Archive for the 'IT Business' Category
Over the past year that I’ve been off the road I’ve been working very intensely with my partners on getting them rocking in the cloud. As you may have noticed here, I have for the most part given up on the general IT provider population and have declined a very large number of invites for presentation and training because.. quite simply.. the easy cloud money will put enough people out of business in very short order as they let that v in VAR become largely minimized. So be that as it may, I have no real agenda here beyond just stating my opinion.
Let me just sum this whole thing up by saying that I’ve seen this movie before. I know how it ends. I know what happened to IT staffers that didn’t keep their skills up, what happened with massively vertical-focused shops that dealt with Y2K and cars and real estate/builders when the economy collapsed, what happened to people that were system builders and many of my fellow SBSers through the years. Cloud is a commodity and a transactional business, if you are not making a moat around it then you’ll soon find yourself out of the castle along with all your “services” the client could really do without. So let’s get started:
For most people, the migration to the commodity cloud will be the last large project of their career or business.
Cloud is a commodity, no argument there. But if you’re one of those VARs, MSPs, etc and treat it as such you’re pretty much putting up your tombstone.
There are many great reasons for someone to “sell” a client Office 365 hosting or Gmail, who can beat the appeal of a cheap mailbox. It’s what the clients are asking for: Vlad, I need the $4 mailbox. Convince me why I should pay double or triple? Hypothetical question of course, I’d hang up on someone that was that clueless. But we do get to compete against Gmail or Office 365 often so here is how we do it:
Case: Client needs Office 365. They want it. It’s $4.
Vlad: Not a problem, I can have that contract for you by the end of the day. There are some terms but let me ask you a few questions…
Few questions later, the person sort of realizes just what a crappy deal they are getting and how many compromises they are about to accept. While on the surface everything looks the same, people that run businesses or are responsible for IT departments don’t buy the bottom shelf Dell hardware specials for a reason.
And to be honest, we have not had an issue selling anything from our Exchange at $4 to the full “Office 365” stuff at over $25/month (I use the quotes around the office because it’s the same software/features that Microsoft offers it just runs off the network and the servers we control).
How Much Is Your Expertise A Commodity
I ask my partners this all the time.
Another one (credit to Lee Evans): Should your expertise save them money?
One of the misconceptions about small business is that in small business we all have each others back and we try to save one another a ton of money. Guys that thought that went out of work/business last decade.
There are two kinds of business models that are thriving today:
Cloud transactional – people selling a ton of different cloud services due to the demand and their ability to roll them out quickly.
Project and legacy models – from web design to hardware maintenance to hybrid of MSP / project based solutions.
Only one of these will survive. And if you think I’m on the side of the cloud… you haven’t been paying attention.
For the past few years we have been at an inflection point between buying stuff and buying services. The moment people buy a service (and get on it) the need for an IT person is eliminated. Smart people are partnering with companies that enable them to be the sole provider of that service – folks that don’t pay much attention are simply connecting the dots and facilitating the sale and effectively removing themselves from the IT channel. Yes, they delude themselves into thinking that their MSP contract means they are tied to the client but I hear from more and more people each day that are dismayed that their client decided to give up the office, the hardware, the infrastructure that was being managed.
Imagine offering your clients a great phone system and managing their PBX and providing service with their phones, etc. Then one day you saved them some money by moving all that stuff to the cloud but they kept their gadgets on their desks and everything was the same. Well, new release came out and there was no real need for the desk phone, their cell could do the same thing and thanks for the years of business but it doesn’t seem we need these cables, phones, contracts or warranty. Replace the phones with computers and the PBX with the cloud services and there you have what I’m seeing more and more out there.
The inflection point – preparing you for which I’ve made endless blog posts over the years – was to help you create your own plans, your own support, your own backoffice (hopefully powered by ExchangeDefender and Own Web Now). You either built it or decided it didn’t matter because you had all these other gadgets that needed to go in play. All I can hope for is that either you gave us (or similar) a shot and that your luck is different from the hordes of people that are suddenly knocking on my door.
The notion that that cloud.. is just a computer that is in some other office.. is a gross oversimplification that eliminates experience, skill set, training, investment and a common goal of providing an excellent service. But suppose all of that was indeed worth nothing, how would you explain your client what you are charging them for stuff every month?
Something to ponder as you think what your business is actually worth when put up against a commodity.
So I’ll say it very simply and succinctly: If you are rolling out a cloud solution where you are not in control of the account, not in control of the data, not in control of the backup and disaster recovery… You are outsourcing the part of IT the business actually cares about. I know you think your service is important, I know your tools are sophisticated, I know your knowhow is earned and your relationships are strong. But you are digging your own grave. Good luck with that.
