MSPs and IT Solution Providers have an inherent business model flaw: They can’t compete on both price and performance at the same time. Your solution cannot simultaneously be the best and the cheapest because the cheapest is always getting cheaper and the best is exceedingly difficult to accomplish.

So how do you compete? I don’t know, and I know exactly. Allow me to explain I recently got an email from a long time ExchangeDefender partner who was asking for further volume discounts of our product:

“Can you also look at my account and see if you can do anything about the pricing – we continue to bring on more ExchangeDefender accounts and I don’t want to have to downgrade the accounts to the lighter versions to help us maintain our margins in the face of more and more competition.  Thanks.”

Sociopath Enterprise Architect

To succeed in this business you need to be able to wake up each day and shift mindsets quickly.

I myself had to face the line above – many times. As a matter of fact, I and other OWN sales folks have been approached about meeting BPOS pricing – which we just cannot do. I think we lost most if not all of those deals because quality of service doesn’t matter to many – only price does.

So my options are cut all the vendor sponsorships we have, kill all the partner programs, stop answering my phone and try to compete with BPOS until Microsoft realizes they are doomed against Google and give it away for free (and run me out of business in the process). That’s one option, but I honestly would not wake up and drag myself to work each day to build a crippled product.

So we launched CloudBlock – You can now buy hosted Exchange with more storage than Own Web Now provides for $2.95 / month.

We’ve also been approached time and time again to compare our ExchangeDefender product with Postini, AppRiver, MX Logic <insert antispam product here> and asked to compete on price for their lowest tier antispam solution. Now, when you look at ExchangeDefender it’s $2 a month. For that you get the base antivirus/antispam but you also get 1 year of LiveArchive on Exchange 2010 with no storage limits, you get web filtering, web file sharing, encryption, integration with your PSA and RMM tools and even a free version to use on your own stuff. But after hearing “I just need antispam” a billion times, I allowed the team to create an ExchangeDefender Essentials offering for $1 a month: spam and virus filtering.

Do we spend a lot of time thinking about the Essentials offering? Not at all. There isn’t even a product ID for it in our billing system – all 5 people that have ordered it just have ExchangeDefender with a 50% discount. The offering has been as successful as a flying brick.

On the other hand…

When we decided to publish Shockey Monkey as a commercial product, we decided to give it away for free. No restrictions, no catches, no limited time trials, no approval process at all. You just fill out a form and 60 seconds later you have a full blown client management portal.

If you want some of the advanced features, you can sign up for the Pro.

This is the exact opposite of the ExchangeDefender and OWN business models: of writing really, really, really great and profitable stuff.

Why is it different? Because there is no “markup” on a solution that you’re going to use to run your own house. But I don’t know a single MSP that doesn’t charge at least $5 for ExchangeDefender. Either all of my partners are total crooks, or they are great at sales.. or there is a valuable addon that comes with deploying these solutions, one that (when managed properly) businesses are willing to pay for and support their business on.

Skitzo enough for you?

It all just comes down to what kind of business you want to run, what kind of solution you want to offer and what motivates you to work to please your clients.

For me, it’s all about ExchangeDefender, Shockey Monkey, OWN. But I’m an entrepreneur and I’m willing to take anyone’s money with CloudBlock, ExchangeDefender Essentials and anything else from folks that are willing to compromise. I would never sell those to a client but if that’s what you need to build your business that is your decision to make.

Do you want it good or cheap?

That is the only question that matters.

When you build your solution stack, do you want a good one or cheap one?

My name is all over ExchangeDefender. I go to trade shows all the time. If my solution was terrible there would be a line of people waiting to beat my ass. I have seen CEO’s that have since stopped going to shows for having their butt chewed out by their clients. I never want to be in that situation or put my people in that kind of a position. That is why all of my VPs go to these events, answer the phone and work with our partners. That is why our partners sell our products and know someone is behind them.

But if you need to cut costs to remain competitive.. That is a race that goes in only one direction. Whether you have your successful business model figured out (like Shockey Monkey) or are just serving a wider market (like CloudBlock).. I hope there is a method to the madness.

