Episode 1: Building a $250M MSP w/ Rashaad Bajwa

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.

Yeah, Rashad, it's great to have you on the show today. We go way back to, you know, the old peer group days in the, well, I guess the late teens before—

Was it HTG3?

It was, yes. And/or Evolve 303. Or, you know, whatever the names became at that point. But, but yeah, it was, we got to know each other back then before you did a lot of the stuff that you've done, which we'll, which we'll get into. So I'm really excited to, to dig in. And I want to start with a question. So this, you know, this might be a loaded one. But when you look back at the kind of the arc of your career and all the things that you've done, you know, you built your own MSP and You've now built a national powerhouse MSP. What's the biggest, I guess, leadership evolution that you had to make in order to scale?

Sure. The biggest leadership evolution I think was a personal, I don't even want to call it an awakening because it was not, it didn't come internally. It was when I had first joined what was the HTG Beer Group. You may remember they used to like vote you onto the island and vote you off, right? So this is before HTG3. This was, it was, Actually HTG 18. And I remember I had come in, we had just hired our first salesperson. And, uh, and I was like, for the first time, I was like, as an entrepreneur, you know, you think you just run through walls, but this is one where it was, okay, I've never developed a salesperson. Let me go out and learn from others, which was novel for me because I, I just, I always just had the bravado to kind of go off and tackle it myself. So I joined HTG for the first time and thought I had what was a pretty good meeting in, in Orlando. And at the end of the meeting, there was 2 of us who had joined in that quarter. First guy goes in, comes out. He's like, okay, I'm good. I go in and they're like, Rishad, you sound very smart, but why are you here? Every time someone gives you feedback, it's not that you're defensive, but there's a lot of I knows, there's a lot of counter. If you already have all of the answers, why are you here? And I remember being thoroughly insulted and caught off guard in the moment.

Yeah.

But, but, you know, being a good salesperson, I said the right things to, you know, have humility in the moment and, and, and get into the group. Anyway, I go back and I talk to my wife, Michelle, who is a co-founder of, of the MSP with us. So she's, you know, been there since day zero. And I replay back to her this story and she is totally incensed. How dare they? Who do they think they are? It wasn't until I saw her reaction, it was almost like a mirror. That I realized what is wrong with us. We have this uber arrogance that we've developed being entrepreneurs, thinking that you know we were the reason and the gift behind all of the success that we've had. Which not to take anything away from that, but here you have you're coming here looking for something that you don't know how to do, and you can't take feedback. So that that awakening by joining the peer group and for the first time listening to peers and getting feedback from them, as opposed to thinking I as the entrepreneur had to. tackle every demon in battle myself. That unlocked so much in the organization because it, it put me on a path to stop being the bottleneck for growth from the organization and actually listen to others and benefit from others and delegate and learn and listen and all of that. So yeah, joining the peer group and, and getting open to feedback, that was kind of the changer for me.

Wow, that's great. That's great. And I, uh, you know, I'm always And I don't know what it is for me, but I've, I've always, I feel like I've always been relatively open to feedback. But, but one of the things that I learned also early on is like, hey, feedback is actually a gift. If somebody is giving you feedback, that is a chance for you to look at, or that for me, this is a chance for me to look at myself and say, okay, even if this is, um, 90% wrong, where's the 10% that it's right? And actually, uh, into— and actually like interrogating that and saying, okay, can I learn something from this even if I think they're mostly wrong about this? Right.

Well, and I'd love to say that I had that, uh, point of view. I did not. And so, yeah, uh, getting, getting pushed by those peers and, and having that mirror be held up to everything that we were, we were missing out on by not listening to others. Meaning, yeah, forget about 10%. It may have been 90% that we needed to learn.

Right, right.

But we were closed off to it because we were just so arrogant in being, you know, the entrepreneur, you know, I, you know, I like to say it takes arrogance to start a company because almost by definition, you're saying the existing marketplace is not serving the needs and I'm going to create something. But then it, but I truly do believe it then takes humility to scale one, like to kind of get it past your own arrogance. And, um, and that is that awakening that happened when they, they mentioned to me, look, why are you here if you already have all the answers?

Yeah, I love that. And, uh, I think maybe a lot of that stems from the fact that we're usually the, um, you know, as entrepreneurs, we're usually the one who kind of knows what needs to happen. We're, you know, a lot of times the smartest person in the room, right? For at least for at the earlier, at the early growth stages. And so we're used to being the one that has all the answers, right? I mean, would you agree with that?

Oh, totally, because you can't afford real talent or expensive talent initially. And so, yeah, you know, to a large extent, you, uh, you get more junior talent or, or less experienced talent. And so it feeds into the whole entire, uh, cult of personality that we create around ourselves. And yeah, and that cult reinforces, oh yeah, you are the And in America, we celebrate entrepreneurs too. Like every, you know, every other week there's another entrepreneur competition where the— but, you know, there's an army of people behind us that are actually doing the work and coming up with ideas and doing all of that sort of stuff. And so it reinforces, I think it reinforces that belief, which is not wrong. I mean, you do need a healthy ego and healthy level of arrogance to start a business and to keep running through walls when they come up. But at some point, if you want to get past a certain level, you got to just let other, like, stop sucking the air out of the room and let other people talk and maybe you'll learn something.