P.S. The really ugly thing, for folks that aren’t naive, is the aspect of the cheapness and liability. In the past when clients decided to go cheap and make mistakes you at least had billable hours and projects to help them roll out of their mess. When those mistakes happen to services, and trust me cloud is far beyond flawless, who really has your back? Your clients? What sort of control do you have over the situation? How about that data? Folks consumed with the dizzying array of Azure and Amazon Web Services options and services are running around trying to do their best to sell more, find more clients, get more leads, specialize in a more lucrative vertical – but all they are doing to themselves in the process is cutting away client dependence and future profit prospects. While the liability explodes because there is no way to throw money at fixing a problem after the lawsuits start to fly. Again, something to ponder. Cause if you think you have a simple and easy answer to this.. it’s going to hurt.
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Earlier this summer I decided to take over two months off of work and really had the minimal contact with the office and with most of the employees. What I had to figure out is whether I am done with ExchangeDefender, Shockey Monkey and indeed with the rest of IT world.
This is a tough business. When you’re in the technology part of it, your motivation and your reward is the man triumphing over the machine and making that underlying technology work better for the business that invested in it. You know what to do. If you’re any good at that and happen to like people you’re on the business side, helping people not waste their money and productivity. Then you make money. You know why you’re doing it. Lot’s of money. Really, rather obscene amounts of money.
So there I was.
When you’re making so much money that you don’t know how to spend it, but still have responsibilities, things get rather monotone and boring. It’s just a number. You go through the daily motions but the process itself kills you. You want to put the pedal to the metal and get a new feature rolled out but that takes time. New marketing agenda – needs to be researched, sold to partners on which benefits work and where, designed, tested. New business lines – ditto, starting it from scratch. I’m not going to lie, it bent me.
So I went on a vacation. Around the world. Did all the things I love to do. No, still didn’t sleep, I’ve come to peace with the fact that it’s just who I am. Ate a camel burger. Rode camels in multiple countries. Hey, it’s Wednesday! Hi Andy.
It wasn’t a soul searching expedition.
I wasn’t trying to ask myself what’s next.
I wasn’t making plans in my head or hoping and wishing.
I just enjoyed my life.
And then it hit me
All my adult life I wanted to make $100,000 a year. Then somehow that changed to wanting a million dollar business. As I got more successful the obsessions added zeros but the bank balances never really did much for me other than giving me the confidence. What I got out of ExchangeDefender, when it’s all said and done some day, won’t be the money. It’s the relationships I’ve built, people I’ve trained and made into professionals, companies we’ve helped build and seen each other (and our kids) grow up.
So I did no work this summer. But I kept on chatting with partners who are actually more my friends at this point rather than the people I work for. And that in the end is my value – in seeing that people like myself beat the odds. I founded my company on the promise that we will not screw or exploit people, staff or customers. Over the past 18 years lot’s of people worked very hard for it. Don’t get me wrong – we’ve done great – but it’s been an effort that is more than a paycheck. When someone wakes up at 3AM to deal with an issue that could be handled by someone that just got hired that’s no longer a “I need this job” mentality.
I cringe when people tell me they are building their business on top of a partnership with a giant company who is accountable to it’s shareholders and barely even to their employees, much less you. And then what do you tell your staff? Your clients – your family?
To me, Own Web Now has been and will be a company that helps small business succeed. And we have a lot of cool things we are working very hard on – with a management team that has rendered me completely useless and replaceable. I can’t tell you how liberating that feels. And just how awesome that is going to make the next 5 years that I’m mapping out for us right now.
As always, thank you for all your money and your confidence in us. I appreciate it.
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I got an interesting email (excerpt):
… so it’s just a matter of time till my job is outsourced or just dismissed.
If you were in my shoes what would you do because I like the place I work at. I just don’t see it lasting.
I hear this from a lot of people. You fall into a job where you happen to be good at a few tasks and your boss piles your plate sky high in the same task until they move on to something else and you cease to serve a purpose.
I often get criticized for writing in a brutal tone that cuts very deep and today will be no exception. I am not trying to sell you anything, I am not your buddy, I am not writing this for the sake of getting you signed up for a seminar or a book tour – I do this as repaying a debt to the community that has made me a very wealthy and successful guy. And this is an important part: I hear this very same “getting stale; I think I’m done” sob story from my MSP partners who are feeling like their days are numbered.
I’m going to say this only once and very slowly, read it as many times as you need to and chant it away until it sinks in.
People hire people.
People buy services.
Got it? Good.
When something doesn’t matter but is necessary for the operation of busines, it is handed off to a temp employee or the cheapest licensed vendor available. It’s temporary, necessary and finite.
When a business is spending money on personnel it’s not looking for a cheapest person barely capable of doing the job. Those jobs are in China now. If you were invited for an interview it was because the company felt you were capable and qualified of doing the job. If you were offered the job it is because the employer thought you would be a valuable addition to the team and could grow to be more than what they needed right then and there. Why else would they go through the hassle, it’s so much easier to deal with a vendor than to train, manage and motivate an employee.
