Special Guest: Chris Day, Founder & CEO at ScalePad

Welcome back everybody, we're here again for MSP Confidential. I'm your host Luis Giraldo, CXO at Skillpad, and today I welcome a very special guest, our very own founder and CEO Chris Day. Chris, so good to have you, man. How have you been? And welcome to MSP Confidential.

Hello Luis, happy to be here, man. It's been a while and I'm, uh, super stoked to, to unpack a few things with you today. It's been a busy— for sure. One month and one day since the big announcement, so.

Yeah, so speaking of big announcements, for those maybe under a big old rock, as they say, you've taken the CEO position at Skillpad as of a month and a day ago, as you were saying. And that sort of ended a tenure of a very special person, Mr. Dan Wensley, who was with us for about 5 years prior to that. What can you, uh, comment about, um, you know, the, the, the lengths and heights to that that Dan brought us to?

Oh my goodness. Yeah, I, I mean, we, we, uh, I think we've said this a few times, but, uh, you kind of rewind to 2019 when Dan joined, uh, the company at that point was around 24, 25 employees. And, uh, fast forward 5 years, uh, I think all of us, Dan included, were sitting there going, holy smokes, we went from 25 to, to around 250 employees in a 5-year period. So, you know, all I have for Dan is extreme gratitude over those, over those past 5 years. It was no small feat aligning the entire company and growing at that scale. And as you can imagine, lots of, lots of bumps along the way for us to to get to where we've gotten, including like 17 million acquisitions that we, uh, kind of had to run through in a very short period of time, 2021 through 2023. So, uh, you know, again, massive thanks to Dan and, and I'm super excited to be working with Dan now, uh, with, within TopDown indirectly, uh, as he starts to become an operating advisor, uh, for, for our fund. And he's working closely with a bunch of the companies in the family. So it's, uh, it's awesome that the journey doesn't end there with us.

Yeah, I'm not sure if I've told you this little story before, but even though I'd met Dan in the channel many years prior to 2019 when he started, it was after he had recently joined then Warranty Master that we met at a DattoCon, I believe. And one of the first things he said to me is like, hey, I might need some tips on how to work with Chris Day. Because obviously you and I have had a long history together and he had not had a chance to work with you before. But, but what was— Yeah.

Yeah, I wanted to maybe ask you a bit of his answer if he's, if he's figured out all those tips, all those tips yet.

But, but I think it's an interesting dynamic to, to explore because you've, you've been a CEO before, and I think there's maybe the expectation or, or stigma that once a CEO, you can't keep your hands out of things necessarily. And I was curious to ask you a bit, a bit of the dynamic with Dan, sort of those first few years, um, I guess leading up to this transition.

Yeah, I mean, I think if you would ask Dan, he would say it, it was an eyes wide open opportunity and, and we were mutually excited about it coming in. You know, obviously I think it's, it's not so much the CEO, but the sort of the founder aspect. And anytime you've got a founder involved, which I have been since day one, by the way, regardless of, you know, whether I had a title or not, I was, I was always involved. But yeah, working with, with crazy entrepreneurs is, is probably probably sometimes a challenge. And yeah, I think we worked it through. I mean, I don't know if a lot of people probably wouldn't know this. I didn't even know it till recently. I was working on some legal stuff and we're just going kind of through the record books and it was, I was officially the CEO from 2015 to 2019 when Dan came on. So I guess it's kind of full circle, like I'm going back back. But, but the funny thing is, you know, in those years, I don't know who, who's been there since the beginning in the WarrantyMaster days, but we didn't have any sales or any marketing or, you know, any channel or any product management. Honestly, we just had engineering and, and a, and a very simple product back in those days. So I'll take, I'll take the, the feather in the cap of having been the CEO once and now circling back for, for the next chapter, I guess. Yeah.

And I'll bring that topic back in a little bit when I get into some questions I have just about products, interest, and stuff like that. But, you know, Dan hasn't been the only departure as of late. We also had a very public figure in the company, Eric Torres, who's made the move over to Pax8. And, you know, there was a little bit of Reddit fodder that spawned as a result of this, people making some of their predictions and things like that. I wanted to ask you sort of the inevitability of change, I guess, is one of the things that's interesting because I find people often get in this very tunnel vision about this thing that may affect them or not affect them in the moment, and it feels like a terrible thing, not understanding that we're going to be on the other side of it within a few weeks potentially or a couple months. But the inevitability of change, I guess, is kind of the idea.