Yeah. I love that. I love that. And, and, you know, and then eventually it's like, hey, if you, if you're the smartest person in the room, then you're in the wrong room. Or you need to get the, or you need to get smarter people in the room. Right. That's the other piece there. So yeah, man. Well, thank you. Thanks for sharing that. I, I do want to, you know, give everybody kind of an idea idea of, okay, where, where did you, where'd you come from? What's kind of your story? Um, how did you, uh, you know, and then how did you end up where you're at today?

Sure. So we started the MSP that later became Integrus. It was originally called Domain. You may remember.

I do.

Yeah, absolutely. It was called Domain, um, back in 1997 when me and Michelle, my wife, we were not married at the time, but, uh, we got married later. Uh, when we were seniors at Rutgers University here in New Jersey. And, uh, both of us, I was a philosophy and political science major. Uh, so I was—

Perfect, perfect segue to IT.

Obvious, obviously, right? Um, Michelle was an English major. Uh, both of us were going to go to law school. That was the original plan. But during college, uh, I got an IT internship in an IT department just because I, you know, I love computers, gaming back, back in the day. And so, uh, just got really good in IT, got some gigs doing IT for some firms. And to make a very, very long story short, we ended up doing IT for law firms instead of going to law school. And then every lawyer we were talking to, like we were, this was a great time to get into tech, late '90s, because the internet had just come out. Networks had started just becoming the PC. It was, it was less than a decade old. Uh, Windows was less than a decade old. And so the business environments were just changing completely. Productivity was just completely changing. And so it was a great kind of atmosphere and timing to, to be in tech. And the lawyers were like, you know, give this tech thing a shot, you know, maybe law school you can always go to later. And, you know, what is it, 28 years later, uh, still, still, still doing this. And so—

Worked out okay, I guess.

Worked out okay, I guess. And so, but it, but it was a lifestyle business. For a very, very long, I mean, a really good lifestyle, but a lifestyle business. It was me, Michelle, and, you know, you start with a handful of employees as, as, you know, your client base grows. Um, at some point we started hiring managers, but I'll be honest with you, we never really deferred to them with a real responsibility. It was still a cult of personality around, around us and a very, very flat org chart. So the company was never really going to get above 20 people. Or so, uh, uh, you know, just reflecting back, it didn't get to 20 people. It was still a slight, slightly less when in 2012, which is when we joined HTG, we were probably $2.5 million of revenue back then. Uh, slightly less than 20 people, as I said, very profitable. I mean, I, I, I didn't know what EBITDA was at the time. It was just, you know, is the bank account balance going up or is it going down? Um, but it was, we always ran a very premium business. So that was, that was something that I think reputation was always very important to us. And And we, we were able to run a very premium business. And so lifestyle business, got into the peer group, started learning a lot of things more than just what to do with that first salesperson I hired, you know, as I mentioned. Uh, so we, we, we got sales methodology, a professional sales motion in place. But, but more importantly, we learned about things like culture and leadership development, uh, which without those things, we would not have been able to Upgrade the talent around us and finally shift out of a cult of personality around some owners and actually become a professional organization that was able to scale. And so then grew that quite a bit. And then in 2018 or so is that's when private equity started discovering MSP. And so we had started another business called Biz Ratings, which is actually what I'm focused on again now. But BizRatings was a CSAT tool and an ESAT tool that we had created for the industry. So I had exited. And so these private equity folks were coming to us and saying, well, you know, just sell Domain to us. You know, we're going to do X, Y, and Z. We talked to the leadership team. We felt that we actually had a better product. And so we decided to do the thing ourselves. So I, I exited BizRatings, came back to what was Domain, uh, spoke to a whole bunch of peers of ours, um, about what we're planning on doing. And once again, to make a very, very long story short, um, convinced a lot of our peers that our thesis around creating a premium MSP was a compelling one. Did our first merger that we had never done any sort of M&A or anything like that up until that point. Did our first merger with Dave Schaefer of Tier 1 Technology Partners, who you may know, uh, in 2020, right in the, right in the beginning of COVID Oh, wow. Um, simultaneously, Great timing. Exactly. Actually, it was, it was a really good timing for MSP too. I mean, in the moment we were scared, uh, as to what would happen, but it ended up being really good. And so first recap in 2020 with Frontenac, which is a Chicago private equity, a lower middle market private equity fund out of Chicago. And, uh, and then did continue to grow, did 10 acquisitions and just did our second recap with Omer's private equity, uh, in December of 2024. And now we're, you know, almost $250 million of revenue. $55 million of EBITDA, over 800 people. And 6 months ago, I shifted from CEO into executive chair role.

Wow. Brilliant, man. There's a whole lot to unpack there. So as you guys were, I mean, going about this process, I mean, I would imagine that you, you know, kind of shifting from a founder to, um, to, uh, the, you know, somebody leading an organization of that scale, um, had to— you, you had to change a lot, you had to grow a lot. And, uh, you know, and even like you've, you've mentioned cult of personality, uh, a few times even on this call. And so, um, so, so when you think about that shift of leadership during that period of time, you talked about one earlier, um, or, you know, previous one earlier in this, uh, chat, but like Well, I mean, how, how does one shift from running a 20-person shop to running a $250 million enterprise?

What does that look—

what did that look like for you?

Yeah. So, you know, the focus changes completely. You know, it's no longer about technology or, or product. I mean, you still have to, I think, have a sense of the marketplace and a sense of product, but it becomes It's a people business and it's about developing the EQ. The first phase is the developing the EQ to hire talent, uh, and identify talent. And then I think it's then, uh, investing in them to develop them initially in those first early phases, it's developing others to do what you do.

