Above the Stack: Episode 2: How to Turn Your MSP from Commodity to Specialized

Nick Ross, what's going on, brother?

Doing well, how about you?

Doing great. Oh, we still got the video rolling in the background. Maybe we can make it. It's the truth, your clients don't care. I have no idea what's going on now. All that important? I'll tell you what is important. Let's see, I'm going to click around until we figure this out. There, I think maybe that stopped it. Drive to a difference. Do you hear— do you hear it in the background?

The buzzwords. This is where MSPs stop guessing.

I don't know what's going on here. We'll figure it out in a second. But Randy Haver, good to see you on. I'm going to click around while we figure this thing out. Nick, why don't you get us kicked off on what we're going to talk about today, and I'm going to go click around and see if I can figure out why that thing keeps playing.

Awesome. Yeah, I appreciate it. I think that was actually on my end, so I think I—

Oh, fantastic.

You can see that now. But yeah, I appreciate everybody hopping in with us here. We're Hopping in, or hopping into a topic that I'm, I'm very passionate about, I would say, but also very excited to unpack with you, Wes, and hear your opinion. We really haven't talked about this, um, you know, outside of doing this episode, so I'm really excited to kind of dive into it today, really focusing in on specialization versus standardization. And, you know, really where a lot of MSPs kind of get hung up today, but also kind of some of the fallacies around standardization, because we all know we need that in in order to be able to scale. But I think there's a lot of concepts there that we're going to unpack today, throw a little bait back to reflecting on, you know, where you're at in that journey and how it might be actually crippling your growth today as an MSP too.

Yeah, I love that. And so maybe some people are alarmed when we say standardization may not be the end-all be-all that you might think it is, but stay tuned with us. We'll kind of explain what we mean by that and what it means to go from standardization into specialization. So we'll unpack that, and I promise I think we'll challenge some thinking on some of this in some ways I think will be quite beneficial. So yeah, maybe we'll just start with this as an audience pulse check. I know we're checking in with people from LinkedIn, YouTube, all the places. So it's good to see everyone on today. I think we have unified chat coming in. Sometimes it works, sometimes it doesn't. What I want to know from y'all is this question. And first of all, Josh, good to see you on.

Thanks for joining.

Here's my first question. What's the What's the number one challenge that you're facing today when you're, when you're talking about scaling your MSP? Think about that for a minute and give us some feedback because I really wanna know where, where are those areas that you feel like, man, if we could just get past this hurdle, if we could get past this mountain, I really feel like we are, we could really continue to grow. It might be on the sales and account management side. It might be on stack and stack alignment. It may be, you know, organizing and getting everyone moving in the same direction. But Nick, I mean, you've worked at big MSPs. Help us out here. In your mind, what do you see as one of the huge challenges that most people struggle when it comes to scaling up?

Yeah, I think there's a variety of different answers. You provide some good examples there. We certainly can think of also just like hiring good talent, right? This is another bucket that you could put into that frame, especially as you're trying to grow and maybe learn new technologies or things that can help improve the offering. That you have with your customers, especially as everybody's probably— all of your customers are coming to you and asking about AI. And, you know, workflow automation now is even just like a byproduct of that because they think it's one and the same, um, you know, in that sense. But, um, you know, for us in that sense, we had, you know, the last MSP I worked at, we had over 2,000 customers. And so there was, there was a lot of thought there in the sense of scale, and that was nationwide. Across the US, you know, just trying to think about the different types of personalities, right, and business types. We didn't serve one particular vertical, but one of the things that we would constantly struggle with was this concept of, you know, having SOPs that didn't really scale with the variety, you know, of customers that we did have and thinking about their unique needs. And when you think about that surface level, I think it's kind of the inverse of what you think it would be, meaning when you go out and you try to write all these SOPs, you try to have these standard processes. Obviously we need to have a lot of that in there to be able to teach, you know, our technicians a scalable process, have it repeatable, have a good consistent client experience is really the main goal. If you really drive it all the way down to that, you know, foundational surface level, what do you, why do you do that? It's the scale, but also to hopefully provide a really good customer experience is what most people would say. And I think where that broke down though is that every client was so unique and needed such, you know, a unique tailored touchpoint that might have been a wide variety of difference between our SOP and what they would need versus like even a small variety would make it go from, you know, great customer experience to a mediocre customer experience. And that, you know, didn't feel great in some senses, you know, when we were trying to scale out and build this process. So we always had to make these deviations for those clients to try to bolster the client success area in that regard. And what we ended up with was spaghetti, right? In the sense of kind of our backend processes and how we go adopt that. IT Glue was really, right, the knowledge house for us where all these deviations live. But that kind of contradicted, one, we weren't able to scale as fast 'cause every technician still had to learn, what was specific to this client, and then two, we also didn't give the best client experience. So I wanted to pause there and just get your take too on, you know, if that's something you're seeing when you talk to MSPs and how that, you know, some of the ideas that come to mind for you there in that regard.

