$7M to $29M: What Changed When He Stopped Doing It All w/ Bruce Nelson

Welcome to the $10 Million MSP Podcast. This podcast is where I dive into the real stories of MSP leaders who have gone beyond $10 million in revenue, how they built their teams, created scalable systems, and turned their businesses into valuable wealth-building assets. I'm Brian Hoppe, strategic coach to MSPs. I work with MSPs generally in the $5 to $50 million in revenue range. In each episode, I sit down with leaders who have built MSPs beyond $10 million in revenue to unpack the inflection points that truly matter. From the personal stories behind their journeys to the fundamentals like culture, operational maturity, and driving profitability. This isn't another MSP podcast about tools and tech. On the $10 Million MSP Podcast, you'll get behind-the-scenes conversations with leaders who've built thriving MSPs, their biggest wins, their toughest lessons, and the practical takeaways that you can take back and use right now. If you're an MSP owner who knows that growth starts from within, that mindset, leadership, and strategy align to create both wealth and meaning, then this show is for you. New episodes are released every other week. So let's jump in. All right. Welcome back to the $10 Million MSP Podcast. Um, I am excited today to have Bruce Nelson, um, who's the president of Vertilocity, um, which is, uh, you know, an MSP that merged with a CPA firm. a while back. They've been doing acquisitions, all kinds of interesting things. Bruce is also in one of the peer groups that I lead. And so, really appreciate Bruce joining me today. Man, welcome. And thanks for coming on.

Yeah. Thanks for having me, Brian. Obviously, we've gotten to know each other over the last couple of years pretty well. And I enjoy the podcast, so I appreciate the opportunity to participate.

Well, it is my pleasure. And I'm sure I'm sure everybody listening is going to get a lot out of the conversation because it, because this is just a, it's a unique, um, kind of thing that you've got going on, uh, compared to a lot of MSPs out there. So, um, so I'm going to just jump in, uh, and, and ask you, what do you think that, you know, as an owner that it costs you to give up control that nobody kind of talks about?

Um, well, that's, you know, giving up control. Um, I think it's scary, right? I think that's the biggest fear, right? It's scary. But if you do it right, which I think we did, and I think it's proved itself out, we gave up control, but we surrounded ourselves with really, really smart people with different skill sets, different backgrounds that really enabled us to get to where we wanted to go, right? So trying to do it on your own is hard, right? It can be done. But if you surround yourself with really smart people with the same vision and culture and systems, we certainly accelerated. I mean, we would not be where we are today without that investment in taking the risk of giving up control. So I think that's the thing of it. So yeah, it's an ego check. It's an ego check. You can't just— But I think accountability is good. Comfort could certainly stall growth and getting out of your comfort zone and giving up some control. But to the right groups and the right team and the right ideas, then it can make a lot of sense for people. So yeah.

Okay. Okay, good. Awesome. Well, um, yeah, so it's, uh, yeah. And you guys, you guys have gone through a lot of, um, you know, different transition here lately, which, which we'll probably get into, but I do want to just kind of give you a chance to introduce yourself as far as like, um, well, and maybe kind of take us back. Okay. How did the, how did the original MSP start? How did it grow? How'd you kind of get connected with the folks that you ended up selling to? And then, you know, and we'll eventually get to where we're at today, but yeah, maybe kind of just walk us through the journey a little bit. Yeah.

So, I started my career in public accounting. So, I did 3 years in public accounting. I knew I didn't want to do the audit and tax work for the rest of my life. I really liked the system side of it. So, I wanted to move my career into the ERP systems and business optimization. You know, I enjoyed that. change, right? It's not just looking back at what happened last year and reporting on it. It's, you know, it's influencing the outcome and future of organizations. So, um, my dad owned a business, um, that did that for small businesses and ended up recruiting me out of Deloitte. And, you know, I started a practice, um, within his company and it was Great Plains, you know, it's now Microsoft Dynamics. And so I built that practice. Um, 2007, you know, we hit some milestones and I bought him out. Um, so January 1st, and then I turned around 6 months later I bought a firm called Vertical Solutions, which was a traditional sort of break-fix IT. So, 14-person, right? On-site, monthly maintenance, all the kind of things that were going on in 2007. So, by July of 2007, I owned a business, I put them together, and I also had a significant debt, right?

No kidding.

Obligations to pay for the businesses. So, first-time business owner-operator, I bought 2 businesses, put them together. One I knew obviously, and the other I And then the world changed a lot, right, in 2007 and '08. So I learned a lot. You know, we survived. But one of the things that came out of that was, you know, really looking at the business model and the structure because it was VAR-oriented, right? You sell a project, you sell equipment, you sell software. So you had the ups and downs of projects. And, you know, we lost probably 30% of our business, our top-line revenue, you know, during that 2007 and '08 timeframe, right? And, you know, Not knowing and pulling the trigger quick enough on personnel moves, right? You're like, oh, we'll come out of it in a couple months, and then it's 6 months.

Yep.

So we started looking at the business, and one of the things, I had just a bare-bones pickup truck. It was a Chevy Silverado, rolled-down windows, but it had OnStar. And I would get emails about the oil service, tire pressure, right? I'm looking at this going like, I know more about that truck that I used to carry the kids' stuff around or get some mulch in the spring than I do about my clients' businesses, right? And we're supposed to be their IT department. So I said, you know, there has to be a better way. So that's how we sort of got into the MSP business. We said like, has to be a better way to monitor and be able to be proactive and not just reactive, right? We were in Pittsburgh, you know, thunderstorms roll through Pittsburgh, it's good for business, right? Power goes out.

So I'm sorry.