It is. Yeah. And I think firstly, for the record, we will definitely miss Eric. And one of these days, I don't know when it'll be, Eric, if you're watching, or Rob Bray, one of these days we're going to get you back. And maybe it'll be 20 years from now. But in all seriousness, we can only look back similar to our time and me working closely with Dan and say, fully executed. He brought us to the limelight. He was a big part of our, of our, the public-facing aspect of Scalepad, and nothing but gratitude for Eric as well. So we're excited for the next chapter. We wish him well. I'll leave it at that.

For sure. No, great sentiments and shared equally, I think, across the entire company. And everybody that I know that knows him has had nothing but great things to say about Eric. So Definitely wish him well. We'll see him a bunch in the channel anyways. I don't think we'll get any less FaceTime, if I'm honest, which is probably a good thing. But I mentioned Reddit, and I think the Reddit thing is interesting because you made a comment to me a little while back when we were talking about a little bit of a Reddit fire that came up, that it's really tough to solve issues on Reddit. And it's an interesting thing because, you know, People often latch on to this idea of community and that the vendors that are responsive and that do solve problems on Reddit are community or partner-focused MSPs. But this is increasingly difficult to do with issues that are not well understood necessarily, or just topically superficial and not getting into the meat and potatoes, or not allowing us to understand who they are so we can figure out what the issue was and unravel some of the challenges. But I guess more of a matter of a statement than a question, I suppose. How do you feel about Reddit in general and the importance of it or that it plays or maybe doesn't play in the MSP world?

Yeah, I think for me, I maybe have an interesting perspective. I think, you know, there's definitely that feeling and I'm sure other vendors in the channel have had this experience where you sort of feel a bit of anxiety or are we doing something wrong? And I kind of look at it a little differently as a huge opportunity. And so it's not so much about going out there and responding and saying, you know, sorry you had this bad experience and here's 17 things that we did and it shouldn't be, you know, happening again. It's more like, I'd like to unpack that. Can we talk? Because, and this is me speaking, this is not just Scalepad. This is like, I would like to know how we got to that position because clearly something's broken in our process most likely, because it's not our people. We have a fantastic, fantastic team at Scalepad. Pad. So it's definitely not a, a, a personnel issue. It's usually just some simple process or miscommunication. And to be able to unpack that, get to the root cause, and obviously deal with, with that particular incident, but use it as an example of how we can deal with any other incident like this that pops up in the future. Like, how did we get here? So I think that's kind of my perspective. It, it's like, you know, obviously we'd love to talk. Please connect with us. Let's have a conversation. Whoever it is, we're happy to talk to you and, and we'd like to all this for you, but more importantly for everybody else as well.

Yeah, I think that's a key part of it is, you know, we kind of need adults on both sides of the conversation to say, yeah, here's what the issue is and this is what would make it right, for example. And sometimes we have people that come to us directly and tell us just that, and we have something concrete and specific to work towards to try and address the particular situation. And especially where we can understand where the things went bad process-wise, it just gives us the opportunity to refine that process over time. And so I invite people to, to contact us directly if you're having an issue, because, um, we want to make it better. And, you know, we've all been in your seat, uh, with the MSP DNA that we have at Scalepad. Not just yourself, Chris, or myself, uh, our COO Ryan Sigwin, uh, 20 years, uh, MSP veteran. Aaron Kennedy, who's our VP of Operations, another 20-year veteran of the MSP industry. I mean, I know MSP DNA has been particularly important to you in how you run things at Scalepad now too.