You are here because you are valuable
Most employees forget that. Most employers and managers forget this over time as well but that’s the truth – we fall into a rut and into a process and the longer we do the same thing the longer we don’t feel we are making progress or a difference.
It is critical for employees, and their managers, to come up with tasks and projects that staff can work on somewhat independently of their core responsibilities (and this is where most people that were gonna forward this to their employees just stopped reading because nobody wants more work) that give some meaning, purpose and independent creativity to an employee.
The best employees see what needs to be done and manage their projects on their own. The ones that just wait for stuff to be handed to them on a platter are sort of missing out because odds are you’re going to be handed stuff you really don’t want to be doing. So take some initiative, talk to your boss, point out stuff that needs to be done.
Remember, people hire people. You got hired for a reason – if you do nothing in the face of becoming obsolete then yes, you will inevitably find yourself without a job. But if you reinforce why you’re there, if you excel at your core responsibilities while proving that you’re worth and capable of more.. They’ll find something to keep you to do.
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A lot of people seem to like Trump, despite or in spite of the seemingly idiotic stuff he says. As I try to explain this to my friends abroad, it has more to do with the general disgust most sane people have for the media and for the climate of political correctness that is slowly crushing our ability to say anything negative about truly insane stuff that is going on.
Here is the thing with Trump – he is direct, he is visceral, he is everything you need to actually succeed in business dominated by lawyers, committees, boards and people put in place to keep things from moving forward. We’ve all had those clients.
I don’t find Trump to be mean spirited. Someone with that much power and that much money wouldn’t stay in business or in the media long, who wants to fight all that backlash when you can buy an island?
I recently had a conversation with a friend about relating to Trump and how being an asshole is not a bad thing people always make it out to be.
Not being an asshole, not being critical, not being able to raise your head above group think is perhaps the worst thing you can do when you realize that far too many politically correct super networkers around you are perfectly polite but also working their own agenda that is actually damaging and actually mean spirited. Folks that are really out in complete self interest and screwing others do not want to have difficult things discussed because it sheds light on their behavior.
I can relate – here is a personal story without naming names. I feel like the biggest problem MSPs (who are a decent size of my client base) face today is lack of education. So I get invited to donate my time to a non-profit to help design stuff for folks to get a better handle on the cloud and how to do so profitably. Sounds like a win win right? But when that non-profit is generating 50 million a year in a certificate business and decides to waste the groups time on generating one more worthless commercial certification track who is the asshole there – the guy who doesn’t have the time for that or the guy that is pushing for it with both hands and suddenly ends up with a part time job with the non-profit?
When activity like that goes without comment and without criticism, many people get actually hurt. Not in sense of hurt feelings, which people get over with quickly, but actual value destruction. And folks like that want an environment where nobody ever says anything stupid or offensive or critical – because negativity is a bad thing and we need to focus on good and positive and forward and up (and let them get away with it)? Bullshit.
This is why guys like Trump are always called out for the stupid, ignorant, negative and critical stuff they say – somewhat because it’s easy to get the people to think you’re an asshole with snippets and sound bites and be angry about it (so you tune in more often) – and it’s far more difficult to get the people to rationally consider all the fuckery and swindling going on. People overreact when they are confronted by such crude or honest behavior because they have become disaffected and sterilized by the cordial, polite and friendly interactions that they deep down know do nothing but screw them. And it’s easy to point to it and say “My god, what is wrong with them!!!” because that shifts the conversation away from the ACTUAL problem.
So every now and then I work with people who after a while feel comfortable saying “Man, I heard you’re such an asshole” and I look at them wondering why they thought that was such a bad thing. Sometimes being an asshole is a good thing, particularly when the “normal” is the insanity we’ve given up to take for granted because that’s just the way things are.
For the record, as many of you may have been offended by this blog (and if you haven’t been yet, stick around), keep in mind that none of it was mean spirited to tear something down. Visceral as it may be, you can probably count on your fingers the number of folks that have been hurt by me – wish I could say the same for those that live to criticize it as they fail from one job to the next.
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Before I get out of here for my summer vacation I’ve spent quite a bit of time on the phone with my partners and we’re chatting about the usual stuff that’s required for growth. If you’d like to chat please call me – if you’re waiting for me to call that’s a 5 figure queue and my schedule gets set by demand… unless you’ve got something fun going on then I’m there.
Making money from IT Solution Providers
I should first offer a disclaimer that the word VAR is a four letter word in my business. So for the purposes of this discussion (and our business model in general) the following doesn’t include businesses that aren’t first and foremost about service.