I'm like, this isn't a great method for us. So, so started to transition the business at that point to an MSP model with monthly recurring. And we did it in the pitch at that point. We were relatively new because there weren't a lot of people doing it at that point. It was, you know, our job is to keep you up and running. Our job is to make sure you're not calling our help desk, right? That's so the investment is, you know, on a month-to-month basis, we You know, our job is to make sure everything's running, makes us more profitable, makes the client more profitable if we keep things, you know, on a proactive basis and keep them from, you know, the downtime. Did that. That worked really well. Obviously, we transitioned, our clients, you know, adopted it. 2012, we started moving our Great Plains practice to a hosted Great GP practice. So we started doing some cloud hosting. Just on the application side. And then it quickly, once we got some clients on that, they said, well, why can't you take everything? Why does anything have to be, why do I need servers? And so really started to move into the cloud adoption. 2012, '13, really started to narrow our focus in the healthcare space and be very intentional about the types of clients we were going after, what our ICP looked like. And so grew that. 2018, '19, I met some folks from Kojin and I was looking, how do you grow, right? I'm comfortable, I have a profitable business. Do I just want to keep going this way or how do I facilitate growth? And looking at outside investment was one of the options. So looked at some different options. I wasn't at the point where I just wanted a check from a large PE roll-up and walk out the door type of thing. I wanted to have an investment, And then help, you know, create my vision and be, you know, responsible for that and, you know, part of it. So met the folks from HBK. I knew them. They're a national CPA firm. You know, we've done— we have mutual clients, you know, good culture, good group. And they were looking for a platform acquisition. They had a small MSP practice, about $3 million, really in the northern New Jersey area. It was pretty localized and But our now CEO, Tom, who had started that practice, saw the vision of advisory services along with the professional services, the CPA, traditional tax, you know, CAS, and just really liked the group. So decided that, you know, we would join up with them because, you know, I agreed with their vision and they agreed with mine. So they rolled us over and, you know, put me in, you know, as president of the business and said, okay, let's, let's go grow this thing.

Let's do this thing.

That was it. 5 years ago. So, yeah, we came to set up—

5 years.

5-year anniversary.

Okay, gotcha. Love it.

August 31st, September 1st was the close of 2021. And, it's been great. I mean, we've had exponential growth and part of that was important. There's growth for growth reasons just to feel good or ego, but a big part of that was I wanted to create an organization where our team wouldn't outgrow us. So, we have really talented folks that want to move up, that want more challenges, right? To create an organization that would allow them to do that with us and not have to go chase another opportunity. It checked a lot of boxes for us and here we are today. So, and then I said, so.

Brilliant. Okay. So, a little context, like it sounds like you grew But you grew on your own from about 2007 to about 2020. And then you did that. So where was your business at when you were acquired by HBK?

We were $6.5, $7 million.

Okay.

35, 38 people. So right around there.

Okay. Gotcha. And then they also had another $3 million in revenue. So you were, you know, $9, $10 million. At that point. Okay. Okay. And then over the last 5 years, you've grown to what?

So this year we just wrapped up our fiscal year. So we're just shy of $29 million. And I just submitted the budget this morning, the finalized budget and forecast. So we're budgeting for $35 million. So I do sometimes pinch myself. I'm like, yeah, I was running a $7 million practice 5, 6 years ago, and now all of a sudden in charge of this rapidly growing $35 million practice.

Right? Yeah. Who knew you could even do it? That's great. Yeah. But that's crazy, man. I mean, so 3x roughly, I mean, a little less than 3x growth over 5 years' time. To what do you attribute that level of growth?

So 2 things. We've executed on 2 acquisitions during that time period. So that accounted for, let's say, $6.5 million of revenue that we acquired.

Okay.

But the rest has been organic growth. I mean, we've added great team members with those acquisitions, new lines of business, the referral business and cross-sell opportunities from the firm have accelerated our New Logo acquisition. And Rolling in and freeing myself up from HR and are we charging sales tax properly in these different states? Yeah. All those, the cash flow and all these little things, we share those services. So, it really freed me up to focus on strategy, team development, where are we going next with the firm? What's happening with the MSP space? What's happening with cloud? What's happening with ERP? And how do we sort of blend these together to, you know, to have offerings for our clients that are above and beyond a traditional sort of MSP or an ERP VAR or, you know, a development company. So, um, I think it's that. It's a, you know, it's a combination of I think we had the right strategy and it freed me up to, to be able to really focus on that and, you know, work with the team to develop the skill sets and/or acquire, you know, when, when they made sense.

So. Okay, gotcha. So, um, there, yeah, there's a line, there's a lot that I want to explore based on that. So I guess what I, you know, well, when you think about your acquisition strategy, what I mean, how are you guys doing that? Right? Like, are you, or how are you going about finding them, having the right, having those conversations, evaluating them, all of that? Like, what does that look like for you guys?

Yeah, so we do have an M&A firm, Cogent, that's on retainer. So, um, they are actively looking for, um, specifically MSP, um, opportunities for us. So, um, that's a feeder in a pipeline. Um, one of the acquisitions that we did was actually a competitor in the Pittsburgh market that I competed against for, you know, the better part of 20 years. But we also did a number of deals and projects together as a team. Um, so I knew their leadership team, um, when I told them what I was doing and In 2021, and he said, "You know, I'm out of here in a year, so maybe we should talk." Yeah. So that worked right. So so I network with other business leaders. You know, certainly our you know peer groups and things like that. We have conversations, and you know, I tell my story, and you know, if it piques somebody's interest, you know that that jobs pipeline, that M&A space. We we look at we spend a lot of time on culture. You know, how is it going to fit? How's the organization run? When I have talks with potential candidates, you know, it's. You know, if they start talking about their team and taking care of their team and, you know, those things, um, you know, we'll move the conversation along. Um, if they start talking about multiples of EBITDA right away, it's probably not gonna be the best culture fit. I mean, they have to come up with it.

Yeah.