And to answer the original question.. No, ExchangeDefender price is not going down. It’s going up. If that’s not for you, I understand and I got options. You can have Essentials for $1 or you can have CloudBlock Antivirus/Antispam for $0.35. Just remember that there is only one solution I stand behind, and while I will feel sorry for you when the 35 cent one doesn’t work out, I’ll only offer 35 cents worth of compassion. Now.. roll the vartruth video.

It’s important to work closely with the people to deliver a solution end to end. Most people only show initiative in a destructive way: posting negative feedback to Twitter, groups and anyone that will listen to their hardships.

Few people use that energy towards something positive. And they win big.

I post my cell phone at the end and at the beginning of every presentation I make. It’s so that anyone that hears me talk can count on me.

Sounds like a load of bull, doesn’t it?

Yet, it’s true. Working with vendors can help you. But how? What are some real examples of how people work on a win-win?

Sometimes it’s as simple as asking a question or asking for a favor. In the past few days I have helped a partner with some advice on selling his business, helping escalate a ticket up to my chief Exchange engineer, helping a business that was (flooded) out and couldn’t make a purchasing decision on ExchangeDefender yet needed to get back up to help coordinate volunteers and then some.

Your mileage may vary.

I completely and honestly believe that most people aren’t abusive jerks. There are some really good reasons for implementation of some really, really idiotic policies.

Unfortunately, rules are made to prohibit abuse by the few bad apples out there – and sometimes they affect the people that are just trying to do their best.

Case and point:

Our Exchange hosting comes with secure SMTP / TLS access. It also comes with ExchangeDefender that allows outbound SMTP relay to additional IP addresses. Our partner had a client that used a copier that sent out scans via email and used our SMTP server on the Exchange side. It’s something that works, but not something that we support.

Why? Well, the ISPs tend to block port 25. Every device has a different configuration and setup. Every network has a different policy and firewall configuration. We provide configuration information, making it work is something that partners do.

Recently we decommissioned a set of servers from our Exchange environment to do a service pack upgrade and implement DAG. When we did so, using the old servers for SMTP stopped – nobody naturally noticed anything else wrong since all Exchange services failed over in a cluster.

Our partner had a problem. When he asked for help, nobody on my team could assist him. It’s just not something we do.

This is one of those cases where the service is disservice: We have several ways of helping you get your mail out of your copier/scanner/fax, but we cannot offer you advice or consulting on how to implement it. It’s simply not our job.

Yes, We can tell you to use outbound.exchangedefender.com

Yes, We can tell you which louie.exchangedefender.com server will accept traffic on port 587 and which alternate ports we offer.

Yes, We can even give you some pointers and workarounds.

Yes, We can test that it works on our end and that you’re using the right IP addresses, usernames, passwords and ports.

But if you hit the wall, configuration of appliances isn’t something that’s going to be done over the phone.

Unless you call me.

Why do I have the power of the greyskull? Mostly, because once things go wrong there is nothing above me. And this is how we arrive at how policies are made. When things go right, we’re a small part of the solution. When things go wrong, we’re entirely to blame for everything.

So my team knows their boundaries – and they know not to push them because if they mess things up, they have to answer to me. I however explain the risks to our partners and tell them the good, the bad and the ugly. Some call it honestly, but it’s just a matter of reality and experience: I’ve seen this before and if things go horribly wrong, I can still sleep at night. If my team misleads someone, it’s not just their fault – it’s my fault.

Service

The service you pay for is the service that is delivered along the guidelines.

Relationships get you the service above and beyond what you’re paying for because you are trusted with more information. Where the “by the rulebook” stuff you pay for will get you to a point, relationships and working with your vendors can help you go further.

The more you work with people, the more you talk about what you’re working on, the more feedback you’ll get, the more favors people will do for you and the more ideas you’ll get on how to move on up.

People often ask me why I spend so much of my time blogging and contributing to the community – hope this explains it.

As some of you may know, I have been out of day-to-day operations of OWN during the last two months welcoming a beautiful new baby boy, Sam Mazek, to our family.

Today, I officially come back full time (and then some).

Now here is the really cool part: We’ve already announced what our gameplan for 2011 is going to be. Messaging: easy, cheap, managed, any way you want it we got it.

We’re going to make a lot of people a lot of money.

My part? Starting today, I will be working the next 90 days straight.

No weekends off.

No events / shows / road trips / seminars.