There are four successful business models for making money off SPs:
1. Overpriced, high touch, we-do-it-all solution.
2. Free solution that sells something else on the side.
3. Reasonably priced but widely distributed thing everyone buys.
If you are considering going into a business that provides any sort of a solution to the SP base you need to pick a horse and stick with it. Here are brief descriptions:
Overpriced, high touch, we-do-it-all solution. This works if your solution requires quite a bit of skill to put together and maintain. Here you’re actually providing more of a service and consulting/implementation than an actual product. Think of it like Mark Zuck – “If they were going to build Facebook, they would have built Facebook” – if your solution was both easy and simple most companies that have a lot of money would have already built it – so good luck trying to sell them something if they already have middleware in place. Ditto on the low end, they want it but can’t afford it and you’re not going to make money by selling things at a loss.
Free solution that sells something else on the side. If you don’t have a large sales force and a support team then you likely also have a weak marketing budget – good luck getting in front of the client and harassing them into buying your stuff. But if they are already using some of your stuff it’s infinitely easier to get them to pay a little for some other stuff. And eventually they’ll end up in the product #1 where they are actually paying a lot for something very personalized and custom. Yes, Shockey Monkey.
Reasonably priced but widely distributed thing everyone buys. Think things like antivirus and backup software – expensive to develop, expensive to support, difficult to build out, requires track record and increasingly higher costs as audits and certifications are required for even the most elementary stuff.
Pick one and stick with it. As every failed IT business will tell you, once you give into the temptation of a “big client” that soon becomes a major part of your revenue and then bends your profit margins over.. it’s far less risky to get a ton of clients that contribute a little than to kill yourself over that “whale” client. But that requires hard work and vision and strategy and…
Service business is about relationships. But what do relationships look like when you’re likely never going to meet most of your clients in person? The key is availability and responsibility. I wish I had a dollar for every time an existing client has told me that I come off like a total dick on my blog and Facebook. No shit, why do you think you’re reading this horseshit in the first place? When you’re actually working with us things are obviously quite a bit different – and the persona that you will play on the Internet to people that will never see you better make it seem like they can approach you and rip you a new one when you fail. Your clients need to know that they can come to you at any time, for any reason and that someone will take care of them.
Long term strategy. Some stuff will work and some stuff will not, that’s the nature of business. But working with solution providers isn’t like working a transactional retail cash business – solution providers will see you as a part of their business. When you do good, they don’t notice. When you mess up, you make them look bad. It’s the instant Office Space moment where you get to be kicked by their client, their clients rep, their low end IT guy that took abuse on the ticket and likely the manager/owner that now has to apologize for you. So if you don’t have the mindset of “I will not fuck up” then this is a non-starter. When you sell them something don’t ever expect them to cancel. Communicate as such, lead up as such, explain as such.
Beware of hobbyists. This is the most important thing and most valuable piece of advice I can give you: Money talks. If your client comes to you with more problems, questions, inquiries and requests they are likely very diligent and thoughtful people. And in my experience, they don’t have a lot of clients that will make this a good business venture for you both because they spend more time tinkering than selling and managing. Unfortunately for me, I was that fucker that spend most time trying to make things perfect early in my career and I advise you to avoid that type of a person like a plague. Ditto for coaches (I still get daily emails and calls from one expert after another promising to bring me business if I hire them on to help my clients with business, newsletters, web sites, sales strategies, marketing, cold calling, etc), ditto for prominent personalities that you can’t pinpoint a revenue stream (professional conference attendees, vendor shills), people you can’t reach on the phone (if you can’t get to them how do their clients?), professional networkers and dealers (we can connect you with a person that can connect you with 5,000 leads) and other common sense scum of every business line.
If you build it… they will come. But will they come in an adequate volume to make you profitable? Remember that folks that have a lot of money to spend may already have some sort of a solution in place and those less fortunate probably don’t have the time, resources or willingness to put the solution in so you’ll have to do it for them. Whatever you do, be nimble and test multiple models until you start building up a base from which you can hire, replicate and grow your enterprise.
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Once upon a time in the long long ago, right after college, I went for an interview with a Fortune 50 company and after a few interviews for an engineering job they went with someone else. About a week later they called me back and wanted me to come in and discuss a VP role. Quote: “You just seemed too sociable and too friendly to work in engineering long term and we think you’d do better leading the place”; few more interviews, all day meetings and calls with different offices later they again chose someone else. I was pretty bitter about that for a long time but it was good to be crushed at such an early age:
High profile jobs, with few exceptions, are not given. They are earned.
That’s not the lesson, I’ll get to that in a moment. Bringing in outside talent to an already thriving organization breeds disloyalty and crushes the corporate culture that is built on climbing the ladder. Why climb at all? Because to lead effectively and grow not just the profits but the team it’s about far more than just being qualified. It took me a while to figure that out.