Yeah, it definitely resonates, right? Like, I mean, on one hand, we'd all love to be like Chick-fil-A, right? It doesn't matter what Chick-fil-A you go to, everyone is exactly the same. And I, I talk about this all the time, right? Like, we want this predictable experience. I'm gonna get my chicken sandwich super fast. They're not gonna make a mistake. It's gonna be my pleasure when I drive away. You know, it's, it's every single time. It's why we value Chick-fil-A, because we know the output that we're going to get every single time. And you're right, Nick, like, we, we want it to be like that. And yet we're told the, the hive mind groupthink is treat everyone exactly the same and don't deviate, because if if you deviate, it damages your margins. If you deviate, you're not going to be as efficient. All of this. And so we try to do that, and the end result is what you just said. We ramrod in only one way of doing something. And I think that the kicker, that we're probably not doing such a great job of it, is we discover all of a sudden our clients aren't happy. They feel like we don't care. They don't feel like we listen. They don't feel like, you know, whatever they had as a specialization, um, we met up to their needs. And so That's what we're talking about today is how do we deal with that? Because Nick, I don't think you're saying, and don't let me put words in your mouth, but I don't think what you're saying is don't have standards. I think what you're saying is don't let standards become the enemy. Make sure that you understand who you're serving. We're gonna talk a lot about this, but understand who you're serving, what they need, and how you can address it in the correct way that meets the requirements of your MSP being efficient, being capable, but, but also making sure that we're giving the client what they need. Is that kind of a, a way of saying it?

Yeah, 100%. I mean, we obviously have to have standards and SOPs for how we do even, you know, think about a foundational layer of our house. So, you know, how do we have a technician to track time? You know, how do we, you know, store passwords secretly? Like, there's, there's all these things on the back end, right, of how we're fulfilling, you know, our customers' needs that need to be structured and need to be done in a way that, that does allow us to scale with, you know, different clientele, but also just like scaling into new business outcomes that we're trying to achieve. But also my background, you know, more in the, you know, the, the software side of things, you know, I've always believed in this concept of the front end informing the back end. And so it's thinking about the end in mind first of, you know, these business outcomes you're looking to deliver for your, your clients and your backend being able to support that, you know, in the most efficient way possible. But the tailored experience you're giving to your clients is really, you know, the value you're delivering. And it does allow you to command, you know, things like a higher price point, creates more stickiness, it refers you faster, you know, from your clientele that you'd see there. And one of the, you know, another example to this, you know, is we had a lot of co-managed clients at the MSP I was working for. We had one co-managed client that specifically came to us just to help them with patching. You know, they had pretty unique needs there, and, you know, we fit them into our SOP, if you will, for patching. You know, it was a standard we did with whether or not you were co-managed or managed in this particular sense. And they had a lot of unique reporting needs that we didn't get to because we just kind of custom fit them into this existing process that we did have. And so instead of actually providing them, you know, what they wanted, we actually provided them what was good for us. Mm-hmm. And that was a big distinction. And to your point, you're spot on in the sense that we learned about it because they came to us frustrated, right? Like, hey, you guys said you were going to do this. This is how we wanted it, you know, because we work with Smartsheets and we do all this stuff over here. You know, there's all these factors that went into how this rippled into a much larger problem than we thought about because of the ways that they use that report in their own internal operations for everything that they were doing. So it's a pretty big deal, you know, from that as well too.