I can’t even begin to explain how excited I am about this. As many of you may be able to relate, running a small business is rough. You’ve got one or two good products and you’re trying to groom the rest and get them to catch up. I’ve spent a lot of time on ExchangeDefender, a lot of time on Shockey Monkey and a ton of time organizationally building up the bits and pieces like training, perfecting the partner program, perfecting our process and execution. Now I can count lines of business on both hands and the most exciting part – in 2011 I get to hook them all up together and deliver them in one complete package.

I.. am.. pumped.

Write. This.. Down… (407) 536-VLAD. I expect you to call me. I am focusing 100% of my efforts on executing the plan we’ve announced and I’ve got an agenda to roll behind ExchangeDefender too. I’m calling it ExchangeDefender 500 but more on that in a bit.

Happy New Year! Now let’s get to work!

Yesterday I held a big webcast to announce our big plans for 2011. To say it went well is an understatement. But in January we start offering all of these services and I want to make sure we are completely on record with everything that we are doing.

If you missed the webcast and would like to check our the official announcements check this out:

Did you miss the webinar? Here is the recording:

Webinar Recording (wmv movie 45 Minutes)
Webinar Slide Deck (pdf)
Webinar Podcast (mp3 higher quality audio)

Read the official announcement of ExchangeDefender Managed Messaging and CloudBlock over on our Own Web Now Blog.

So what’s CloudBlock, Vlad?

It’s three different things:

1. It’s not a solution designed for the channel. It’s a solution designed for the end users that want the bare bones commodity email solution.

2. It’s “Mail” solution starts at $2.99/month and includes Exchange 2010 mailbox (5GB Mailbox, upgrade to 25GB available), optional mobility, built-in security. It’s your typical Exchange hosting available from tons of vendors around the world.

3. It’s “Security” solution that starts at $0.35/month and includes SPAM filtering, Virus filtering, malware scans, DDoS protection, address harvesting protection and business continuity (mail queuing). Unlike the hosting product, this solution is designed to protect your existing email server on-premise.

Most importantly, CloudBlock is not Own Web Now. It’s not ExchangeDefender. It’s not my people. We have licensed pieces of our solution stack for a project that we believe can be profitable.

How does it make sense?

Let me Vlad-ize it for you.

Customer: I want a Ferrari.
Vlad: Fantastic. I have a few!
Customer: So I spoke to a guy at a Hyundai dealership, what kind of a Ferrari can you sell me for $8,999?
Vlad: I can sell you a 1:43 scale model along with an F1 poster signed by Michael Schumacher.
Customer: But I won’t be able to drive it at 180 mph?
Vlad: Relative to the ground? Only if you’re driving it on your tray while an airplane is taking off. Which is against the FAA safety policies.
Customer: So I can’t understand why a Hyundai is $8,999 and a Ferrari starts at over $200,000?
Vlad: [ 2 hour speach ]
Customer: I get all of that with Hyundai according to their sales people.
Vlad: Guess I’m going to lose this sale.

Translate the above to all the conversations you’ve had and all the deals you’ve lost to Google Apps and Microsoft BPOS. In light of all the outages they have had, you lost. In light of all the inconsistencies among the products and Microsoft’s inability to even roll out their latest Exchange and SharePoint releases, you’ve lost. In light of endless fears about the privacy and security, you still lost!

Why? Because when the client is making a decision on the price alone there is no amount of features or business fit that you can talk about, they only care about the lowest cost.

Emphasized enough? It’s true. While you can excuse some of it on clients just not understanding what they truly need – or your inability to explain it, when something is seen as a commodity it’s only compensated and valued as a commodity. Which means cheapest thing wins.

So why did you do it Vlad?

Because I’m a CEO of a for profit business, not a CEO of a religion. Look, it’s obvious from all the pain out there that there is demand for this type of a solution. If people are willing to pay for the bare essentials, who am I not to take their money?

That said, this is another weapon in our partners arsenal. If you are facing a stubborn client that is not willing to listen to your recommendation for what they really need, and they want the cheapest damn thing out there – you now have something to recommend. And when they need more, you should be there to deliver it. We partnered in CloudBlock because we felt it had a unique value that doesn’t exist with BPOS or Google Apps – it doesn’t have a VIP partner list or another business model. So you don’t have to worry about your customers being introduced to the competitors of yours that we like more or being gamed to sell more advertising.