Now.. what I’m about to tell you is not something a book can be written about because it’s not glorified feel-good bullshit people tend to seek out while they fantasize their way out of the daily struggles to manage and grow a business. Here is the truth.
Making money is hard. Sustaining it over the long haul it’s extremely difficult.
And that’s the way it should be.
The sooner you accept that – the better off things will be. It’s hard, it’s brutal, it’s without external motivation and very few people are cut out to do it. That’s business.
I have disagreed on this topic with many of my ex employees. Among the more triumphant failures I’ve tried to mentor are scores of stay at home moms, SEO experts, multilevel marketing sales frauds, sandwich flippers, family business part timers and other lifescapers who thought they knew better. I wish them all the best. But in so many ways I feel sorry for them and for the day when they look for a real job again and realize what HR does to resumes that have large holes between jobs and how hard their “willingness to work” will be questioned some day. But that’s their problem, not yours if you are trying to build a strong organization.
In a workforce full of dreamers is the reality of overworked and underpaid people who channel their frustration into solutions and success. If you think about what it took to build your business, that most certainly describes you. And while peons and dreamers will come and go, the people that can make it through the thick and thin are the ones that will be there for the long term and will ultimately succeed in the long term.
Not really a feel good motivational tidbit, is it? But it’s the truth. While people are stuck daydreaming about working at Google and being given a free paycheck and time to go find themselves on spiritual journeys through Indonesia (of which I’m almost certain there are like 6 people with those choices just for the sake of PR) the rest of the people are grinding it out like everyone else.
Don’t dream. Work. It doesn’t get easier, you just make more money. People that win have the mentality that it isn’t about the temporary annoyances but about smashing long term expectations.
And that pursuit, of overcoming adversity while excelling at your craft, is what careers are made of. And damn it feels good when you finally make it. Maybe it’s for you, maybe it’s not but I’ll tell you what – earning something always beats being given something and it sure as hell beats holding a sign asking for $15 an hour for a job that people beat you down at.
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That nobody talks about because nobody can get paid off of them.
In my new life in the cash business I spend bulk of my time exchanging ideas with some very smart people that spend a lot of time pouring over government employment and economy reports, of which this past week was full. Long story short, it sucks to be poor in America and it’s going to suck even more. But I don’t want to talk about bashing the poor, I want to talk about the business practices that will keep you out of the hole. Namely, two of them:
I’ve never really understood the passive complex of sitting around and expecting someone else to give me a cut just because they are doing better than me. If anything, it’s always been a mentality of finding out who is doing well and trying to do what they are doing.
If you’re sitting around in the paralysis over comparative analytics (which is what many of you that went out of business constantly questioned me about).. just stop. Worry about your own business. Beyond knowing what is working and what others are charging it’s on you to build a profitable business. Otherwise just go buy a franchise.
There are tons of opportunities out there. Tons of really great paying jobs. Great career advancement possibilities and perks. The only trouble is, nobody wants to move to Buttfuck, South Dakota or #holyshittherentishowmuch, San Francisco.
Far too many people get hard headed about things other than making money and then wonder why they eventually can’t make more than scraps. The line of “forget the cloud, I’m making thousands in margin on every Cisco device I move” is stretching around the unemployment office (where you’ll find those same masterminds).
Long story short
Find out what others are doing and if they are doing well, copy them. Even if it’s uncomfortable, little money is better than no money and I don’t care what the late night infomercial or unemployment IT festival speakers told you: making money is hard. So just come to terms with it that nobody is going to cheer you up, everyone will try to beat you down – and unless they are about to do your work for you f em and just keep on working.
Do those two and everything is gonna be alright. Or preoccupy yourself with the circus and you’ll soon find yourself in it.
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Personal note: Sometimes I lose sight of how many new people come to Vladville every time I post something – god bless social networking, folks forward stuff around and like a boomerang I get buried in an avalanche of emails from a new audience. I’d venture to say at least 95% of my communication about this blog and the IT/SMB community in general flows through firstname.lastname@example.org so feel free to email me but sometimes.. honestly.. I just delete it all.
The other day I wrote about the #1 Problem the MSP Industry faces and in a nutshell it’s that nobody is interested in doing the low level grunt IT work of dealing with the mess businesses have with poorly thought out technology process and purchasing. This is a threat to vendors because there will be fewer people selling their junk, threat to service providers because there will be fewer talent interested in a career of IT plunging (get the visual?) and the entire ecosystem can collapse. I’ve gotten enough feedback on that post to write a thousand blog posts but instead I’ll just try to address some of the misconceptions.
“How can you be so negative on the MSP industry yet so positive on the MSP prospects?”
My buddy Norb actually laughed at me for calling it an industry. And yes if you go to an event it does look like the gong show.