A business owner needs to get a good valuation, you know, but that sort of sends where the, the mindset is, right? And, um, you know, so, you know, we look at those, um, And the 2 we have done, not counting the one we just did recently, were new skill sets. So they were different lines of business that we could bring to the client. So the one we did was a North Carolina-based firm and they had really heavy application development. They had some tools that tie into CRM, so they had some of their own IP, but they had a different skill set that we just didn't have. And frankly, I wasn't comfortable building out an app dev practice myself because that's not my background, right? It's a different animal. But if you can acquire that skillset through an acquisition and give them opportunity to grow, we look at those as well. So, we're not just saying, well, we just need to get bigger to get bigger. We're looking for skillsets or something unique in it.

Yeah.

You know, I think at this point we've got, you know, pretty good coverage across our, you know, our business units. You know, so it's, you know, we might look at different geos. You know, HBK has a large presence in Florida. So, you know, are there organizations down there that will help us expand our growth in that area? And so that's, that's kind of the baseline of how we go about it.

Mm-hmm. Okay. Gotcha. And what do you guys— so, so it sounds like a lot of it has been to acquire different lines of business. which I actually want to talk about because you guys have a very diverse number of revenue streams. Because I've seen the details on that and for the most part, yeah. Yes, we have. But so I definitely want to hit on that. But when you think about the, you especially mentioned culture, like you're evaluating culture, how closely are you evaluating things like The tech stack of the potential acquisition, the operational maturity, and those kind of things? Like, what does that look like for you guys? Or, yeah, or is it— does it just kind of depend on what you're looking at?

No, we certainly look at that. I mean, we would, you know, if the tech stacks align, if the go-to-market offerings align, those are all certainly things that would add value to a transaction. You know, so, they've got the right team, they've got the right bundle, how they, you know, go to market with their offerings, um, is certainly, you know, something we look for, right? You know, we're looking for successful businesses. Um, so very similar to what I was— I'm looking for another, you know, vertical solutions, a good solid business that's profitable. Um, you know, I'm not looking for fixer-uppers. I don't want to, you know, rip and replace the entire tool stack because we do— I mean, we merge all the organizations in So we don't just leave it as a standalone entity, right? They merge into the parent company. So we want to align our tech stack and we want to make sure it's consistent across the whole platform so that multiple team members can manage different clients. So I don't want this group that's running Cisco firewalls as their expertise, but there's only 2 people that know it and you can't really help out. So we do spend time on that. Yeah, we do look at operational maturity. What are their CSAT scores? What's client retention? What's employee retention? That's a big one for us. Why does half your team only have a year and a half or 2 years with you? What's happening here that we're turning over? Why don't I see 5, 6, 7, 10 years of experience with teams? Because that's usually a sign of how— You know, the organization was run and culture. So we look at all of that in depth.

So, oh, for sure.

For sure.

Okay, good. Okay. Yeah. And so, so let's get, let's kind of explore for a little bit the, you know, just as far as you guys having, you know, like you've, you've specifically acquired 4 different lines of business and I can see like, you know, and personally I would shy, I would tend to shy away from, hey, I don't know. I don't really know app dev very well. I'm great at running an MSP. I don't know app dev well. Um, what, what made you kind of get into that or, or say, hey, this is kind of one of the ways that we want to, um, you know, that we want to grow is by, is by adding new lines of business like app dev, like, um, um, your ERP solutions and those kinds of things.

Yeah. Um, so, you know, I was in, I was an ERP consultant for 7 years or 8 years before I—

So, you got the expertise, right?

Before I acquired it, right? So, that was my background. So, my first sort of venture was to go acquire an IT company, right? An IT support business that I didn't really know. I mean, looking back, I really didn't know what I was doing.

You know a little bit better now?

Yeah. But the vision was that, you know, It was frustrating. So when you're doing ERP implementations and it's very structured, you know, coming from an accounting background, things are very structured. Project management, tie-outs, go-live, everything's very structured. And in 2007, most of the firms that were, at least in our space, were, it was still kind of the Wild West. You had a lot of, you know, engineers that started a business. They were very good with tech, but the planning, the communication was just a challenge. And I just said, We should own that expertise, right, and be able to take it to our clients and structure it in the way we structure our ERP practice and, um, you know, and go to market. So that was my vision. So that's what we executed. So that's how those 2 businesses went together. So, um, you know, and then I look at, you know, like we did a very good job of cross-selling our services into the different client bases. So it was a value add, you know, clients were like, hey, you know, It was a one throat to choke sort of mentality. Like, hey, if we can bring these services at a high level and give you additional value for that, we already have the relationship. And they're like, that'd be great. So it worked. So that's been sort of my mindset. If there's some other expertise that we can acquire that will add value and create opportunity for our clients and value for the organization, then we will look for those. You know, again, we, you know, it's harder when we're— now that we're, you know, significantly bigger, um, you know, those standalone business units are, are definitely, um, more mature, right? You know, so any one of them is a pretty large practice, right? So, um, it helps, you know, if you've only got 2 or 3 app dev guys, then that's gonna be a hard, hard thing to manage.

Yeah.

You know, but if you have a team with revenue and leadership, You know, that could roll in, then you can help that group grow and, you know, offer expanded services. So.

Sure. Okay. Gotcha. Okay. Awesome. Yeah. And it's, you know, it's interesting when you look at, you know, service leadership reporting and those kinds of things, you know, most all of the MSPs have nothing under, you know, applications or anything like that. You guys have very, you know, very diverse revenue streams, still significantly managed services, You know, traditional managed services, but also, um, a lot of other, a lot of other things rolling there. Um, so how much, how much has your, I guess, involvement with, uh, you know, in a larger accounting firm, how much has that contributed to like, to your growth? Is that, is that a significant source of new business for you guys? Is it more of, um, you know, is it, yeah. Or is it just more of like a, yeah, I mean, that happened, but that's not where we're getting our business from. Like, what does that look like for you guys?

It's both. I mean, we are certainly getting a healthy number of referrals. It's the same thing, you know, the CPAs are a trusted advisor and they know their clients.

Yeah.