Yeah, I think for me what it does, what it feels like to me is, and just like simple examples, if I'm reading materials that are going to go out for education or marketing materials or things like that, I somehow I'm still, you know, 25 years later of working in the MSP industry, I still think, how would this hit me? Like, how would I respond to this? Because I know the business very well. I know how, how busy and complex and all the people issues and scaling issues and client retention and all these things that are going on. And so I, I think, I think that gives us a unique position to be able to like be on your side and, and truly understand, you know, what you're going through at different stages of growth and maturity where, you know, we want it to hit properly. We don't want it to, to hit, hit you in the wrong way or, or, or have less value than it should. So I think that's for me what's the most valuable being, being in the software space after being in, uh, you know, in the MSP space for so long is, is it's just that authenticity of, and, and it's not, I'm not talking about myself. I'm talking about yourself, Luis, like you said, Ryan, Aaron, and, and the other people that have been servicing MSPs for many years, even Mike Walsh. I know, I think we may talk about him, but having been in a software company working with MSPs for over 10 years where we, we definitely have that empathy and, and we want to fix things. We want things to be done correctly and we want things to be done in line with how the MSP business operates.

So after various exits, not just on the MSP side, because obviously you did a few things with Fully Managed and then TELUS and all that stuff, but you've been investing in early stage software companies for a while, had a number of those exits. Um, you'd think that you kind of graduated from, from being an operator at it to some extent. Uh, and so like, why this change and why now? Like, what, what took you back to wanting to be in the hot seat as a CEO?

Uh, I suppose that's a good question. I, I think I can answer that in a couple different ways. Um, firstly, the, the, the reality is that I think I said a little bit earlier, I have not sort of the scale pad has not left the nest. It's not, I'm not, it's not an empty nester. I'm not an empty nester yet. I've been connected to this business since 2015 in one shape or form or another. And, you know, even as early as one, about a year and a half ago, I formally stepped in because the company had so much more scale as a chief product officer, just recognizing the complexity of having 6 products and a platform and an OS play and data and machine learning and, AI and all these things that were coming into play, uh, where it started to become quite a complex animal. And I felt like my, um, skills and experience were, were pretty well suited for, for where the company was at now. And the other thing I would say is, is we've kind of reached, uh, what I would consider rare air in, in MSP SaaS companies, you know, at, at the size that we're at now with the number of people that we have, products that we have, an opportunity ahead, and, uh, some of the growth that we've seen over the last several years. Where I think it, it needs, you know, this will be one of the most exciting companies I've operated and maybe it'll be my last as a CEO, but I feel very excited about taking the helm and, and taking us through this next 3, 4, 5 years of growth, which I think will be pretty significant. You know, to the tune of 4 or 5x in that period is gonna be a crazy journey. So I'm, I'm super excited for that. I think it's different than something that I've done before, uh, in, in the sense of the scale. And I'm pretty excited to do that. And having participated and watched so many companies go through that scale from a board side, but not directly in, in control. So I'm, I'm super excited for that.

Yeah. Um, you mentioned Mike Walsh and, and a bit of your CPO, chief product officer role, which have, which has now been bequeathed to Mike Walsh. And I thought maybe it'd be kind of cool to tell a bit of the backstory with Mike and a bit of your mindset around handing over the reins to the thing that literally has been your baby. Because, you know, one way that I consider you to be an influence in Scalepad is sort of that product vision, which you won't stop doing as CEO, obviously. But I think it's interesting to go through the process of handing over the execution, you know, the delegation and the trust needed in somebody to do that. And so I know there's a little history with Mike that maybe has built that trust over the years and wanted you to speak to that.

Yeah, I'd love to share that. So for those that don't know, there was a little IT documentation company that was started in 2013 that Mike and I kind of partnered at the very beginning. And I brought him on as sort of the brains of the operation building out the code. And I was more on the product management side and on the sales marketing and everything else side. Uh, and then as that, you know, Mike Walsh wrote the first line of code as an example, uh, for that product. And, and, uh, you know, fast forward 10 years later, 11 years later, uh, you know, the, the size of, of that company and is, is enormous. And so I think that gave me a lot of trust working with Mike. We went through so many different things together, um, Then subsequent to that, the next chapter for Mike was, was kind of launching Quoter into the space, which obviously, as we know now, has also been added to the Scalepad family. But through that, Mike got a really— I think he did a tremendous job of kind of becoming a CEO of a smaller SaaS company. And so he got like really, really solid ability to, to handle, handle on the levers of the various aspects of the business, which stepping into now And we announced this several weeks ago, him stepping into the Chief Product Officer role. There's a lot of trust built there. Mike also comes from an even more technical background than I do. I, me coming from the IT service provider space, Mike coming from the engineering space. And so there's a natural fit there for what we're trying to accomplish with not just the individual products that we have, but the platform and the OS, which, which are forthcoming. And, and we really need someone at the helm there that's, that's extremely technical and forward thinking.