There are two perspectives First, those of you new to Vladville may have misunderstood – I’m not a journalist. I’m a CEO of a technology company (ExchangeDefender) so I have an insight into what people are buying, what people are getting rid of, I talk to thousands of partners around the world and I also offer a free business management platform at Shockey Monkey. So I obviously have a business bias and a very large footprint of actual business data that I draw conclusions and opinions from – I’m not a research company analyst pulling numbers out of thin air because my English major college education left me mentally incompetent to tell what software and hardware business executives are lying to me about.
Second, I have a very large following through Vladville and a massive worldwide audience that I may not do any business with at all – so lots of IT employees, Shockey Monkey users, people I met at shows. This is my reality gauge, what are the people that don’t think exactly like me doing.
Explanation: We tend to form our opinions based on the evidence we only have direct access to and see with our own eyes. Hence my negativity towards the gong show, deception, lies and degeneration of leadership to people that should have a warning label on their face. But I have my business which is growing, I have numbers at Shockey Monkey which are growing, I’m investing in new and different services and I see a ton of potential for a way to make money.
“I’m still around so the notion that the business model of dealing with old technology is bad is wrong”
This argument is so old and so pointless I kind of don’t even want to touch it but I’ll say it again: If you go to a Radio Shack you can still by a VCR tape rewinder. Yes, Radio Shack is still out there – when was the last time you went to it? And yes, people still both build and sell VCR – so yes there is money in it but only like two companies do it and all thanks to scale. So maybe nothing really dies when it comes to technology, but just because something isn’t dead doesn’t mean companies should follow the same plan.
For tons of reasons. First, it’s hard to find lots of talent that will be excited about working on the legacy IT. Second, it’s hard to finance a technology that is slowing down in influence – so a startup or a small player doesn’t stand a chance at all. Third, the talent needed for it and third party support are hard and expensive to find (hence the $105k for a AIX / DB2 admin ad in the newspaper; their current DB admin is 90 years old and about to die and they need a replacement). You can go on for days.
Explanation: There are two wrong assumptions in the IT business – that you must chase every new fad and that you can build a massively growing and profitable business on a dying technology. Typical scare tactic “If you don’t get into this right now you will go out of business” and “There is still a ton of money in Windows XP upgrades that you can’t afford to miss” both ignore the fundamental need for every business survival: being rational about how money is spent and how easy it is to get a new profitable client.
“Why do you constantly beat down the very same people that give you money?”
Some people are just negative by nature. So they look at my criticism of certain things here and they consider it to be a destructive force. I can’t really explain that, how exactly does a blog someone writes in his spare time produce a real and actual negative business impact? It’s just words.
Something I wrote got you butthurt? Good!
If something I wrote here makes you feel so insecure about it then work on fixing it. I don’t wake up every morning high fiving myself about how awesome I am, I look for areas in which I can improve and what I can be doing better.
World has enough insincere cheerleaders. They want you to feel good so you can buy their crap now – they have quarterly numbers to hit. I on the other hand want you to be better and build your business for the long term.
Explanation: Just because things are good doesn’t mean they can’t be better. I am not a cheerleader and I don’t write for the sake of my personal pleasure or for the hits – I write this blog because I can’t respond to thousands of emails that come to me and I’m tired of having the same conversation. I am trying to help IT and SMB folks grow and avoid mistakes and commit to discipline and long term improvement. If that sounds like a beatdown… perhaps you shouldn’t be reading this blog.
“The way I see it, complexity and mess means profits! Less competition? Good!”
Indeed. Except things don’t work like that in reality and that’s exactly the wrong kind of a business you want to have in the technology field unless you are a sadistic person that loves daily dose of pain and punishment.
For example, working with Windows XP. And not the pretty part of paving and reinstalling a box ravaged by a stream of viruses and no backups – I mean the ugly migration of a third party app that has to work with the specialized printer or other equipment that is obscenely expensive and way out of support. If that’s your dream job, rock on, carry on my wayward son. If that’s what you want to do till the day you die or retire…
Profits? Complexity means something entirely different in the IT world. It means very specialized, extremely expensive and time consuming to train workforce. It means long hours, uncertain project deadlines, anything can go wrong at any moment and oh god please tell me we’re charging for this by the hour.
Most IT companies don’t get lawyers wages. Most don’t have enough of that highly specialized workload to keep them busy which means that their most expensive labor is on a contract employment basis. And the profits are skinny.
Less competition being good sounds like it would make sense but.. in a slowing business opportunity cycle it’s cheaper and easier to acquire businesses to grow than it is to market and win new clients. Less competition also means less talent that could potentially work for you. Smaller ecosystem = bigger growth problems.