Mm-hmm.

So if I was doing tech, if I was the technology superstar back in the day, it was about getting other technology superstars around me first. But then at some phase it was about, uh, developing managers, but that, that can't happen until you become a manager yourself.

Mm-hmm.

You know, I, I think all of us, including, including the founders, uh, we have the Peter Principle, the problem, meaning where we kind of, you know, promote ourselves to our level of incompetence. And I had to learn how to manage people. I had just, you know, had no concept.

And so getting coaching, if you're familiar with Hardened Buyers, Yes, he was, he was my first coach, uh, and, and the reason that I do what I do today. Absolutely. Yes.

Well, so then, uh, you know exactly what I'm talking about. It's folks like Hardin that poured into me, and I'm kind of using his terminology. Um, right, right. Uh, he, he— I love it. He uses something about, you know, there's some folks who are a, like a, a contain— like a vessel that it just ends, and there's others that flow through. And so my goal, similar to what he sees as himself, is to flow through, meaning he's poured so much of his wisdom and ideas into me. And then, so my goal is now to kind of pass it forward. And so I'm just reflecting back on my first comment about going from a guy who thought he had all the answers because he was this entrepreneur coming out of college and like, you know, kind of full of piss and wind to having someone like Hardin pour into me in such a way that I'm like, wow, I have to pay this forward. And so it starts with paying it for a lot of the folks that, you know, who were on our team back then is Rob Bufano, who you know really well. Absolutely. K-Riz.

Yeah.

Anthony DeGraaf. These are all folks who came through that pipeline of Hardin poured into me and then I poured into them and then now, and then they poured into others. And, you know, hopefully that's kind of how the cycle keeps going. And my hope is that all of these folks, whether it's under the Integrus umbrella or, you know, some, some maybe find opportunities elsewhere, they, they keep pouring into others and, and kind of sharing that message that Hardin shared with me about, yeah, um, being a good leader.

Yeah, I love that. I love that. So yeah, and, and, uh, obviously we can, we can talk, we could probably talk coaching journey like, uh, all day, but You know, I think that's that being willing for you, for somebody like you kind of talking about where you came from to, to hire a coach is essentially, you're, I mean, you were, you really took that to heart to be like, hey, I know that I don't know everything. And the more I learn about what I don't know, the more I'm like, oh yeah, I really actually need somebody to help me see my blind spots. And understand where I can grow, and understand how I become a better leader.

Yeah, I think if I had been more normal, I don't know that I would have taken to coaching as fervently as I did. It's because I had such a negative view of coaching slash like to me coaching and all that stuff was like self-help. Like yes, for weak people, you know. Just coming from that arrogant college kid, you know. Look, I did this by myself. I never took a loan. Da da da. You know all of this sort. of stuff. That was just insecure arrogance, um, posing as bravado. And, uh, and you're right, being able to go from looking at things like core values and vision statements and culture as being fluff, as that kind of initial, to the complete opposite. Um, and, and the same thing in spades applies to coaching, which is, you know, yes, you cannot get to the best version of yourself if the only influence and feedback you are getting is your own ego.

Wow. That's quotable right there. I like that. So yeah, so I'm hearing kind of back to the question of like, you're evolving as a leader into somebody who's capable of carrying, I mean, not carrying, but somewhat carrying the burden of a $250 million company. It became for you really about people. Um, that's the, the, would you say that's the primary thing?

Yeah, that's right. Being able to identify talent. That's, so that's key as well. Meaning it's one thing to develop them. It's another thing to identify this. So getting the right people on the bus is, is probably the most important thing. And then the second most is once you get them on the bus, you take care of them, right? You develop in the, you know, pour into them properly. So, you know, you know, I'll, I'll bring up Hardin again. You know, coaching's a little bit different than running your own business because coaching, yeah, you do get to pick your clients, but it's not necessarily an investment. Uh, when you're, when you're, when you're doing the business, uh, you're, you're picking your people that you're about, you're going to pour into. So getting that right is really, really important because, you know, you can't want it more than them that, you know, you have, they have to have the kind of the raw. Workings of, uh, the material, raw materials, uh, to kind of get to that next leg. So that's why I'm, I'm a big fan of, you know, assessments of folks in advance, personality assessments, as well as cognitive and all, all of those sorts of things to make sure that the, the person we're getting is truly who we think they are. And then once, once they're on the bus, like you just give them everything, you pour into them and hopefully, hopefully you got some superstars.

I love it. I love it, man. So as you were growing, what would you say were like the, the biggest hires, the hires that made the biggest difference?

It's at different phases, you know, and because, you know, going from $2 million to $250 million, there's just, there's so many stages in between.

Oh yeah.

