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