They understand some of the challenges and the clients are saying, wow, we can partner with your IT consulting firm as well. We already know you, we trust you, and we're having challenges here. We had a security issue. So, you know, that's an easy, right? That's an easy sell, so to speak. week, um, because you've got a very warm lead and referral source. So that, that helps, right? We spend a lot of time at the firm. We actually do all the firm's IT work. So we run help desk and security and, you know, all those core components across the firm. So, um, that helps. But we also, you know, we go acquire our own new clients, right? So we've got a sales function and a marketing function, and, you know, we're looking to bring on, you know, new accounts on our own. So I'd say it's probably still more 60/40 that we are acquiring our own clients, you know, relative to when we're getting on the referral side. But it's a steady stream too. So, and it's good on both ends. You know, we're not really, you know, just relying on the firm to like, hey, please give us some more opportunities and, you know, let us talk to your clients, right? We're doing our own. So we're adding value across the organization.

Mm-hmm.

But certainly, I mean, having the organization the additional minds. And when I look at M&A, for example, I've got really good people, really good financial people that are going to call out my blind spots. I'm like, oh, I'd love this deal. And they're like, well, what about this, this, and this? Have you really dug into this?

Yeah.

So that certainly facilitates, or if I get a crazy idea and a strategy and I want to go to this direction 100 miles an hour, they might like pump the brakes a little bit and let's model this out a little further and, you know, make sure that we're going in the right direction, you know, for the investments. So, yeah, so it certainly helps. Yeah.

Quick pause. Let me ask you a question. If you stepped away from your MSP for 90 days, would the business keep getting stronger or would it slow down? Your answer tells you a lot about the operational maturity of the business. I created a short MSP maturity assessment to help you identify what's working, What's breaking and what might be capping your growth. You can take it at brianhoppe.com/assessment and the link is in the show notes. All right, back to the episode. Okay, gotcha. Um, yeah, and I, you know, I run across like both in, in peer groups and with my clients, you know, companies that are, uh, or MSPs that are part of larger organizations. And I find that, you know, you would think, oh man, like the cross-sell opportunity is so great. And it could be a CPA firm. It could be like, um, you know, legacy copy print, uh, business or that kind of a thing. And you would think like, oh, we have all of these clients. So we're just going to be like always selling new managed services to all of these people, but it never works that way. Right.

Never works that way.

Nope. Yeah. So, so is it, I mean, for you guys, like, I, I don't know if I've ever run across anybody who would say, yeah, about 40% of our new business comes from, you know, a cross-sell from other part of the organization. So that's actually pretty good, um, from my perspective. So like, what do you, um, I mean, what do you guys do as far as that, or how do you cultivate that? Um, I would, yeah, that's kind of what I'm asking is like, what makes that happen?

Um, so we are very intentional about it. You know, um, we have our account management function, our sales functions, um, or All assigned to regions and/or industry groups.

Okay.

So, okay, the firm is, is moving more and accelerating into industry groups. So there's a construction group, there's a manufacturing group, there's a healthcare group, there's a not-for-profit group. So the teams are aligned around that. That's their go-to-market. So, um, so we will assign, you know, certain account managers and resources to make sure that they are actively having conversations, they are participating in those group meetings within CPA firm. For myself, I sit on the strategy committee. So there's 25 of us that are responsible for overseeing the 5-year strategic plan. So that's a quarterly meeting. But we are very intentional about staying in front of them, having conversations, making sure they understand what we do, how do we do it, go to market, and then make sure we take care of our clients. If we get a referral, those are You know, top tier, they are going to get the, you know, you know, service. You know, we are going to make sure that we do the job that we're going to. It also helped in, I think, 2 years. I think we're coming up on 2 years that we actually took over the work, the help desk and, you know, security work. So we have a lot of visibility. You know, the whole firm is, you know, using our resources, you know, for tech support and security. So it really gets us integrated. And if they have a great experience with that, that keeps our name on the front of their minds and they've had a great experience, so they have a higher comfort level of going to their clients and saying, look, we use them internally. They're great. We handle it just like any other client. I mean, there's an account management function, there's CSATs, there's— I mean, we handle it the exact same way and tracking metrics and everything else. Um, you know, so that we can, you know, gain that trust. And that's a big part of the referrals, right? You have to— if you're gonna, you know, walk somebody in, you know, um, to an opportunity, you better have a high level of trust that they're gonna, you know, perform at the, the level they say they are. So.

Okay, gotcha. Okay, so, you know, and then, and then another question kind of based on being a part of that larger organization is, what is— I mean, what's difficult about it? Uh, you know, it's not all sunshine and rainbows, right, being a part of a, a big firm, there's got to be some stuff that you have to do that you're like, oh my gosh, I can't believe I have to do this thing. If I was just running on my own, I wouldn't have to do that. But there's always that kind of a thing. What does that look like for you?

Yeah. I mean, there's certainly challenges. I mean, there's additional reporting, additional questions and accountability that are challenging. I can't just decide I want to go in a direction and there's cases where I might Love an idea and it will get shot down for investment reasons. And so those are all the things. I mean, it's just part of it, right? There's a higher level of accountability if you have an outside board or if you have an executive committee and they're going to ask for additional reports, they're going to question things, right? So certainly much more structured, which has been a benefit for our team 100%. But I can't just make changes to payroll, right?

Mm-hmm.

It's a very structured process, right? But they have all the tools and it's good for our team because it's created career paths and a lot more insight for the group. But there's certain things where you're an entrepreneur, you want to go this direction and do this. Like, well, I have to think of somebody besides myself today and the bigger picture, right?

And the impact. Yeah.

Again, if it's done right, if the approach is so that we were all successful and The questioning and the accountability, you know, that's CPAs, that's what they do, right? Trust but verify. So, you know, it can— why are they questioning this all the time? Why are they questioning me? Or, you know, you get, you know, a little bit of that. But if it's coming from the right place, it actually makes me better. You know, I've become a much better leader in thought process and, you know, having the maturity of going through that.