That, um, there's so many key hires. And I think if they didn't happen, the next domino would have never even been an option. So, so I think getting that first manager. Is probably the first one. Like you know, like that's the first thing to develop the cadence of walking away from that cult of personality. I know you I used it before. It's just I frankly, it's just it's so it's so right because that's that's not only for me, but I see it around me everywhere and not just MSPs, but even in our client in our SMB clients. The businesses that don't grow normally have some very strong ego founders that just do know how to suck the air out of a room. And it becomes very difficult for anyone else of substance to survive very long there or to, or to grow. And so they end up being kind of like B players only are the ones that will survive there. And so I think that first hire, getting your first leader to be better than you and trusted in the eyes of your team, if you can get that done, you can probably do it over and over and over again. And then, you know, I don't want to oversimplify it, but then yeah, the road from That gets you to $5 to $10 million. You know, I think being able to prove that out, that's why once you get to $10 million and as long as you've done it organically by kind of like building that skillset, you can probably keep going. Like, you know, and then at some point, you know, call it $15, $20, maybe $30 million, you know, you're always going to be over your, you know, over your ski tips. I know I was as far as being able to, you know, running the biggest business you've ever had. But it probably scales quite a bit. And then the next decision is to figure out when do you need to hire outside talent? Because you can't keep growing yourself and or others indefinitely. You know, there's very few founder-led businesses without outside kind of senior executives that have come in that have grown to 50, 100 plus. So then, then it's getting some real key hires from outside, whether it's a CFO, whether it's a COO.

Yeah.

Whether it's a new CEO, um, all of those are probably, you know, incredibly critical hires to get past that, whether that happens at $30 million, $50 million, or $100 million in order to keep going, you know, that, that is that next leg of getting outside talent.

Yeah. Yeah, absolutely. And then what about, what about outside help? I mean, you talked about a coach when you like, let's say, I mean, you've done at the point you've done maybe a few acquisitions, you're probably over $20 million at that point. Who were kind of the key outside people that you had? I mean, maybe they're consultants, maybe they're, maybe they're coaches, like what kind of outside support and help did you need?

Sure. When we first started doing M&A and bringing together new cultures, because up until then, everyone who was in the company had been hired by us, had been screened by us, had been drinking from our water cooler of ideas. So culture was kind of organic and native to them. Now you have a whole new group of people that have not bought into that necessarily yet. And so the first was getting an integration, somebody who had kind of understood and been there. Our first outside hire outside of CFO was getting somebody who understood integration if you want to go down the M&A road. So that, that would be that first kind of outside skillset. Uh, the other thing that we used right around that same timeframe was another executive coach.

Mm-hmm.

Slash, I don't even know what the title is, organizational consultant, consultant or something like that.

Yeah.

Basically a third party that helped us evaluate, uh, new executives, put them through assessments, did group coaching sessions for us to help with, uh, you know, building a leadership team going forward, helping us identify strengths and weaknesses for all of us, uh, you know, where we kind of filled each other's, each other's gaps. So that outside consultant was Super, super helpful at all. And then, you know, we always would have consultants based on the project. Sometimes we would have, you know, somebody for go-to-market. Now we have a whole bunch of people working on AI initiatives for us. Um, but from a people point, but from a people point of view, you know, having coaches for developing leaders as needed, like Hardin coached probably half a dozen folks on our team over the years. And then at some point he just said, Rashad, I've now poured into you. I'm coaching you to become a coach. And, and then, and then likewise, if you can then do that to your own people, now you have an army of, of folks who can go out and kind of spread the good, the good juju across.

Absolutely. I love that. I love that. Yeah. And, and, uh, you know, I think it's, it's true that, um, we never, um, make it on our own, right? There's always, there's always people that have helped us along the way. And so, you know, I think, I think a lot of times what I see is there's kind of this reticence to, to be like, hey, to go, go to somebody and say, hey, I need help. And why don't you come and help me with this thing? And so, so I'm always curious about that. So it sounds like you had a lot of those people along the way.

And I think as entrepreneurs, that reticence that you're talking about is it's like ingrained in us. I think part of what makes you an entrepreneur It tells you, I can do this myself. Like it takes bravado to say, I can do this myself. Now that shouldn't preclude you from asking other people for help, but I found out that the hard way. But sometimes I think it, it does because we, we feel that if we do take too much help, we're not actually doing it ourselves. Yeah.

Yeah. It's like, wait, I'm not, I'm not going to get all the credit or something like that. It's like, well, is that the right way to look at it? I don't know.

Yeah, we entrepreneurs are complicated people.

So we are, we are indeed. Yeah. And I'm just reminded of something that kind of you were talking about earlier is in that space where we kind of, I guess what I'd call the loudest voice in the room. Right. And so a lot of times what I see, I was just having a conversation with a $40 million MSP owner and he's like, yeah, I think, you know, people seem to always like agree with me. And so nobody challenges me. And then it's like, Are we doing the right thing? Or things don't get done because, you know, and so it's like, hey, well, yeah, you're actually, you're the loudest voice. And so if you say, hey, here's my opinion, and then you ask people to disagree with you, they're probably not going to do that, right? Like collect opinions first, because if you give yours first, then everybody's going to tend to be like, yeah, boss, that sounds great. And then they're going to go talk about it at the water cooler later and be like, that's the dumbest idea I've ever heard.

And, you know, uh, uh, Lencini and Five Dysfunctions of a Team, The Advantage, all of that sort of stuff, you know, and they, and they talk about where you have to have that conflict in order to, that respectful conflict in order to get buy-in in order to be aligned going forward. But you're right. The, it's really hard to have conflict with an entrepreneur that is many times is, is going to have A lot of confidence in their voice, even though they might unintentionally be running over people unintentionally, you know, they, they probably speak with a lot of confidence. And because they speak with a lot of confidence, people presume that this is your— they're dictating the answer as opposed to soliciting a debate. And so then there is no debate. There is no buy-in and it's a dictatorship, even though I don't know that it's always— I don't know that the entrepreneur necessarily wants it that way. They just create that environment because of their personality.

