commit to it long term and go quite in depth with them. Would that be a correct extrapolation of that? [00:17:03] Speaker B: Yeah, you really need to increase your risk appetite and that decision when you do want to hire someone, you should be over the moon to give up massive responsibility and really committed to it because you will falter throughout that. And if you're not, you know, within the liar family, you don't have those metrics and case studies and other CEOs to talk to about this. So you know, you're going to go up the pay scale, you're going to give really high variable compensation, you're going to give someone a big portion of your business and probably the most important part of your business. And so you better make that decision with confidence. And I would just say high or slow, you know, and make sure it's right and then give that person every opportunity to go and make it happen. And then in six to 12 months if it doesn't work, you know, you're going to have to move on. But if you don't fully commit, I view that as one of the fastest ways to fail here. [00:17:55] Speaker A: Yeah, and, but of course that's the scariest thing, isn't it? You know anyone? I, I run my own business. Most people listening to this are watching this run their own business and to, to, to ask someone to fully commit to handing over something so big. I think that's probably easier for someone in your position where you know, you, you're shepherding and, and, and looking after a number of businesses. Whereas when it's your business and it's your baby and you built it from scratch, you know, literally screwdriver turn by screwdriver turn over 20 years, I think that's a, that's a much harder thing. And if actually, let's turn that into a question. Have you, have you, do you have a process to help the people, the people who are operating these, these MSPs that you're buying? Are they, are they the typically the former owners or are they, are they other people at the service desk, manager or someone like that? [00:18:39] Speaker B: Yeah. So maybe in 40 or 50% of our businesses the ex CEO is still the current CEO of the business and we've kind of rejuvenated them. They had a plan to retire, but now they're a part of Lyra and they've gotten really excited and they've decided they want do this at a different kind of scale with different level of resources and they've been de risked so they can go and take some shots maybe they always wanted to take. The other 50 to 60% are CEOs that we're typically placing. Maybe half of those people are promoted from within the company. They were the right hand man. Maybe they did do this and they already had that growth leader and now they're being promoted up into the CEO chair and then another half. We're going to go and find someone with again similar profile. Right. High attributes, five to 10 years of career and we're going to give them their first CEO title and say hey, we know this is going to be bumpy for about 12 to 18 months but typically what we'll find is someone with 15, 20 years of experience, they start up here and they're on this path and then this person makes a bunch of mistakes and then takes off after them after about the 18 month period. So similar process on the CEO side that we go through hiring for about a third of our businesses. [00:19:52] Speaker A: Got it. And when you're selling the idea of a Chief revenue officer into a CEO who previously was the owner because even though they might not have a financial stake, they don't own the business, they care for it still. It's still their baby. Right? Especially if they've chosen not to retire and to stay carrying on looking after their baby for a while. Do you find it harder selling the chief revenue Officer concept into them compared to the CEOs who've been hired for. [00:20:16] Speaker B: That job, way harder every time. Way harder. You know, they've done things a certain way for 10 years versus a CEO that's done things for six months or 12 months in a certain way. So change is a lot easier to enact. Those, you know, those CEOs that were founders, they become the biggest champions, though, over time. And so I'm often, you know, we have these internal referrals. Basically, it's like, hey, go talk to X, Y and Z. They felt exactly the same way in the exact same setup. And here's kind of the outcome and where they're headed today. And so we use them as champions. [00:20:51] Speaker A: Yeah, that makes perfect. That makes perfect sense. Thank you for exploring and explaining this concept of. And it's become, it's going to become a thing in my head now, a crutch of words. I can't say Chief Revenue Officer. It's like the word phenomenon. I've always struggled with that word. For example, I think it's probably the first time I've ever said that on the podcast. And I shall not be saying Chief Revenue Officer either. Although it seems to be easier now. Well, exactly. It's easy. You've been saying it for a long time. So it's easy for you, Jake, before we let you go, because it's quite rare for us to get so much time with someone like yourself who is involved with so many MSPs and you're in so many different marketplaces. Do you say you were in four different countries? I think you said five countries. Five. Okay. You've added an extra country just while we were talking. So you're experiencing so many different types of MSPs in so many different marketplaces. And obviously we are tomorrow heading into a brand new year. If you could. And I'm not going to ask you just to cut it down to give us your top three. But let's say tomorrow you got fired. I mean, that would suck. What an awful first of January that would be to get fired. But let's say that happened and you said, well, screw you guys, if you're going to fire me, I'm going to go and buy my own MSP and I'm going to run my own MSP and take everything I've learned here and I'm just going to do it. So let's say tomorrow you bought an MSP and it was an average size acquisition. What would you do? And what I'm looking for here is your direct advice of what you would do if you owned an msp, because obviously that's something that the MSP is listening to and watching. This can take away themselves. [00:22:20] Speaker B: Yeah. So if I took over the operation of MSP tomorrow. [00:22:23] Speaker A: Yeah, yeah. So it's suddenly it's your baby. You've shelled out, you've borrowed a ton of cash, you've put your money in and you own that msp. And obviously a chief revenue officer, we all know that now that you would put one of those in. But that's a long term thing. So in the sort of the first six months, six to 12 months, what would you do to start to drive growth within. Let's assume it was a stagnant business that you bought. What would you personally do to start to drive growth? [00:22:46] Speaker B: Yeah, so I would start by only buying companies with happy customers and then I would immediately go and I would talk to and meet with every single customer. You need to find out why your customers actually work for you. This industry is very noisy. It's very hard to differentiate. And so you got to find that magic of how you're going to have a compelling value prop that doesn't just sound like every other MSP and that usually exists within the customers and why they work with you. The other thing that I'm looking at when I'm talking to the customers is the relationships. This is a relationship business. You use circles of influence. Those are absolutely critical. So I need to know who we have our core relationships with and who has referred us business in the past. And then I'm going to map what I call circles of influence and I'm going to look at those people's second degree connections. I'm going to look at where they spend their time, what circles they're in. That could be other investments they have that could be business associations, peer groups, charities, any number of kind of close knit communities. And I'm going to join those communities where I have multiple customers in the same community. Because this is a trust sale. And so I kind of hack gaining the trust by being with the people that already trust me and entering their circle. And so once I map those circles of influence in the secondary connections to kind of my super connectors, I put my sales plan in motion to go join the circles that they are already operating in the media that they already trust. Kind of like this conversation within the MSP community. [00:24:14] Speaker A: Yeah, yeah, that makes perfect sense. Jake, thank you so much for coming back onto the show. Now some people listening to this will be thinking, actually 2025 is the year they're going to get out and maybe they'd want to have an initial conversation with you. There may also be people listening to this thinking that chief revenue officer job sounds great. How would I, how would I know more about that? So what's the best way for people to have those conversations? Is it with you or should it be with one of your colleague? And how should we get in touch? [00:24:40] Speaker B: Yeah, you can definitely reach out to me on LinkedIn. You can send me an email, you can link to it. I'm happy to share some of the playbooks we use in terms of scorecarding candidates and how to hire them and set them up for success. So please do, don't hesitate to reach out. [00:24:54] Speaker A: Coming up, Coming up next week, how would you like to own an MSP doing 7 million a year where you personally do none of the tech work? In next week's final special episode, you'll discover how one Guy grew to 450 clients, 35 staff, and $7 million revenue. Enjoy your New Year's celebrations and I'll see you in 2025 for MSPS around the World. Around the World, the MSP Marketing Podcast with Paul.