Yeah, yeah, no, absolutely. Makes sense. And so you guys are, you guys run across, well, many different regions and all that kind of a thing. I think you're, I mean, you work from home pretty much, right? Okay. And so what is that, what has that been like as far as building the company and building it essentially with remote teams, people who don't see each other in person that often? I mean, that's a big undertaking at your scale.

It is. So, it started in 2012 when I couldn't take the weather in Pittsburgh anymore. I just couldn't do it. I said, I have to do— my kids are 8 and 5. We need to try something different here. But the organization was headquartered out of Pittsburgh. But I've always traveled in my professional career as a, you know, implementing consulting, it was, everything was onsite. So even when we were in Pittsburgh, I never had an office in our Pittsburgh office. You know, I left, I left that for others in the organization. When I was in, if I was in the office, I was in a conference room or I'd sit in the bullpen with the team and just hear what was going on. So, you know, 2012, I was like, okay, we have a good organization. I think we have a good management structure. Things are going well. I'm going to move to Denver for personal reasons. And we'd started to hire some people. So we started to build out some region here. But it was a good litmus test of, is this the Bruce Nelson show or do I have a real company and a real organization that will run? And so that was sort of step one. And it did and it worked very well. So we actually grew from during that timeframe while I wasn't in Pittsburgh on a daily basis. in the office. And, um, you know, it freed up, you know, the folks in order to take more ownership and to take more leadership, and they embraced it. Um, so, so that was part of the culture. Um, you know, and other part of the culture is I tell our team flat out that, you know, uh, and all our new hires, if I hire adults, if I have to babysit you, like, here's your metrics, here's your job, you know, this is your job. If I have to babysit you, like, this is not going to work out long term. So Yeah. So, you know, very upfront that, you know, we want independent, free-thinking folks that can manage their own schedules and be responsible for their outcomes. You know, so we've done that. We also moved— we were pretty— I'd say we were earlier than a lot of our peers in the cloud space. You know, we bought into it in 2012. We moved a lot of our clients to cloud platforms. There was a private third party and then Azure in 2018. So, a lot of the on-premise infrastructure started to go away, and we did that to keep them up and running. So, it was another piece that, okay, if you have it in a server closet in an area that's prone to lightning strikes or whatever, we created that culture. So, when COVID hit, most of our clients were already on the cloud. So, we were very nimble. and able to like get our clients, you know, working from home and up quickly. And our team adopted that, you know, because they were used to it, right? So, um, we actually saw a lot of growth during COVID Um, we were very well positioned and, you know, there was a number of our competitors weren't, you know, they didn't have skill sets in cloud. So, so once that happened, it just sort of accelerated it. You know, we were like, oh, I mean, my COO, um, I don't think you've— I don't think Ben— you haven't met Ben, but Our COO at that time, he was like, you need to be in the office every day. The team has to be here. I have to be able to see them. And after that timeframe and the adjustment, he's like, oh, wow. Wait, we can hire people outside in different regions. We could find time.

Yeah.

And just give them the framework to, here's what the expectation is, here's what your peers are doing, and meet those and monitor those on a daily basis. So, I think we just, Kind of part of it's my background of not being in an office and traveling the sites and doing those things and being responsible for what I had to get done. So it's worked. We've been able to hire great talent in different areas. It doesn't have to be within 15, 20 minutes of our office. That's a small pool of potential candidates when you're looking at a region, right? In a small region versus You know, potentially nationally for the right type of talent.

So yeah, yeah, absolutely. Okay. And I mean, you mentioned, you know, some of your leaders, but, you know, I'd imagine that in order for you to be able to, you know, have most of the people in Pittsburgh, you go to Denver, you had to have some good leadership in place, you know, besides yourself, right? So what did that look like building that kind of layer of leadership inside the company?

Part of it was I took on a business partner right around the time in 2007, the acquisitions. It was actually somebody that my father had known for a number of years through the CPA world. And Mark had left CPA, had gone out, bought a stake in one of his clients, and then they grew a $3 million glass distribution business to a $50 million glass manufacturing business.

Wow. Okay.

He had sold it about a year, I think I would say maybe 2006 or something after his 5-year run with them was up. And so, I had a chance to meet him and he was running a small sort of friends and family tech business and he was interested. And he said, but if I do this, I want to stake in it. I want to invest in you. I believe in the vision. I believe in what you're doing and I want to make an investment in that. So I brought on a partner at that point. Ben, who was the other one, was a, again, he was a competitor in the Pittsburgh market space.

Okay.

ERP software, different niche. So we would trade opportunities, you know, more often than we would compete against each other. Had a really good background and he had left his firm and was kind of doing his own thing for about a year and we connected. and he was interested in what we were doing, so we brought him on. So 2 key leaders that were good at developing, that had grown other organizations that were significantly larger than what we were. So they had that structure in place, right? So I used them as mentors to help guide our growth and the vision and some of the things we were doing. So those 2 key players, and then they were good at developing others. So we had that framework. You know, Ben, like I said, Mark started in public accounting. Ben started in consulting with one of the Big 4. So professional development and developing people and teams and structure was very natural for them. So that made a big difference. I mean, that was definitely one of the biggest catalysts of it. So just having that culture of developing that leadership and independence from folks.

Love it. I love it.

Yeah.

So yeah. And it's one of the most important things is like, And, you know, from an ownership perspective, and you're used to being the boss and all of that, and, you know, and kind of giving up that some level of control, right, of what, over what's going on in the day-to-day. You have to if you're going to grow. So on that note, like, what's something that you used to spend time doing that you've had to stop doing entirely since you've reached kind of this, probably over the last 5 years? There's some stuff that you used to do that you're like, I couldn't even touch it if I wanted to.