You now have a competitive chip in the commodity space.

Won’t this kill OWN, ExchangeDefender, etc?

There is a certain kind of client that only looks at the cost. So yes, that kind of client wouldn’t consider OWN or ExchangeDefender anyhow.

Will some of the existing clients/partners go to this? Yes. And we’ll make slightly less margin on them. But what’s our margin if they switch to a competitor? Now does it make sense?

If you can’t explain the difference between a Ferrari and a Hyundai then let them buy a Hyundai and when they become to depend on it and want to drive it at 180mph – you’re right there.

Remember: If you don’t have alternatives, your clients will find them on their own. Not everyone is looking for a Ferrari, either.

More details on this in January. We think this is huge for the channel even though it wasn’t built for it. Differentiate, differentiate, differentiate.

Earlier today I held our final webcast of 2010 – in no small way it’s the biggest, most ambitious thing we’ve ever done. And we’ve spent entire 2010 to bring our organization and our relationships to the level to actually make this possible.

I’ve posted my professional thoughts on the subject as the CEO of Own Web Now here: ExchangeDefender Managed Messaging. Here is the more volatile angle:

In a nutshell: I’m tired of bitching, moaning and excuses for not building a business model around the cloud and the messaging platform. I know there are plenty of real business concerns that are hard to make but try to think back to when you started a business and the faith you had in yourself and your solution. Were you immediately profitable? No. Did you have a winning combination that was fool proof? Probably not. But over time things get perfected, details get ironed out and you build a successful business model on top of it. Yes, it took a ton of sacrifice. But look at you now!

Many are looking at the cloud right now and the margins make the sacrifice component less and less tasty. Nothing good happens while standing still in an ever changing world. Not for you, not for me. So considering how well we’ve done through the years, we owed our partners this one. Here is what it is:

Completely managed end-to-end messaging solution built and supported by one vendor with your brand name on the front. When I say completely managed, I mean it: We’ll configure it. We’ll install Outlook. We’ll migrate the mail profile. We’ll support the end user. We’ll bill them. We’ll collect money from them. We’ll cut the commission checks.

This is a culmination of all the bitching, moaning and complaints feedback we’ve gotten about the cloud. Some of it is very legitimate: It takes a lot of time to run the business side of billing, collections and accounting. It takes a lot of time to do the setup and migration but clients hate paying for it. Some of it is not.

So what did we actually do?

First of all, we changed nothing. Our packages are still the same packages with the same pricing, same offering and same specs.

We added a new tier at the top of our offering that includes everything. Everything. Trust and believe that. Because if it breaks, we don’t get paid.

It starts on January 1st.

Initial response has been amazing – and I hope we help a ton of people build a great business in the cloud. This is, pardon the self high five, huge. I don’t know of a time that someone decided to do all of the work – end to end – under your brand and even give you control of the account.

One question did stand out: “So wait, you’re going to set the price on this?* Cause I can sell it for $75/month easy.” Slow down. First, the price has to be set in order for us to actually bill the client – and it gets really messy very quickly so it’s not something we could answer right away. Second, we kept it relatively low because in order to make money in the cloud you need volume. Scratch that – in order to make any value on this as an MSP/VAR you need volume – you need a ton of clients to farm and deploy your existing MSP solutions into. If you’re looking to get rich on a few uninformed clients you’re really cheating yourself out of building a huge market presence for yourself.

I’ll explain the reasoning behind the rest of these moves throughout the holiday season. I’m sure the more cynical in the bunch would doubt the sincerity of what we’re doing and I have two things to say about that: 1) Check our track record, we’re always behind our partners and 2) Sitting around and doing nothing will always lose to us actually doing something to help.

Looking forward to a great 2011 with all of my readers and partners. Thank you for your support and attention, as always!

* I am not providing the actual pricing structure in public because this will only be available through our partners. Want to know? Sign up here.

On Tuesday, I will be presenting our roadmap for 2011.

It’s basically the biggest show of the year.

Last year we used it to launch ExchangeDefender 5. This year, we are announcing our new business plans.