Yeah, yeah. Because yeah, you, you don't see it, right? You don't see it when you're, when you're kind of in the midst of it, which is why I like to sit in on leadership team meetings. And, and usually that's the main thing, or one of the main things that you observe is like, okay, well, yeah, nobody's— no, there's no dissenting opinions in the room. Well, you know, either we're all the same person and we all think the same things, or we're not, we're not creating a healthy culture of of a culture of healthy conflict.

That's right.

And so, um, yeah.

And that's why the coach is so important, just like in sports where, you know, if you're shooting a free throw— and I'm not a great basketball player, but I presume this is how it works— if you're, if you're shooting the free throw, you have one angle, one point of view that you can have if you are shooting the shot yourself. It takes somebody on the sideline. There's some flaws in taking a shot that you can only see from a different point of view. And because by, by its very nature, you're blinded to that angle because of the, the seat that you're in. And so the same thing happens where I'm so glad that you do participate in those meetings because I think I, I hear time and time again where you have the leader come out and, and sometimes diminish their own people by, by saying, I can't hire good people that, you know, fill in the blank of all the reasons why it's them and not me. And then you observe the room and you're like, how could anyone survive here? You sucked all of the air out of the room. Yeah, of course they're gonna suck. You don't even let them talk. Yeah.

Yeah. Well, and, and, and that's where, you know, you, yeah, you definitely run into retention issues and, and, and all of those kind of things. And, uh, yeah, that totally makes sense.

Yeah. Or, or the people you keep around are all just kind of mediocre because those are the only ones that don't, that, that, um, or they even buy in some, sometimes they buy into their own inadequacy relative to you because they've just been brainwashed by this cult of personality over and over again.

Yeah, 100%. 100%. So yeah, I mean, there's a lot to unpack there, but I want to move, I want to kind of shift for a minute over to kind of your strategy, right? So, hey, it totally makes sense if you do a merger, You have a higher multiple, right? Presumably at that point. And then you kind of start into acquisition mode. So when you think about that, was, I mean, maybe talk through your, I mean, what was the strategy when you kind of first started on the merger and acquisition path?

Sure. So it all comes back to the value creation plan. And yes, one of the factors of the value creation plan is EBITDA multiple arbitrage. But, you know, that can only take you so far. And so the original thesis and the current thesis is not just about EBITDA multiple arbitrage, because as I said, that's good, but it can only take you so far. And really good assets get more and more expensive. And not only that, acquiring companies and integrating them can create stress.

Yeah.

We, knock on wood, have very good churn, meaning the churn's not too high, but the vast majority of rollups have ridiculous churn, which sometimes can really, A, offset that EBITDA multiple arbitrage because it kind of puts a, puts a stink on the company because they're, they're losing all of these clients as, as quickly as they're adding them on. And that stink reduces not only the amount of EBITDA, but also the multiple arbitrage, meaning your multiple is not going to be that high. And so for us, it's about Making sure that there's always a case around how we are uplifting the experience for these clients. And I'll give you an example. So ours, ours is very premium focused on a couple of different segments. And in those segments, we have a differentiated right to win. I'll give you an example. We're one of the largest community banking MSPs. I told you before, uh, we started with law, with law firms.

Yeah.

And so we still have one of the largest legal, legal ones. And so the beauty there is we can acquire a horizontal MSP, meaning an MSP that kind of does everything. They'll have some community banks. They'll have some lawyers. They got serviced just regular MSP stuff before, but the lawyers never had anyone that understood their document management system as well, or their time and billing system. The community banks never had someone before that could actually sit on their board meetings and talk to the regulators about FISERV or Jack Henry or FIS. So now it's a totally different— so the benefit there is the M&A is about You acquire these companies and now bring additional capabilities that they would have not had otherwise. And it's not just the standard, oh, well, we're bigger. We have more resources.

Yeah.

I mean, yes, that is true as well. Like our cybersecurity resources and AI resources are going to be far better than any one of these smaller MSPs. But we also have a team that knows your line of business way better than the folks that you would have had before. And so that I think creates an opportunity to increase the EBITDA. organically, just based off of them being a part of our platform now. Whereas like, you know, we, we had a community bank in Minnesota before, but that Minnesota community bank had come from an MSP that didn't really know community banks. They now are working with a community banking team that knows that far better. And so that creates, creates a kind of an upsell opportunity for us there as well.

Yeah.

Yeah, it makes sense. So, um, yeah, so, so adding, adding value, not just by multiple arbitrage, but by actually adding value to the clients that you're acquiring. Because, you know, you know their industry in particular. So on that note, how important do you think it is to, if I'm an MSP and I, you know, I'm considering selling 5 years down the road, how important is it for me to have some sort of vertical focus, do you think?

I think it's helpful because in the short term, it's going to allow you to differentiate yourself to your own clients and hopefully charge more because they see more value in what you're doing. And then that just translates to better gross margin and EBITDA later on. And, and, and frankly would make you far more attractive for someone like Integrus to acquire, uh, whether we have your vertical already or even if we don't. If we already have it, then it's a no-brainer. Uh, we just bring it into kind of our existing, but if it's a vertical that we don't have, as long as it's scaled enough and it's big enough, it makes them very attractive for us to bring on. You know, that all being said, we see excellent horizontal MSP, meaning like generalist MSPs.

Yep.