Yeah. I mean, basically everything on the tech stack. I mean, I used to get involved even 5, 6, 7 years ago in larger ERP projects and providing some guidance and oversight and, um, you know, a lot more in the client, you know, some larger clients and dealing with those things. And, um, you know, I've removed myself from most all of that. You know, we, you know, we've got our account management function, we've got our leadership team. They are dealing with the day-to-day operational functions, um, and, you know, they kind of shield me from it, you know, for a lot of, you know, they'll deal with it if there's a problem with a client or a service or something's not going well or a team member. They are dealing with it and just updating me as needed. It's not, hey boss, you need to handle this. Hey boss, we got this problem, you need to handle this, right? They're coming. And if there isn't, we tell our team, we tell everybody in the organization, our door is open. Anybody can call me. But if you're coming with a problem, come with a proposed solution. Think through it. Don't just walk into my my office, so to speak, my inbox and just dump problems on me and walk out. Think through that, right? We want to solve this. We want to be a better organization. It takes everybody to do that because I'm not going to have the answer for every question you have. So, empowering our team to do that makes a big difference as well and just creating that, again, culture of it.

Absolutely. I love that too. And there's a book, Turn the Ship Around, if you're familiar with that one. No, not that one. It's a good book, but it's, you know, but long story short, the whole thing is, you know, basically teaching people to not bring a problem. You know, you're an expert in your domain, right? So you have a problem, you want some feedback on it. Okay. But, you know, come up with 3 solutions and tell me what you intend to do. What do you intend to do? And then I'll say, great, that sounds good. Or no, we can't do that because this, this, and this. But if we tweak it like this, then yes, we can do that, you know? And so, so, so that is, you know, that's an empowerment thing. What I find often is that we'll, we'll give, you know, as leaders, we'll give people authority over most of an area, and except it's like, well, but I really want to hold on to this part of it, or, you know, don't make that decision without You know, without coming and talking to me. It's when we can actually delegate not only 100% of the thing, but also the authority to make decisions about it. And, um, you know, and then, you know, if they, people are going to do things in a way that you wouldn't do them. And one of the, one of the hardest things for owners a lot of the time is like, ah, I wouldn't do it that way. I wouldn't do it that way. But most of the time it's going to be fine, even though you wouldn't do it that way. Sure.

Yeah. And if it doesn't work, you know, it's, it's, if people, you know, they come up with an idea, they take a chance, they do some things, right? And if it's for the right reasons, you know, don't beat them over the head. Oh, you know, learn from it. Right. Okay. Let's, what didn't work there? How do we sort of reassess this? And, you know, um, you know, if it's for the right reasons, so, you know, use it as a learning, learning opportunity and coaching opportunity, you know, not just. Beat somebody over the head. I know some organizations where they've got some really, really talented people. In one case, the owner accident and the team flourished because they were just so nervous because whatever they did, they just felt like it was going to be wrong.

Yeah.

So, they just stopped doing it, but they were really talented individuals. And once they got into a different You know, environment, they really, you know, really grew and flourished around that. So, yeah. Yeah.

Okay. That's awesome. Um, so, uh, so here's it. So on the kind of on the flip side of like having to give stuff up, what's something that you as the, the, you know, the main leader, um, will not, will never give up, like even however busy it gets, what, like, what do you feel like that, that are the things that you've got to, you've got to hold onto and be responsible for?

I mean, to me, number one is the culture. I mean, just owning that and enforcing it, right? And enforcing it is making sure that our hiring decisions are consistent with it or reviews is consistent with it. That piece of it and strategy, right? That's the tactical piece. And I won't give that up because I really enjoy those pieces of it. But owning and understanding The people and the culture, because again, I tell people, I'm like, oh, you run a tech company? I'm like, no, I run a people company.

Mm-hmm.

We use tech, we resell tech, we bundle our services and our expertise to deliver a solution. But for most cases, outside of some of the app dev stuff, we're not really building tech. We're managing, leading, growing people. So, I stay very close to that part of it. I participate in meetings. I don't sit in every meeting, but I will sit and listen in meetings. We have a daily standup that I still do every day at 7:00 AM just to listen in and get feedback, right? And it's a very open discussion with our network admins and things that are challenges and things that are going well or not going well with the client. And they are not afraid to say things in front of me, right?

Mm-hmm.

It is what it is. And so, leading at that, hey, you can say this. Okay, let's be honest. Let's find a solution to this problem together. They're not hiding those things. So I stay very close to those pieces of it, but I get out of the way and let them do their job and what they're really good at on the tech side and the delivery side and those things. Yeah.

Yeah. Well, and I think that says a lot that people are not afraid to speak up. Because that's one of the things about, well, teams that are unhealthy, right? Is that people really don't speak up. They don't speak their mind because they don't feel safe, right, to do that. They don't have a measure of psychological safety inside the company or the leadership team, depending on what we're talking about. So that says a lot for you guys, for sure. Yeah, I do.

I read quite a bit and I like military history. And again, given today is 9/11, that was a very impactful day in our lives, certainly at our age. And so, just reading Jocko's books on leadership and how these high-functioning teams operate. And one of the things they do, no matter how dirty or beat up or bloody they are after a mission, they have an after-action meeting right then when it's fresh. And anybody can say anything in that room and it, you know, it's the safe space. You know, it's, hey, this worked, that didn't work. You weren't on point here. That went well. Like, so they trust each other implicitly and they know they can say that, right? And that's why they operate at such a high level because they're able to do that, understand it, learn from it, and move on. It's not something that just, you know, hangs around forever, right? It isn't unsaid. component of it. So, I mean, that was one of the first things I did. My dad always kept things close to the vest, financials and things like that. We share our financials on a quarterly basis. We have a quarterly all-hands meeting, right? What's working? What's not working? Here's key initiatives that we are working on. Here's why we're working on them so that the team that's involved that's going to need to support these endeavors understands the why, not just, hey, do this. Okay.

Right.

It just is this new pet project for Bruce or like, yeah. Yeah. So we do a quarterly, you know, all hands meeting, we record it so everybody can view it, but, you know, disclose financials, what's working, what's not working, you know, here's, you know, strategy and all that good stuff. So I think that makes a big difference.