Explanation: Where most people have a hard time understanding this conflict is in their business process design. Are you building a business model with a 5 month or a 5 year expected life cycle? Some people don’t even think about a month out because they have a service business and their profit margin is fixed – so they aren’t making an investment in people, technology, training – hence the confusion. There is another twist here: growth. Are you building a business that’s going to grow at low single digit percentage or double to triple digit percentage? Depending on all these, you may have a different perspective.
Carrying on from the previous comment is a business model: I Just Wing It as a Service.
No shame in that, it’s a business and if it makes you money, I’m happy. It’s like that consulting meme – if you’re not a part of the solution there is good money to be made in prolonging the problem. Don’t mean to crap on you at all.
But again, perspective and business design. The goal is to build a long term growth business that can survive without you and that can be massively profitable without additional work. And that “scale” doesn’t come when you wing it, it comes when you invest.
There are two things you need to do in business (yes, only two): 1. Get paid. 2. Pay bills. Getting paid is something you can get creative about – but not paying your bills will get you messed up quick. So most businesses need to have a very predictable and very reliable cash flow. For almost all of us, that is dealing with legacy solutions that we are good at, that don’t change much and that we have minimized costs in over time.
Remember what I said about being rational – you can’t ignore things, you can’t irrationally chase everything, you can’t not invest in the future and you can’t have a business without a plan and a business model. If you think you can then go become a plumber – much better hours and people are actually happy not to fight over your rate if you’re holding the plunger and their office smells like shit.
Highly profitable businesses have 3 lines : legacy cash cows, currently developing operations and future investments.
For us, legacy is SPAM filtering. Currently we’re making a killing in hosted exchange and cloud services. The future for us is in service and business management / collaboration auditing. But that’s me – and believe me, I’m making a ton of money killing SPAM.
Most businesses fail to take the future investments seriously. Why? Well, it’s hard, it’s expensive, there is a great deal of risk and uncertainty. And they never build massively profitable companies. Why? Because the reward for that risk is being the first mover and making the legacy cash cow really, really, really fat faster.
Namely, people that pushed Exchange and the cloud stuff when I started to in 2007 already have tens of thousands of seats that they just collect payments for. Meanwhile guys that are fighting for them right now are getting those lazy businesses, with tons of baggage, difficult IT and tons of other problems – causing them more issues, more desktop time, etc. Could the investment in their marketing and deployment of Hosted Exchange been the same as betting a business on virtualization? Sure, and they would have been screwed. That’s why you don’t follow every idiot standing on the stage pretending they know your business better than you do. But hey, if you don’t know your business well enough to be able to make investments then you shouldn’t be running it. Back to the plunger.
Explanation: Some people are just risk averse. It’s a personal preference. Majority of the people I deal with though aren’t trying to defend their Windows XP business with a spork though – they want that cash cow that they don’t have to feed daily. The only way you get there is with long term planning, investments and risk. Don’t like risk, don’t want a fast paced fast growing company – that’s your choice and it’s not a bad thing. But most people I talk to want a new boat, longer vacation, Ferrari, paid college tuition, etc. Getting there is hard and that’s what I try to do.
First, people read the written word and make opinions and impressions based on their own mood, experience, circumstances, etc. This is not the word of god, this is the word of Vlad and it’s just my opinion.
Second, I’m not a braindead cheerleader. My passion is helping people improve and grow, not give them a false sense of security and a free tshirt so they’ll like me.
Third, perspective is important – I write for and I’m the voice of the people I interact with. Lot’s of people. Around the world. In different industries.
And they are all looking for a way to grow and reach a level of financial security. So we have two options – we can all throw our $ on a big pile and start buying lottery tickets. Or we can slowly help each other improve one day at a time and make $ in the long term.
Now turn it up!
Have a great day
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Still on vacation so I haven’t been jaded enough by the daily grind to offer much of an opinion on Vladville but I did chat with a friend that attended a conference over the summer and he offered the following observation (paraphrased):
So there is tons of opportunity out there in tons of different directions.. but the only thing I haven’t been able to find is a large number of successful business owners that have launched into these new tech fields – just one or two vendor prize cows that I’m sure are more there for a free vacation..
In a nutshell, even though the MSPs and VARs have been dying in droves, few have found a way up the food chain or fish in the wide blue oceans many industry experts fantasize about: and the #1 threat to the entire MSP ecosystem is as follows:
Nobody wants to do any actual IT work anymore.
What automation didn’t kill off in the terms of IT personnel – well, the cloud has been finishing off. Meaning the only good MSP food is the most poisonous one: dealing with the clients that have neglected their IT, that received bad advice, that are extremely or unreasonably cheap or limited in their willingness to touch new technology. And once you do try to untangle the mess you’re mostly stuck looking like the bad guy who broke a perfectly functional car made out of glass and ice cream.