First of all, a disclaimer: There are no changes to what we are doing or to our products. Your pricing, service and support will remain the same.

Beyond that, lot’s of new stuff. Here are a few hints:

1. Lower cost version of ExchangeDefender.
2. New third party company offering Exchange 2010 and on-premise SPAM filtering solution licensed from OWN (think BPOS, cheaper)
3. New “managed” solution.

Of course, the devil is in the details and I will share those with you on Tuesday at 1 PM. We are responding to the demand from our partner base. There are basically two new types of partners that have come out of this entire cloud shakeout:

1. Those with really solid business models – that want to add on the cloud but don’t want to manage it. This leaves room for our premium offering that will be managed and billed end to end under our partners branding.
2. Those that think the cloud is a commodity and are willing to ignore it but don’t want to lose their clients to Google or Microsoft. This leaves room for a bare bones Exchange offering to move the more essential messaging to the cloud while everything else stays in place.

We are kind of at a point where the cloud is no longer a discussion point at all, it’s a part of business model and partners have to choose what to do with it: ignore it (and lose), embrace it (and take their chances), embrace it somewhat (and try to live on smaller margins) or embrace it shoulder length (and just keep the clients).

In the end, it’s all about the clients needs, and you’ve seen what I’ve done in 2010. We’re built a world class CRM platform with Shockey Monkey absolutely free to help people manage their cloud services under their name / brand / pricing. Then we added Looks Cloudy, a blog to cover the cloud deployment strategies and considerations. We also rolled out Monkey Remote to enable remote support and monitoring.

Next, we introduce the actual support and service no matter where you are on the scale.

Our business model for 2011 is simple: We will only focus on messaging. Yes, we do a ton of backup business, a lot of security, virtual servers, dedicated servers, SharePoint, etc. At this point though, it’s make it or break it time and with the economy still struggling and record unemployment we can bring in the rest of the services later. But if we cannot address the most critical part of their business immediately, we may as well just close the doors and try to tell ourselves that being an Apple Genius still makes us an IT professional and not a slimy 201X version of the 90’s beeper salesman.

It’s going to be a busy quarter for us so I wanted to make some of these announcements personally and provide some background on them all.

ConnectWise / HTG / CharTec Conference

Next week we are sponsoring the cluster of conferences happening in Orlando. ExchangeDefender will be as present as ever so stop by our booth, hear about the new stuff we’re doing and get some swag. ExchangeDefender has grown by leaps and bounds in 2010 and we’re adding even more stuff to it.

However, I will not be there in an official capacity. This is mostly personal – I have a second kid on the way and frankly, I like my wife more than you. I know this comes as a crushing defeat to so many balding middle aged men, but.. yeah.. awkward. But! I will be there if anyone wants to meet with me. Just fill out this survey:

Meet Vlad:

http://www.surveymonkey.com/s/RPTBRYC

With the exception of Wednesday, I can make a trip down at any time since the hotel is about 15 minutes from where I live.

ExchangeDefender Rebranding

As we keep on growing and doing more and more to make our friends successful, promoting the Own Web Now business is becoming difficult with so many different brands. Most people can’t reconcile the fact that we do so much stuff in the cloud yet still provide so much on-premise service (Microsoft has the same problem).

So we’re considering rebranding it. If you have a moment, please fill this out.

Shockey Monkey

I don’t know what I was thinking about when I figured out the business model for Shockey Monkey but at this point it has turned into a beast. It is far bigger than we thought and the amount of excitement for the product is beyond anything I ever expected.

I have paid a lot of attention to the feedback, to the requests and to the need that the marketplace has for the unPSA solution. I hear you. You need to see this:

Shockey Monkey’s Big Webcast Announcement & Developments

Join the Shockey Monkey webinar next Wednesday at 11:30 AM. It will only take about 30 minutes:

https://www1.gotomeeting.com/register/371920033

It’s only the biggest Shockey Monkey announcement since it launched.

So in conclusion: let me know if you want to meet, fill out the ExchangeDefender survey, sign up for the Shockey Monkey webcast and wish me luck

I knew it! That hairy mother@#% sold us this @#% and now he is going to f@#% like everyone else. @#% him and his cars and his #@% services that are more down than up and…

Now that we’ve got that out of our system, here is what we’re actually doing: We’re going to do a direct push through our partners and train our partners how to position, market, sell, support and manage cloud services to make a higher profit margin than they did managing servers.