Yeah. Okay. Well, so, you know, and I'm curious on that, Note, you know, the, I mean, so I think that open books is a, well, there are several schools of thought that are like, yeah, open books are really, it's really important for the team and for the team's health and that kind of a thing. Like actually sharing your numbers with your team versus, you know, versus being kind of close to the vest on it. But what do you, I mean, I'd imagine, you know, you being a CPA, at least by training, kind of had pretty good books in place to, you know, to start from, from the beginning. What, so like, you know, in, in what ways have you had to, I guess, financially mature as you've, as you've grown, you know, kind of put towards the $30 million mark?

I think we've, we've had to become much more disciplined and not the, just getting the shiny new tech. I think it started even before I rolled in, but as we were larger, like, oh, we need this platform for monitoring, then we need this on top of it, and this on top of it. And it was like, it was always, you know, our team knew it would go—

Tool sprawl.

Tool sprawl, right? You go to a conference, all of a sudden you're like, you're looking through our list of vendors going, this is impossible to support. Like, what are we doing here, right? So, Just continuing to really refine that and that discipline of, okay, what are we doing? How are we doing it? And tracking return on investment when we are bringing on new tech stacks or new tools or new functions along those lines. So it's probably that discipline that's— and certainly being part of the CPA has helped that because I'm looking at it closer and having a different angle, right? So there's different views on I would look at things with rosy glasses on and like, oh yeah, it's going great. I'm like, no, hold on. In your group, the group that you run, SLI is great. Like, okay. Oh yeah, we're doing awesome. Oh, we suck. You start to share and you're like, oh, we need to tighten those areas up. So, it's just evolution. It's a never-ending type of thing.

Yeah.

Yeah. I think those are the big ones. Being consistent with hiring practices and everything else. Yeah.

And to me, I mean, benchmarking is one of those things, like, that's one of the things we do in our groups. And we look at how are we doing on all, I mean, all these different areas versus everybody else in the group and versus the best in class and just kind of like realizing, oh wow, okay, It is realizing what's actually possible. Because when you look, when you're just looking at your numbers, you're like, no, we, we, there's no way we can make 20% to the bottom line. And then it's like, well, these guys are doing it and those guys are doing it. So it's possible. It's possible, you know, 25% of people are doing it. Um, and so, so to me, a lot of it is learning. Yeah. Figuring out what, you know, what can be done and then And then tweaking until it's like, oh wait, if I, yeah, if I do the right things, then I can, I can do that too.

Right.

So, um, so it's not a—

I get some of the— Yeah, this is not a service leadership commercial, but, uh, we've been doing it 2 years. I wish I would have done it 10 years ago. Yeah. Yeah.

Yeah.

So that's like one of those things. Every time I leave the meeting, I kick myself. I'm like, I wish I would have done this 10 years ago.

Like, yeah. Yeah. Well, and, and I'm, I talk, I talk about it often because I'm like, hey, if, you know, if nothing else, get in a peer group. Like that, that's like one of the, one of the biggest things I think that anybody can do. One of the highest ROI things anybody will ever do as an MSP owner, get in an MSP-specific peer group. And then you get stuff like you, you learn so much. You learn about, you know, benchmarking and all those different kinds of things and, and just actually how to, how to run your business better. And so, you know, I'll always be, you know, excited about that because it's like, it's just, to me, it's just something that everybody should do. It just should be part of doing business. 100%. Yeah. I'll leave that there because I could talk about it for a while. So just kind of like, as we're, you know, as we start to wrap up, I do want to hear from you, like, just Where do you think this industry is going over the next 3 to 5 years? What, in your opinion, what, what do you think is, what do you think is coming down the road?

Well, we have what we made it this far without talking about AI, so I guess we can talk about that.

Oh, dang it. I can't believe you brought it up. No. Right.

Yeah, I, I, I do think, I mean, I think there's a fundamental shift, you know, coming and it's, it's starting to get here, right? We talked about, I think last session, right? Hiring of people versus investment in technology flips. In tools.

Yeah.

He said, yeah, I think Peter said that was the first time that's ever happened. So, I think you're going to see that really accelerate. So, I think, and obviously, I believe in this, I think firms like us where you've got some app development capabilities and understanding and business process and ERP consulting, you know, folks that really understand how the, you know, data flows through an organization, um, are going to be critical, um, you know, for MSPs to be able to grow and capture this opportunity. Um, you know, I think you're gonna have to look at everything— pricing models, how you structure. I mean, everything is going to change in the next, you know, 3 to 5 years. Um, you know, it's like, well, you know, okay, yeah, we charge $100 a seat for help desk. Well, You're gonna have to bundle it in, you know, because you're gonna have an agent that's running help desk. And how do you think through your costing and productivity? And, um, but I do think that, you know, firms, I think we'll be able to, you know, I think firms like us that do have that, and, you know, we are doing, we do have AI projects that are out there that have been proven and, um, you know, taking that to the market saying like, we can really improve your business, not just keep you up and running and secure and, you know, safe from the bad guys out there, we can make substantial financial improvements in your business. And I think you're going to need those skill sets. And I think we've got pretty heavily invested in Claude. We've got a couple certified folks. And I said the other day, I walked out and told my wife, I'm like, we need 100 of these. We need 100 people.

Or more.

Let's start with 4 or 5. got already, but like, I mean, we need like 100. Like, it's just amazing the things that are happening. And, you know, the more that, you know, organizations adopt that, you know, if you don't have that skill set and ability and understanding, I think it's going to be a real challenge. Um, you know, and that's, that's not coming— those resources and team members are not coming out of our MSP practice. It's just a different, you know, so totally different skill set. Totally different skill set, you know, and understanding. They're both really valuable, but, you know, I think it's— you're gonna have to figure out how to, as an organization, acquire or hire those skill sets or develop them with a different mindset because they're probably not in the current team in most cases.