Yeah, and you penned an open letter sort of during the transition into your CEO role, and one of the things that I think you call out is this idea of product centricity. And I think there's a lot of opportunity for every company to— and I think back again to WarrantyMaster, how you were the CEO, but it didn't need a CEO. It kind of just, it was this product that was really magical for the time. And in many ways, I think product centricity is kind of that thing that people desire out of their products. They just kind of grow themselves because they're so great. So tell me a bit about your ideas or mindset around product centricity and what that means.

Yeah, so I think, you know, and this is obviously one of the hardest things, like, are our products perfect today? Absolutely not. Do we have lots of opportunity and we see tons of growth opportunities and optimization opportunities for sure. But I think it, it, the mindset that we have and the investment that we're making is, uh, I think on balance heavily weighted on product moving forward. And, uh, and, and I think we, we talked about this and, and maybe you'll, you'll ask me about it at some other point, but, uh, at, at Innovate, we sort of talked about some of the numbers. We talked about the size of our product and engineering teams directly. We were very transparent about that. And, uh, you know, to put it in perspective, I believe that number was around 100 folks that are purely dedicated in our business at simply working on products, user experience, product management, and everything engineering and everything surrounding that. So that is a lot of people out of 240 or wherever we're at exactly now that is purely focused on product. And so I think that says a lot about our commitment. And then what we're doing now is is sort of re, rejigging this, the structure of the company so that we can accelerate in all products individually and on the platform as well. And that's complicated, right? If you think about, I, I mean, a lot, a lot of our partners don't deal with, with engineering as a core competency, but when you, and you unpack these things and you see, oh, we have to deal with UX, we have to deal with, um, sort of the design of that. We have to kind of prioritize features. We have to engineer these features. Some of them require AI and machine learning. Some of them require like massive API things and, and BI and all these different things. So when you start to unpack and realize what we're building, you know, that, that we had a lot of that, I would say, leading up to this year and leading, you know, even the next month or two. And we're gladly going to put that in the, in the rearview mirror. I think as Jelly Roll says, there's a reason why the windshield is so much larger than the rearview mirror. So, you know, we have a, I think we've set the foundation to really innovate hard in, in every lane that we're in. And, and, and my vision and our vision is to, if we, if we enter a category of a product in a category, and let's just say that category as an example, which we're passionate about is client engagement, formerly known as asset lifecycle management. If we're going to enter that category, we're going to win that category. That's my commitment. And so I think that's a different mindset. Luis, you would probably agree that kind of making that statement and then making it true is something we are we are passionate and we will do.

Yeah, I think the interesting thing to think about as, as any SaaS company builds products is kind of the ability to guide or work with MSPs as they transition through their, you know, very many stages of growth and maturity and evolution. And I think this is an interesting challenge because designing the perfect product might look like this for a 30-person MSP, but looks very different for a 10% MSP. And it's interesting that very small shops— and the average MSP is under 10 people, as we all know— they kind of want to play in the big sandbox with the enterprise-level tools or the tools the big boys are using, so to speak. And so tell me a bit about your mindset around catering to the various levels of MSPs in that spectrum.