The problem for the vendors is that without the new blood coming in to do the grunt work the pipeline dries up, the acquisition of new accounts becomes more difficult and you see what we have now: Vendors with limited prospects getting acquired for close to nothing (ie: “Financial terms not disclosed”) to private or venture interests with hopes of going IPO in the industry that isn’t growing rapidly. In other words: the greater fool theory.
Real Grunt Work Sucks
Technology solutions come in two ugly and unappealing ways for the MSPs. The first is the easy/cloud/appliance model that completely eliminates the MSP in virtually all areas. There is literally no business model to be built on this and the relationship is typically large-Fortune-500 direct contract with the client. Some like to play on the edge (“We’ll manage your iPhone for you”) but most are finding very slim profit margins and more PITA – so they do it for the sole purpose of keeping the account.
The other model – grunt work – is still there but more often than not gets off on the wrong foot due to the complexity in the existing infrastructure. Things sure were easier when everything wasn’t connected to everything else, huh? There are seemingly two ways of doing it: Plan excessively and kill your profits up front or plan and roll out in stages and kill profits and opportunities over time as one thing explodes after another. I kind of like this model because it funds my business model but the real problem for MSPs is..
Do as I say, not as I do..
Bad leadership. You can hit up Vladville from 5 years ago and read about how the Master MSP thing was gonna work out. When you saw those things folding up and those folks getting jobs or becoming
unemployed coaches you could have concluded, as I had, that the model just doesn’t scale and the only massively profitable way out was through the greater fool theory. In this sense, the biggest fool on the block was Best Buy.
Time to despair? If you’re an MSP, hell no. It’s important to have perspective and it’s important to understand your best interest. It is in your best interests to minimize costs, maximize profits, scale and replicate the business model far and wide. But that’s not what you’re going to get from the stage full of vendors – because that is not in their best interest – they need you to get the solution in and get out of the way. They need you buying more tools, getting more stuff, more seminars, more training, more expertise and more SWOT – don’t spend money scaling your business and getting more clients, how the hell does that pay the guy who makes you think that you just need to turn into a Walgreens and sell everything and double up your income from the existing client base that already thinks they are paying way too much for IT and hate seeing you at the top of their A/P every month?
If you have a bleak outlook on the technology business you’re either in the wrong business or you’re listening to the wrong people. And they are
coaching experts lowlevelvendormanagement unemployed for a reason.
Edit: I kind of forgot to wrap it up there – my point is that the biggest problem the IT industry faces is the fact that nobody wants to do any actual grunt IT work because bulk of the promotion at the shows and other outlets is on simplicity and easy business. And if it were easy everyone would be doing it, not going out of business. The faster you come to terms that your rapid growth depends on your willingness to get dirty, the faster you’re going to grow. This is what we embraced at ExchangeDefender a year ago when we announced we’d do migrations to our hosted Exchange for free – yes it’s more expensive for us to pull off and it is about as glamorous as working the fry machine – but we’re growing and that’s not something you hear a lot out there these days. My motto is actual $ over opportunity to make $, any day, every day, all day long.
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As I mentioned over the past few months I have been scaling back my responsibilities at ExchangeDefender to only a part time affair (about 30 hours a week; and trust me, that’s part time here). I’m just a CEO these days – meetings, phone calls, clients and a few trade shows. I also started a new business this year so don’t worry, I’m not bored.
This summer – from late June through late August – I will be on vacation. Multiple continents, cruises, countries and so on. Timmy and I are packing our bags and doing what we do best – getting lost. And I’m taking you with me (virtually, sorry wifey doesn’t approve more adoptions). If you’re not following me on Facebook, feel free to add me / follow me.
Listen… Over the past 17 years I’ve built and sold multiple multimillion dollar lines of business. I have a great team that runs the show and makes me look good. I don’t owe anyone anything, I’ve got more cars and bikes than I know what to do with and I have made more money than I’ll be able to spend in this lifetime unless I decide it’s time to build a Ferrari collection. I get to work when I want to on what I want to and I apparently get to take a 2 month vacation.
I’m not gloating
Getting to this point wasn’t easy. It didn’t come without sacrifice. And most frustratingly: nobody cheers the workaholic. You don’t get to have a bad day, you’re working too hard and need to take a break. You don’t get to complain about problems, you’re working too hard and need to take a break.
Oh, and people tell you that your wife is going to leave you. A lot.
So listen.. building and running a business isn’t easy. It’s not without sacrifice, hard work, risk, worrying, mental anguish and emotional bullshit employees and clients put you through. But I am a living proof that you can make it without screwing people over, without winning the lottery and without an IPO. All it takes is time and persistence and the ability to filter out bullshit.
So if you’re struggling right now and trying to build great things.. hang in there, work hard.. I’m taking you on a vacation with me. Let it be a motivation that some day soon you’ll be in the same spot.
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