As well. And as long as your retention is really good, as long as your recurring revenue is at a certain, uh, you know, percentage, you know, 70, 80%, uh, plus of your recurring revenue. And, and you have some level of, um, pricing elasticity, uh, because you're, you have high quality, meaning what people ask, well, if you're going to look at one indicator on an MSP to say whether they'll be a good fit for Integris or not, what is it going to be? It sounds so basic. But it's all-in-seat price. And I'll— and the reason why is if you are an MSP, and I'm— pick the city— in Phoenix, Arizona, charging $200 all-in-seat price, and there's 100 other MSPs in Phoenix, Arizona charging $100, but you have charged $200 for a decade plus with very low churn, I don't even need to ask anything else. You got something. You either got really good people. You have some sort of differentiation. All your clients can't be idiots. And so that, that in a— now I want to find out why. So then we'll, then we'll do some diligence to find out why. And what we normally find is, yeah, they have really good people. They have a culture that retains really good people. They have some knowledge or expertise. Is it because they have a vertical? Yeah, it may very well be because they have vertical expertise, but it may not. It doesn't necessarily have to be that. I'd rather, we're looking at an MSP right now that's in a vertical that we're in. On paper, it should be fantastic. It should be amazing. They're selling dollars for 75 cents, meaning they're not making a lot. Like, and the reason they're doing that is because they're probably not very good in that vertical. The last thing we want to do is make our good vertical crappier by adding another vertical market MSP. So, so it's not, you know, vertical alone, I, I would, I would stay away from, but I will tell you one thing that we find is MSPs that have been part of peer networks, whether it's Evolve or SLI, are almost always, as long as they've been paying attention and listening, way better than ones that have not because they have benefited from the feedback of others and they probably have put in best practices that make them a better fit for us.

Yeah, I love that. So yeah, and I always, you know, when people are like, hey, what, what, what are the 3, what are the, or what are the biggest things that kind of, uh, You know, enabled your growth and, you know, throughout my journey, I can point to 3 things. So first one was joining a peer group. Um, in our, in my case, it was Evolve. Second one was implementing a business operating system, EOS for us. And the third thing was getting an executive coach. And so we talked about, we've talked about 2 of those 3 things. How was, was the business operating system kind of a part of things for you guys?

Oh yeah, for sure. So we, we were, we were an EOS shop for quite a long period of time. The headline is we scaled out. I don't know if that's a thing or not. Um, and I, and I think there can be healthy debates about it, but until we were probably 300, 400 people, we used EOS as, as our operating system. And most of the companies, not maybe not most, but many of the companies that joined us, Integris now, because we're a rollup of rollups, there's probably like 40 or 50 MSPs. If you kind of go back and you pull the thread. I would say the majority of them were EOS shops. So yeah, I, Brian, I agree with you completely. I think the operating model is important. It also helps get away from that founder-led calling all the shots. It teaches the founder to have a meeting where you're getting feedback and debating with other people. Now that L10 meeting, unfortunately, sometimes is the founder still sucking all the air out of the room.

Right.

Uh, but at least the concept is now there as opposed to it just being the whim of the founder. I think it does scale out. I mean, there, there is a point at which beyond a certain size, you can't have everyone's opinion in an L10 meeting trying to like ideate and go through IDS. You, you can't IDS marketing's problems with the CFO. The CFO just doesn't have time. Yeah. $100 million business, but foundational for sure. Sure. I think those 3 things you picked are right on.

Okay. Well, well, good, good and good to know. So yeah. And then kind of, kind of back to the, cause, cause you mentioned like a few things as far as As you guys have, have evaluated acquisitions, I mean, you're looking at the all-in seed price. You're looking at, I heard some about culture. I heard some about verticals. If you had to pick a few more, like, I mean, EBITDA, we also talked about. Yeah. What would be incredibly important?

Okay.

Yeah.

Churn, churn is, uh, you know, I'm a big reputation person. So if you're growing well, but pissing off a lot of people who are going out the back door constantly as well. That does not create the type of harmony in the universe that I like. I'm all for having a sales-led organization, but I also am a firm believer in you have to have a customer-focused organization that knows how to retain talent at scale. Like, you know, when we were smaller, our best, like, you know, the best of us would almost always have less than 5% churn just because we were, we were small. We could put our arms around everything.

Yeah.

We, we, we almost like personally vetted every single customer that came in the door. So it was easier in a scaled organization. 5% is like as good as it gets, but it's very, very rare. We want to keep it below 8%, but we, you know, scaled organizations, most of the, most of them are 10+ these days.

Yeah.

Churn, meaning from a churn point of view, keep that below 10 and you're in a good spot. Keep it below 8 and you're even in a better spot.

And, and, uh, you know, there is data on that. And, uh, you know, I think, I think the average is somewhere a little bit north of 10, or at least this last quarter and, and maybe best in class is in the high 5s, if I, if memory serves, something like that. And so, um, so yeah, I mean, so, so churn in, and I would imagine both customer churn and employee churn probably plays a big part.

Absolutely. You know, and you, you don't want it to be zero either, by the way, because that tells a different message. Yep. Uh, so, you know, there, there's a, there's a range in between. That's, that's low enough, but not so low that suggests that this isn't a stagnant organization.

Yeah, totally makes sense. Okay.

So, so shifting gears again slightly, um, or maybe one more growth and then growth, organic growth. So, you know, you know, you want 10% plus organic growth. If you're really small, it better be more than 10% organic growth. Uh, and you, you know, and at some point, maybe not when you're really small, but at some point start getting enough financial acumen where you can actually break apart, is it new logo? Is it farming? Is it because of price increases? Like, 10% organic growth in 2022 was not exciting because inflation was 7%. Yeah, you know, 10% in other normal years, pretty good. 15% plus, even better.