Yeah, so there's two interesting things that come to mind for me on that. The first is size and maturity are not mutually exclusive. And so you can have a very large MSP that doesn't have the maturity to execute a quality QBR or VCIO process for sure. And likewise, you can have a 5-person MSP that has that on autopilot. And so one of the things that we recognize, and it's really easy, and honestly, just having looked at so many different SaaS companies over the years through the top-down side and making sort of seed and investments and, and the like, it's always been a, a big consideration is what percentage of the MSP audience can this product address? And, and, and sometimes we see fantastic products, but, you know, if you're looking at a TAM of, let's just for rough numbers, let's just say there's 100,000 actual MSPs globally or in North America, what doesn't really matter if only 5,000 of those or 2,000 of those or 1,000 of those MSPs are mature enough to adopt this software, you've got a problem right out of the gate, and it's, it's been a tough thing to, to try to invest in. And I sometimes feel bad for, for running across some of those products. At Scalepad, we, we look at it differently. Every product that we have and every product that we will ever have, we see an opportunity to bring the product in a different form or different packaging and pricing for all levels of maturity and size. And so having that kind of democratized pricing and then ability to sort of match the product with, with the stage that, that the MSP is at and make that affordable. I think those are all things that are very important and it's not a one size fits all. So to sell, you know, comprehensive vCIO package to an MSP that's not ready to deliver vCIO, uh, is sort of like they're wasting their money and we're wasting our time. So I think we put a lot of thought into that. And then one more, uh, sort of precursor to that is the opportunity for for freemium, which is something we did early days with WarrantyMaster, the ability to sort of plug everything in and, and see what it's doing, try a few things, maybe even get significant value in, in one small area so that you can prove to yourself that this is something that is worth investing my time and effort to, to deploy. And so you'll see we've done some of that. Are, are we perfect? No. But we, we have a plan to be able to address that so that you can actually touch and feel these apps before you, you know, make a commitment to us. And so I think that's really important. So different maturity levels, different sizes, and then addressing that with pricing and packaging in a way that's fair.

Yeah, and those, the scales of MSPs are interesting too, because I find that something that happens even as MSPs grow, and we get into pricing conversations a lot, and you hear a lot of the fodder that's out there, whether it's a Facebook group or on Reddit, is concerns about pricing. And one thing I noticed that MSPs don't seem to graduate the price-value meter, so to speak. You know, as they grow, their value mindset around price tends to stay as a small business, or they're often placing their own value on what the client is willing to spend, for example, in any given scenario. And we talked about this actually a little bit when we last spoke. Because this was sort of the thing that you tapped into as an operator of an MSP to sort of get yourself out of that rut of thinking, I guess, small. You can't go play in the big leagues with a small league mentality, of course.

Yeah, I mean, I think I can't remember what I think. I mean, I know what the sentiment was because it's something I feel passionately about. But, you know, I remember walking through these large industry events and channel events and literally kind of writing down, grabbing business cards, and then leaving the show. You know, this is in the MSP days, and just literally buying everything because I was like, anything that can help me, if this delivers like a, uh, even a 2x return on the cost, like, I'll take it. Um, and I think, and this is not even a Scalepad thing, this is sort of an industry thing, I think that there's a lot of that mindset of like, this is a cost, um, but it, but if that thing is going to deliver more revenue, or that thing is gonna allow you to, to, you know, execute X% more, more tasks with the same staff count. I, I sometimes scratch my head as to, to why, you know, we're not buying all of that stuff and, and making it a focus because I mean the whole point of software is, is to make one more efficient. And so unless that's not true, then, you know, I, I, I feel pretty passionate that that's, that's something that we should be doing more of, not less. Like, I'd rather increase the software cost at a higher rate than I'm increasing my, my people costs, for sure.

Well, well, I think maybe the, the genesis of this is that we might be in this interesting, like, commoditization race, you know, the race to the bottom, so to speak. Uh, MSPs price and package their offerings, and suddenly these new solutions come in and they're not equipped to go have conversations about price increases with clients, and so they just absolutely just annihilate their, their cost structure by including that thing in the existing cost structure or price structure that they have. And so the unit economics are changing a little bit, and, and we're kind of— we've been hearing people talk about the return to consulting, you know, getting more specific about understanding how money moves inside of your clients' businesses, trying to understand and uncover opportunities for true technology innovation for business outcomes, because it seems like we've been so hyper-focused on the standardization and the hardware infrastructure side of things that we forgot to actually do the thing that we were great at, which was using technology for business solutions. So, you know, maybe talk to me through a bit of what you see the opportunity for MSPs going forward, you know, with this unit economic moniker and discussion.