Yeah, for sure. Yeah. And I've seen, like, you guys and, and some other, other companies that are sizable companies, uh, you know, $30, $50 million MSPs that are like, yeah, I mean, We have some great people, but they're not going to be the ones that are going to go look at a client's business and say, hey, we can implement AI and automate this here. You're talking about, I mean, business analysts. So folks that do, you know, software stuff, people that do business intelligence stuff, you know, those kinds of things. And so some of the smartest companies I've seen are, yeah, they're going out and buying those kinds of companies, folding them in, and then that's helping them accelerate their AI development, right? And, and how they're, how they're going to market with, with AI.

And how they deploy it internally, because you have those skill sets and that mindset, and then you can go to market to the clients with it. So, yeah. Yeah.

Yeah. Yeah. Love it. Okay. Well, we won't belabor the, the AI thing, but I did, I figured you probably had some, some, some thoughts there, but so, okay. And then this one, this one I love, you know, it's kind of one of the, it's, it's the question that I ask everybody, but what's the, uh, What's the biggest mistake that you have made as a leader?

Biggest mistake? It was probably early on when I acquired the organizations and I was just so new to it. And then we had a pretty major world event, right? So, again, September 11th, right? I was doing consulting. I wasn't a business owner at that point. It was a big shift in how things were happening. You know, I bought the businesses and then you had the financial meltdown, right? And I didn't react fast enough. I mean, my biggest flaw is not reacting fast enough. And I think I've solved that, you know, not solved it, but I'm better at it.

Yeah.

You know, if you think you're going down the wrong path, don't be stubborn, you know, and, you know, stick with it. You know, just say, okay, made a mistake here and move on. So, You know, that's probably been my biggest, you know, mistake, flaw is not, you know, being decisive in certain big moments, right? I was when COVID happened, I was ready and, and we captured, you know, you know, a lot of, you know, momentum in a positive way. I was like, I've been here, I've done this. This is my third, you know, major world event.

Yeah.

Like in my professional career. Like, I've got this. We're gonna do this, this, and this. The team had confidence, the clients had confidence. Like it wasn't just sort of wavering, go, ah, it'll just be a couple months and we'll stay at home or something.

So. Yeah. Well, and you were used to remote work at that point too, right? I mean, that, that was one of the things for me and my MSP, we were remote team anyway. So it was just like, well, we just, it's business as usual for us. We don't even need to go in the office.

So yeah. But 11. Yeah. Yeah. Not moving fast enough when, when I know I need to and just having that hesitation of like, ah, just wait along. It'll be okay.

Like, you know. Yeah. Yeah.

Yeah.

It's like, let's go.

Yeah.

Gotta, gotta move. Okay. Awesome, man. All right. Well, so, so, hey, I like to wrap up with some rapid fire. So, so first, for in rapid fire, this is just like first thing that comes to mind, quick answers. Don't, don't even think about it. Just go. So first one is, what's a belief that you've changed your mind on recently?

Oh, um, I don't know, pass.

Well, I don't know if any—

yeah, I can't say I have any big shifts in beliefs. Um, you know, uh, I guess we've— we just made it— we just got a significant investment in PE. And so, um, PE had a, you know, kind of gets a bad reputation in certain, uh, certain aspects, but going through the due diligence process and everything and getting to know the team, I think it's a, it's a real value add. I think there's a lot to be had and gained from, from partnering with the right groups. So.

Okay. Awesome. Awesome. Okay. I'll, I'll let you, I'll let you go on that one. No. So what's something that you've been really curious about lately?

Again, it's probably the AI and just this, how do you change this really fast, right? You know, how do we, how do we adopt this? How do we make it a value for the client or to team understanding it because some of the things we're doing are just blowing my mind. It's almost hard to get my head around some of the stuff that our team's doing for clients at this point.

Okay, awesome. What is something that you can't live without in your daily routine?

Workouts. Exercise something. Yeah. I mean, it's 3 to 4 days at the gym and then I walk at least 2 or 3 miles a day with the dog. I mean, that's just something that Get away, get out of front of a computer, be healthy so that I can contribute.

Love it. Okay. What's your go-to way to unwind like after work, on the weekend, that kind of thing?

Workout, explore. I mean, I love being outdoors. So, any chance I get, and Denver weather is great, so any chance I get to be in the mountains, I will take that opportunity to unwind and Love it.

Love it. Okay. And then, what is a book or idea or a piece of advice that has shaped you the most?

I mentioned earlier, but I think Jocko Willink's Extreme Ownership. It's just that idea of empowering your team, but as a leader, you still own everything, right? You need to give your team room to move and do things, but Every decision you have to own, right? So anything that does go wrong is my fault. I mean, that's just how it is. So just having that mindset and being okay with it, I think that was a highly impactful book. I really enjoyed it.

So love it.

Our leadership team has to read it too.

Okay, good, good. Brilliant. I love it. Okay. So man, Bruce, really appreciate this. I think Like, there's— well, you just have such a unique perspective on a lot of different things, especially compared to other folks that we've had on the podcast. And so, really, really appreciate you taking this time. And if somebody wanted to get ahold of you, what would be the best way for people to learn more about you or connect with you?

Yeah. I mean, I'm pretty active on LinkedIn, so you can certainly find me on LinkedIn. Just search up Bruce Nelson and Invertalocity. Go to the website. Or send me an email, right? It's published. It's pretty easy to find. And I love to connect with other business leaders and get feedback and different perspectives, right? That's one of the biggest values of our group is sharing that information. And I'm happy to share anything that people might find valuable from us. So, I love it.

Awesome. Awesome. Well, this is certainly really helpful for a lot of people. And so, Really appreciate you, uh, doing this, man. And, um, and we will see everybody next time on the $10 Million MSP Podcast.

Awesome. Thank you.

Thanks for listening to this episode of the $10 Million MSP Podcast. If this conversation got you thinking about growth, profitability, or what might be holding your MSP back, I invite you to take my MSP maturity assessment. It's a short assessment designed to help you identify what What's working, what's breaking, and where the biggest opportunities in your MSP may be. You can take it at brianhoppe.com/assessment. And again, that link is in the show notes. I'll see you next time.