The cloud book is a major part of it. I have two more chapters to crank out, have it edited, published, hopefully out in time for ConnectWise or Thanksgiving.

Shockey Monkey is a core part of it, even if you use another PSA. If you haven’t signed up for the free one yet, shame on you. Want to know why it’s such a big deal? Read this.

We’re bringing a lot of friends along. Sign up for the 2-part webinar we’re doing with CharTec over the next two weeks, cloud moves a lot of stuff along with it and you need to focus on building a solution!

We’ll show you how it’s done. Over the next two weeks we’ll be teaming up with some of our partners to do direct presentations at our partners events. Let us show your clients what they get with the cloud, what they need to be concerned about and how to make that decision.

…

We started dropping this bomb through the HTG newsletter (peer group thing that we sponsor) because it’s members helped us build all of this stuff – from the monkey to the book to the events. It took OWN nearly two years to straighten out all the mess with billing, realign and even rewrite some of the services, figure out how the most profitable partners are doing it and now show our other partners what they need to do.

So stay tuned. Give me a call. This isn’t something that we’re going to put out in a neat little packet for everyone to ignore, we’re doing this thing one on one.

The agenda is to show people how our partners are consistently making more than 100% profit margin on moving hardware and cloud solutions as a part of the office no longer being contained in four walls.

We’ve accomplished every financial and software project we’ve hoped to have done for 2010 over a quarter ahead of time. Now we start executing our 2011 plan a quarter early – want to be ahead of the market? My cell phone is very public, feel free to call and track me down.

Generalizations are fun. Naturally, people tend to object when you say things like “all” or “every” or “none” but in (small) business you’re often growing on the back of someone elses marketing agenda that is moving the overall direction of computing.

To the cloud.

No, not everyone will go to the cloud. But as more people do, and that becomes the trend, you will not be able to survive with the traditional business model because when the line of customers you are able to reach starts to thin, so will your margins, business, etc. For all intents and purposes, everyone that is not your client and goes to the cloud which may be against your current business model is everyone.

A while ago someone commented on my blog that “(you) forgot to let HP know that they’ll be out of a job soon.”

Well, turns out they are. HP to slash 9,000 jobs and take a $1 billion dollar hit to do so.

Let me dumb that down for you. They are willing to pay a part of $1 billion to get rid of 9,000 jobs because the role of traditional “IT” (ie: monkey) is not worth having around.

You can stick your head in the sand and pretend that people will never get rid of their fax machine SBS server, or your company can become their next SBS Server. It really just takes a few simple steps…

Yesterday I observed three things which on their own would amount to a miracle – and I feel compelled to share it with you. Like any other business, we have our ups and our downs, but to see how much better things are doing and how much hard work went into getting us there – to see it pay off and come together – is amazing.

Miracle 1: SMTP resurrection

The more Exchange changes the more it remains shit the more it acts the same. ExchangeDefender is around because we couldn’t keep Exchange 5.5 stable in the 90’s. Now in 2010, with Exchange 2010, we’re still using Linux to keep Exchange breathing. After a seemingly endless list of hardware additions and requests, we moved the edge roles onto Linux and automatically, delays are gone.

Miracle 2: Supportless Support

We launched forums this week. We did it in a relatively low-key way (primary purpose for them is actually to provide support for all the Autotask software we’re writing) and the forum admin (on his second login since launch to tweak categories) noted that people already started supporting one another.

“It’s like a machine that prints money…”  – Check the OWN forums at www.ownwebnow.com/forums (p.s. Your login credentials have been emailed to you. If you haven’t received them, request a reminder on the forum login page)

Miracle 3: We all agreed on something.

This thing I can’t actually discuss in the open (legally) but we all agreed on something. That’s somewhat unusual. The nice thing about it is that it takes us to that next level.

Things at OWN are better than they have ever been and in no small part thanks to our partners that understand the value of the partnership and help push us forward all the time. I know things are not always ideal (and at times can even get ugly) but the track record here of what we deliver and what we’ve been able to build is pretty damn amazing.

Now, on to UK. Anyone over there want to help us build an office?