Yeah, it's funny. I mean, it's obviously having operated as an MSP for so long, I would feel, I feel like I'm an expert in the unit economics of, of running an MSP. And I, I would imagine, Luis, you feel the same way and, and probably right in there and painfully aligned as well as far as what are the unit economics of, of running an MSP. And so I, I like to unpack that and I, and I think there is a, a discussion on commoditization cuz there is a bunch of things that are, that are commoditized now. But, um, there, there's one thing that's definitely not commoditized and that is relationships. And so I think what, what you'll see from Scalepad moving forward is, uh, is a real focus on that. How can we help MSPs have better relationships with their clients? I don't think that's a mindset of any, of too many companies in our space right now, and I think it's a mistake. And I, and I think that's where we're gonna really focus our efforts. There's a lot of ways, different ways to do that. But as far as the unit economics goes, you really have essentially 3 buckets to worry about: revenue, cost of goods, and SG&A. And when we're talking about, uh, scaling an MSP or making an MSP more profitable, there's really only 2 levers that, that you can play with, uh, at scale. That's revenue. Can you grow it? And that's, uh, cost of goods. Can you shrink it? And shrinking your cost of goods, uh, if you break that down, there's really two components of, of cost of goods, as you know, labor and tools. And if you break, if you compare the two, labor's like 90%, tools are like 10%, or even, even more tilted than that. So when I look at opportunities as far as how do we change the unit economics for MSPs, I am primarily looking at what everybody in software is looking at, which is Can we, oops, my little mic did something. Can we reduce the cost associated with delivering this service or engaging with the client? Okay. But if that, that's a, that's one area for savings. More importantly is can we increase the top line? It can we, can we bring something forward that allows MSPs and their clients to engage in a better way? Allow them to be the rock star of the story, allow them to be the MVP. And if we can do that, we have higher retention, we have higher new, new customer acquisition, we have expansion because we can grow those accounts and, and put new services in front of them. So for, for us, I think at Scalepad, we're really a lot focused on the revenue and then of course focused on, on cost of goods and like how can we, how can we reduce that? We don't think tools, uh, are, are a major opportunity for savings, uh, in the unit economics of the MSP.

Yeah, I think that is sort of the obsession, however, uh, and, uh, and I think it's interesting, sort of once you start to uncover some of the growth and revenue increase opportunities, it starts to become a lot more clear. And a perfect example of this is you see this play out, you know, MSPs get to a certain glass ceiling, whether it's $1 million or $2 million, and then unless they're really changing the way they go to market, unless they're really changing and expanding on how they engage with clients, The only way to grow from there is to just acquire another MSP that's doing more of the same, mostly commoditized type of work. And so what we notice about MSPs that are truly in sort of this unbridled growth stage is that they have stopped to think about what is the client relationship like, what is the client value that they're delivering, and building a standardization up to a certain point and then bespoke services on top of that. We're seeing more and more MSPs separate, you know, help desk support from all the other security layers, consulting layers or BI and/or application API and stuff like that. We're seeing MSPs become vertically integrated. I just talked to an MSP who literally acquired the software that their clients were using to run their laundry businesses. And so now they're literally their own supply chain. And so there are some folks that are getting very, very smart about going to marketing and what true growth could look like. And this is some of the things that I know we're working to try and unlock the mindset around with MSPs that are in that early stage of trying to understand how to make this thing go, right?

Yeah, I think for me, if I would— if I were to summarize it, if I, if I was starting an MSP today, I, I would be focused on two things. How can I perfect the client experience first and foremost? And then second, and almost equally as important, how can I perfect my team's experience? And if we, if we can accomplish those two things, you got a great inspired team and you're delivering a, a perfect, uh, as close as we can to perfect, uh, client experience. And that's, that's going to be the, the MSPs that that win. And so I think our commitment is to help in those areas.

I love it. Well, and I think you kind of spoke to a few of those things. And you mentioned Innovate, which was the sort of all product-centric virtual event that we did back in June. And I wanted to ask you about Innovate a little bit more because I think one thing is to sort of build what the market needs, but another thing is to kind of build what you're excited about. And I wanted to ask you personally, what things are exciting to you right now about the platform, the technology, the innovation that's in front of us, and so on?