Yeah, yeah, absolutely. I love it. Okay, so, uh, you know, yeah, so, so kind of what I want to get into now is, I mean, you're seeing, you're seeing the, the industry from a, from a different perspective than a lot of people at your scale. So when you're looking at the future, and let's think about the next 5 to 7 years, you know, or maybe, yeah, what is a 2030 MSP? What are the big things? I think, you know, and I'm going to, I'll throw out, you know, I mean, security obviously has been and will continue to be something. Automation, you know, we got RPA and all that kind of stuff and AI. How do you see those things shaping the industry over the next 5 years and, and, and, or maybe there's some other things that you would throw in there.

Yeah. So definitely I think we're going to look very different in 5 years. I would say less than, I'd say in 2 years, uh, we're going to look very, very different because it's already shifting. It's already, even for us, it's shifting very dramatically. Automation was the first kind of, um, accelerator. And I think auto, but automation has been around for a long time. It's just the tools have gotten really good in the last couple of years.

Mm-hmm.

And then AI, AI obviously just builds on top of automation. It allows you to automate the automations in many regards and make them more, um, just smarter and less variables that, and so the AI just answers the variables for you and makes them kind of, so then it turns them into agentic AI. And so I think level 1 support already at Integrus, the vast majority of our, um, level 1 and dispatch type stuff. We're addressing with automation and we're writing agents for. So I think in 2 to 3 years, our, our level 1, even our level 1.5 folks, we will hopefully have shifted them off of those mundane kind of like no one wanted to do these things, tasks anyway.

Right.

Those will have either all shifted to agents, automation, or, or self-help, like, you know, where they can just take care of themselves. And then I think Our folks will be freed up to do more meaningful work where they actually have to interact with the client and or make substantive kind of consultative or data-based decisions. And so I think 3 or 4 years down the road, we're going to have more data scientists than we'll have level 1 folks.

Hmm.

We're going to have more business process and application layer, like, and that's why verticalization is so important. You can't, help someone at the application layer or business process layer if you, if your clients look like everybody, because there's just, there's thousands of different business processes. But if all of your clients are attorneys or all your clients are, um, you know, osteopathic physicians— I don't know that we have any, but just as a point, um, you know, you need to be able to help them and leverage. You can't write an automation if you don't understand their process, and you definitely can't turn that automation into agentic AI if you don't understand the automation. So getting closer to the client and understanding their business process, their workflow, you know, and when we talk about the OSI layer, you know, very, very early on, we started helping them with the hardware and the network layer and, you know, device layer and all that sort of stuff. Now we're talking about the app layer is where you start, where verticalization is really important because you can't, you can't know all apps. You know, you can know Acrobat, you can know Microsoft, you can know a handful of others, you can know the security stuff. Right. But then if you get into their process and workflow, that requires a different level of engagement. And I would argue a much higher value that the clients will be willing to pay for if you can show them value, if you can show them why. And the example I like to bring up is when we first started doing this in 1997, the reason the business took off, it's going to sound crazy right now, was WordPerfect macros. We were helping them write WordPerfect. Remember Blue Screen WordPerfect? We were helping them write word-perfect macros that allowed them to automatically do mail merges and create documents. And these are people that 5 years before had a word processing room of legal secretaries typing documents from scratch because they didn't— cut and paste didn't even exist back then. So, so we introduced this new technology to them and all of a sudden they went from 4 legal secretaries per attorney to Complete inverse where now you could have 4 attorneys per legal secretary. I think the same thing is happening with automation and AI, or can, as long as you understand their business process. We could not have created that word-perfect macro for them if we did not understand what legal documents they were looking to create for a medical malpractice suit or a personal injury case or whatever it might be. And that requires a different type of conversation as opposed to, you know, let me just reset your password, get you into Windows, and then after that, it's up to you.

Right. Yeah. Yeah. Um, that makes total sense. And I, I would assume, I mean, you guys probably have a team, an AI team, uh, the whole thing. Right. And, and what about, what do you see as far as—

But at the same time, we're constantly evaluating like third-party vendors too, because, you know, you can't fall, you know, getting back to feedback, you can't fall in love with your own, you know, recipe, uh, maybe for like a minute or a day, but at some point you need a taste test. So we're constantly evaluating all the vendors, uh, in, in the network as well. Uh, you know, all the names that I'm sure that you've heard and that present, because yeah, we, we have a team and we're doing some really cool stuff, but this stuff is moving so quick that you better pay attention to what everyone else is doing as well.

Yeah. Okay. And then in real quick, what about monetizing it as far as selling it to your clients?

Oh yeah. So the same thing that we're talking about our business, our clients, not all of them, but many of them, because a lot of our clients are professional services. You know, heavy kind of workload or human capital workload driven folks. And so they also are looking to figure out how to get the most out of their human capital. And so it starts with giving them advice around how to have their own strategies around AI and automation and giving them a way to do it safely and securely. So in many ways, it starts off, even if you're not involved with them at the app layer or the process layer, you are at the security layer. So give them a safe way to digest, uh, you know, getting into the LLMs and things along those lines and making sure that their staff aren't going rogue and uploading, you know, data to the public, um, interwebs without, without authority. So start off there, but beyond that, helping them with their own agentic workflows, it's a great concept, but you better be close to them on the app layer and the business process layer. Otherwise, I don't know what you're going to be. You know, making, making work better for them.