Yeah, so the, the platform side for us at Scalepad is super exciting, um, and, and I'm not using the word platform, um, you know, like loosely platform in, in the sense of, you know, we're, we're a platform because we've aggregated, you know, the 4 products under one umbrella. I'm— when we talk platform, we're talking, uh, true platform. We're talking The ability to have open APIs to talk to multi-vendor kind of vendor agnostic environments, the ability to centrally apply AI techniques and machine learning, the ability to, you know, add an integration once and make it available across all the products, the ability for one product in our suite to access data from another product seamlessly. And, you know, in a, you know, self-serving from, from our side to cut down on all the back and forth so that we have, you know, For those who don't know, we have product managers for every line of product in, in our ecosystem. And by unlocking the platform, we allow individuals to have more autonomy in their, in their realm, cuz they can now develop features from, from the platform and from the OS and from the datasets that are available. So we're super excited about that idea for, for self-serving reasons, because we can evolve the products faster with, with new and unique data types and, and insights that we can apply. But we're also, excited because I think we're the only folks out there that, that, you know, we, we can open up all this data, uh, across, you know, any, any of the, the religions, uh, that, that exist around different tool sets. And, and we don't feel like we're tied to any of those. And so I think that puts us in a, in a pretty nice space. We don't, um, you know, people ask me who we compete with and I, and I just said nobody. I mean, we compete like with ourselves basically. So, um, you know, do we have products that have, alternative options? Of course. But, but we, we really don't see those as, as issues. We think that the market is, is big enough. But I think, yeah, going, going forward with the platform, it's really sort of that line of if, if data's the new oil, then AI is the new electricity. And, and, and we think we're uniquely positioned to execute that and we're not, you know, tied to the, the datasets of our, our own products. So I think that's, that's super exciting.

Well, and in the world of AI, you could say that June is like ages ago. And so, you know, a statement you may have made about your sentiment with AI and how we incorporate that into our product thinking and our innovation moving forward may be grossly out of date. But what has changed since June in your mind with respect to AI, machine learning, and some of the stuff we're doing behind the scenes?

You know, it hasn't been that dramatic. In fact, it feels a little more— it feels slightly more stabilized. I mean, I saw this Google tool yesterday. I think you saw it too, Luis, where you could turn a document into a two-sided podcast. Or maybe, you know, your role on MSP Confidential will soon be not required if you can load up your voice on it. But, you know, yeah, there's a lot obviously happening. I think what we kind of feel is that there's some building blocks that need to be still put in place. You know, we're still doing this kind of slow and steady. And, but we are aggregating data from all over the place. And we do, we are uniquely positioned to correlate that data. So I think the techniques that we use, the way that we express those and present those in different apps and centrally will become evident soon. But yeah, we're still early days on that for sure.

Yeah, it's definitely a moving goalpost. And it feels like Even things like governance or legislation around AI haven't even arrived in North America yet. We're starting to see some of that stuff in Europe and some of the initial very explosive plans starting to get brought into a little bit of a guardrail scenario. And so it'll be interesting to see how this plays out. I think I appreciate we've been very intentional about how we think about and deploy AI into our, even our usage day to day for productivity reasons, never mind into the actual products. And so I'm definitely looking forward to see how this plays out. And I think MSPs are starting to appreciate sort of a very calm and tenured approach to this thinking as opposed to just do it for the sake of just being on the trend bandwagon, of course.

Yeah, just check the marketing checkbox that we have AI. I don't think we're too interested in that, but we do have a bunch of, you know, looking at just, again, all of us that have been in this MSP world for so long, we know those areas that where there's the most value to be added by removing manual steps and, And so we'll be focused on those first, you know, and, um, it's, it's not really, you know, the example that, that everybody always uses is like, you know, password resets. And so, you know, if we can automate that, is that gonna move the needle? And again, I would say it's not gonna move the unit economics. So we need to find things that are taking you 4 hours, 8 hours, 12 hours, 20 hours, and turning that into like 5 minutes or 1 minute. And I think that's where you'll see us focusing our efforts.

Well, there's no shortage or slowing down, it seems, of the number of vendors entering the MSP space. It feels like every conference that we attend, there's, you know, a couple hundred vendors, many of them, you know, in Startup Alley and doing some new and cool and exciting things. And there's this interesting, I suppose, over-rotation that the MSP market tends to have towards the small vendors because they move fast, they move with a lot of feedback, making a lot of changes very quickly. And I know this tends to feel like a frustration from MSPs with their vendors because they say, oh, they got acquired, they're going to slow down, the product's going to go to hell, etc., etc. You know, talk to me a little bit about your thought process behind the intention or being intentional, I guess, in the development process. And I think there's more at stake obviously as you grow, and so you have to be more careful small vendors maybe have a little bit more caution to the wind, but your thoughts on that?

Yeah, I mean, I definitely agree. I mean, obviously at the early stages you can be a full stack. You're the developer, the product manager, the UX, and the website developer and the designer all in one. So you totally appreciate that you can get things off the ground fairly quick there. As far as comprehensive solutions, it's a little bit more difficult. That being said, I think speaking to, to the Scalepad model, this has always been one of our, one of our core values, something we're very passionate about, one of the reasons we have 100 people working full-time on the product. And, and I think that's, that's unique in our space because we could, you know, if, if we were so inclined, we could probably run the product with 20 people, uh, that, that would be just keep the lights on. And, and that's just not something we're interested in. So as a, as a percentage of our investment, um, it's, it's going up year over year on, on product and engineering, uh, not down. And, and I'm not saying in, in dollar amount, in percentage. So, uh, we, we are actually over-calibrating in, in innovation. And I think that's, that's the only way because as you get more scale, We've had to do a few building blocks, which was again, late 2021 to 2023 with a lot of acquisitions. That was a lot of cleanup that we had to deal with, not just technical debt individually, but technical debt in terms of doing M&A. So we're largely through that now, looking forward and able to really start to drive that, that pretty serious innovation. So you'll see a lot of that happening and coming to fruition. Imminently.

I love that you mentioned technical debt, because I think one of the areas that MSPs— and I have this note from a conversation I was having the other day on the live stream— is that MSPs tend to unwillingly take on and carry the technical debt of their clients. And this shows up in many interesting ways. You know, they, they are kind of— they're commoditizing themselves. They haven't spent the time building and expanding on the client relationship or fostering measuring it in any kind of way. And then they end up in this place where they're obviously come into questions like, what is the value you're providing? Why are you here? And we kind of revert to this very activity-driven type of reporting or metrics or KPIs that are becoming less and less relevant, I think, in the future going forward. So, in the noise of sea of many vendors, hundreds of vendors at any particular conference, what would you say, maybe this is an idealist statement you can make, but how will we stand out as Scalepad going forward? And what think is the key thing we need to be doing so MSPs notice us and understand the value we're providing?

Yeah, I mean, I think one of our other, you know, and this is credit, full credit to Dan and what he kind of instilled in the company as far as our mindset. I think a lot of people talk about, you know, being a channel company. And for me, I think I think that's a fine category. We can call it that. But for me, it's really around being partner-centric. It's about, and again, using our MSP DNA, what would we like to experience if we are going to bump into Scalepad at an event? What type of content would we like to get? Is it marketing material or is it sales material or is it some sort of true thought leadership where we can actually pull together the minds and the expertise and share something really powerful that's kind of fully independent of, of our products. Clearly we would hope that our products might have a, have a small part to play should, should someone want to work on that issue. But I, I mean, we ran, we've done this successfully in the past and you're going to see us double-click on this this year, which is truly getting in front of our partners and bringing education. And, and that's not necessarily education on the products, although that, that would definitely be something we're, we're pretty passionate about delivering. It's education on everything else. And, and it's also not just from us. It's, hey, we've got a fantastic MSP. He's built a, a 200-person organization in Atlanta, and he's really good at X, Y, and Z. And so we thought we would bring him to speak on, on that topic and how he kind of accomplished or got through the scale period in his business. So I think more of that and a little bit less of self-serving stuff, because what I know is if we, If we can show that we're invested, then we'll win together.

I think that's a fantastic sentiment to perhaps close out for today. I can't thank you enough for spending a little bit of your afternoon chatting with me and sort of letting people know a bit of that insider baseball track of your mind and what's going on as we sort of set out to plan for a big year. I think 2025 is going to be massive, not just for us, but I think the industry in general. And so I I know that I'm excited. I know that a lot of the Skillpad Rocketeers are excited. So thanks for hanging out with me for a little bit, and I hope you're excited about the future as well.

Yeah, much appreciated, Luis, and I'm sure we'll, we'll come up with something cool to talk about again soon.

Right on, Chris. Well, thank you again, and thanks everybody for joining us. This has been MSP Confidential. We're here every Friday at 12 PM Pacific, 3 PM Eastern. We'll hope you'll join us for an episode. If you're watching on YouTube, hit that like and subscribe button, and there's lots of good content we're trying to bring to you from the MSP industry and beyond. And so come and hang out with us every Friday. And thanks for listening. We'll