Yeah, it's going to be interesting to see how that evolves over the next few years, because I mean, my theory is it's kind of like, you know, the cloud and in where it's like, oh my gosh, the cloud's going to steal all of our clients. Well, you know, no, I don't think so. And in the same way, I don't think AI probably is either. And they're in our clients as MSPs, our clients are going to turn to us For, you know, to, for help with, with AI. And so if we have something to provide to them, then that's just going to put us in a much better position. And, and if we can get involved at that, at the application layer, like you're talking about, uh, it's a much higher, uh, value proposition for them. And they're probably going to be willing to pay more for that.

That's right. That's right. I, I think, um, the reason we were able to get away with the infrastructure level, most MSPs just at the infrastructure level. Is because as soon as you got to the Outlook and Excel, they figured it out on their own, or they had other resources where they were able to make it productive by themselves. I think if we just gave them access to AI LLMs and said, have at it, I don't think they're going to have success. I think they're going to need somebody to help them. And if it's not us, it'll be someone else. And that someone else also will likely whisper at them and be like, Do you really need the infrastructure guys still? Um, we can do that too, by the way. That infrastructure stuff is easy for us. What's hard is understanding your business process and creating an agent for it. And we can do that. They can't.

Absolutely. Totally makes sense. So we got, we, we definitely have to evolve for sure. So, um, so, so kind of before we wrap up, um, uh, and I've got a lightning round of, of questions here in a minute, but, um, So, so this one might be a little vulnerable, but what do you, what is the biggest mistake that you think you've made as a leader?

I mean, I'm going to cheat and say early on it was not joining a peer group slash talking to people outside of my own kind of close community until halfway through the lifespan of, meaning the first 15 years of running the business.

Yeah.

It was, you know, that was a shame that there was so much unlocked potential that, that we, we didn't do. That's the biggest one by far. Now, I would never change it either because I think, you know, as I'd said, I don't think I would have taken so strongly to it if I hadn't been such, so wrong before. Just that contrast has, has, has been so powerful for me. So biggest, biggest mistake was Not listening to others and being open to feedback earlier.

Okay. Okay. Makes sense. So, so yeah, quick, just, these are just kind of like some quick, a few quickfire ones. So what's something that you've been really curious about lately?

I mean, AI is going to be the easy answer. One key part of AI is about large language models versus small models. There's, there's a lot of big debates right now as to whether as an MSP, how much we even need the OpenAIs of the world. Because they're, they are taught on a lot of data that is not ours. And frankly, because it's in the wild, you can get a lot of hallucinations. If you train a model, a small model, on just your own, you know, IT Glue, ConnectWise tickets, resolution, triage, all of the processes, and Integrus now has literally tens of millions of this over, over many, many years, uh, you might get much better outcomes. So kind of like, you know, what, what is the best mousetrap to get to the holy grail that we're all looking for? And that is essentially, you know, IT is a lot of repetitive processes that AI should be able to address. And, and what is the best path to do that? So I'm curious about that.

Yeah. Okay. Um, so in your daily routine, what's one thing that you can't live without? Coffee.

Coffee in the morning, like, okay, almost immediately after brushing teeth.

There you go. Brush teeth, get some coffee.

That's awesome.

Um, what is your go-to way to unwind?

Oh, hanging with the family and the kids, like getting together, going out for a nice meal, having, you know, banter, you know, about people's days and weeks and, you know, ragging on each other. Yeah, that's, that's the most fun.

That's so fun. Awesome. And then, um, what would you say is, uh, well, I guess like a book or an idea or a piece of advice that has shaped you the most?

This one, uh, you're gonna know very well since you had Harden as a coach. Leadership and Self-Deception. Arbinger Institute. Random name, I know, as to who wrote the book, but still one of the most impactful. And I remember the first time I read it, I was convinced how everyone else was in the box.

That might be the surefire way to know that you are in the box.

In the box.

Oh my gosh, that's great. Uh, I, I can only imagine that, that, uh, that coaching session after that. Uh, like, it's like everyone around me is in the box. I don't know what's—

can you, can you help coach me into getting them out of the box?

Oh my gosh. Well, yeah, and you'll have to read— they'll have to read the book in order to understand that. But yes, that's— that is— it's so— that's actually very ironic and right along the lines of all the stuff we've been talking about. So awesome, man. Well, hey, so where can people find you or follow what you're doing?

I think the easiest these days is just hit me up on LinkedIn. Like, hit me up on LinkedIn and follow what we're doing. So obviously I'm chair of the board at Integris, so continuing with M&A. If there's any MSPs out there that feel like they'd be a good fit for what we were talking about, would love to have a conversation. And then the previous gig and next gig is Biz Ratings. Okay. And so hit me up on LinkedIn and we're happy to chat.

Okay, awesome. Well, Rashad, thank you so much for this. This is gonna— I have a feeling this is gonna help a lot of people. Really appreciate your time and we will Talk soon.

Awesome. Thanks, Brian. Thanks.

Thanks for listening to the $10 Million MSP Podcast. I'd like to encourage you to take just one insight that you heard today and put it into practice because small shifts create big momentum. If you enjoyed the episode, make sure to rate and subscribe on your favorite platform so you never miss a conversation. Thanks again for tuning in, and I'll see you in the next episode.