Yeah, yeah, that's good. And we're going to have some things we're going to talk about today that'll help you work through some of these thought exercises and even to take what you're going to learn today and bring this to your teams for deeper discussion. So we're asking that question. By the way, if you're just now joining joining us. Welcome to Above the Stack, Episode 2, um, where we're really just talking about what does leadership look like from cybersecurity perspective, even from a non-cyber perspective, to say, you know, as MSPs, we want to go above just talking about the stack and what's in your stack and what's in my stack, and because clients don't care about it, right? So, so welcome. And so what we're talking about today is we're kicking off this series of, um, what does specialization actually look like for us? So I'm glad you've joined us. Now, we asked this question right here: what's the number one challenge you face when trying to scale your MSP? And so Nick was sharing a ton about, you know, what that looks like for them and what it looks like to say, "I'm going to mandate to my clients, you're going to only do it my way and do it this way." And then we end up with, you know, SOPs that are wildly different from one to another, a spaghetti result where everyone has differences, and we struggle to meet that demand. The client's unhappy and it all falls apart, right? So a couple questions or a couple answers came into chat, Nick. I thought I would just bring those up just for us to riff on a little bit, and then we can kind of jump back in. But Brandy checking in. Randy's a really good friend of mine, and he says the choice between— his struggle is the choice between tools, AI, or people headcount. What leverage is more important? That's, that's where I'm stuck. And I get this, right? Like, we know that people are the most expensive part of the P&L. No question. Also the most unpredictable. Also probably the true differentiator, right? Because to Keith Craig's point, one of my colleagues at Empath, he says this all the time. He's like, look, I can go buy the same guitars, the same amps, the same pedals that Aerosmith uses. That doesn't make me Aerosmith, right? It's the people that make the difference. And so, you know, this is important. And I think this is where people do oftentimes get stuck, is we do want great tools, we want a great stack, but the people is important. And it's really the true differentiator from one MSP to the next.

Yeah, well, I think the people aspect of this, that's— it's the hardest part of the job, right? For me as a new CEO in Cloud Capsule, as an example, you know, that's, that's been the most challenging aspect is to find the right talent, to nurture that talent, to managing, you know, different personalities and things like that. And it's something that also, like you said, creates a highly competitive differentiation in some cases that you can't really express more than, you know, there's just really good talent within our pool here, but You know, from the standpoint of tools and AI, you know, I think there's a lot of, you know, different concepts there that you get into, but largely I think, like to think about this back to what business outcomes you're driving, you know, for your business and for the customer as part of that. And certainly tools can complement that and go into that realm, but it reminds me, you know, kind of of this recent use case, you know, I'm starting to do more in the AI realm, and I've recently surveyed some MSPs and was asking them, you know, kind of some basic questions around where they're at in their journey today. And one MSP reached out and was like, hey, you know, I'm trying to, you know, develop an AI roadmap, but, you know, I'm really starting to focus in on just starting to sell Copilot, and I'm thinking about getting into ChatGPT or Perplexity. And it was a pause and just reflecting and saying, well, you know, you may want to take a step back and not, not think about, you know, the tool sets that you're trying to deliver, but what is the AI outcome, you know, you're trying to drive, you know, within this? And it could be agnostic to any tool, you know, right within there. But a client's not going to come to you desperately saying, I need Copilot, because if they do, the end result of that, if you fast forward 3 months, is that they bought this thing that they prepaid for, for a year that they don't I don't use it at all because it just, it doesn't, you know, get in your face. It's not proactive. You have to have a lot of training involved. And so they'll have a negative reaction to that, right? Not only from a financial sense, but also just like AI in general, they'll bucketize that quickly. And so it's kind of the reframing, kind of going off into a different tangent here, but I think it's important to recognize this core foundation of what we're trying to talk about too, is you're not really positioning your SOPs or your tools In this sense, you're positioning these business outcomes, you're having strategic conversations with the client to unpack their business needs, and that transcends, you know, any SOP out there. It's really focusing back in on how you're going to deliver that to them regardless of what you're using, regardless of your people even in some cases, but where you also have competitive differentiation too.

Yeah, yeah, it's exactly right. So I love that, and I did a livestream with John Harden last week, I think it was, and we talked through— I was trying to remember, was that last week? I've been under the weather and it was. And we talked about that exactly, is it's less about AI and more about the business outcomes. We need to remember AI is just a tool. It's all it is. And if we come back to business outcomes, what the client is wanting, then we're going to be able to solve and bring the right tools to bear to make this happen, right? No one cares. It's so— we see this, we're so guilty of this. We see this all the time in other industries. They go to the mechanic, they just want my car fixed safely, reliably, on time and on budget. I don't care what brand of tools you use to make it happen. I'm happy for you if you want to make an investment in a tool that lets you get it done $200 cheaper and you keep the, you keep the margin. I don't care. You told me the price, get it done on time. That's what I care about. And we've got to remember, that's what our clients are ultimately looking for and wanting. So I love that. And if there's anyone who's good at that, by the way, it's Randy. Randy's been an awesome VCIO leader and coach and educator on that. So I love that. Miles also checking in. We joke and say Miles is Impass number one QA person. He's, he's, uh, always finding and helping us find issues and errors that we're making. I found a bug over here. But Miles has been super awesome and helpful, um, plus he's just a great human being. And I love it as evidence, just bringing new ideas and challenging the norm, which is why we're all here today. So, so I love it. All right, so let's get back to that conversation a little bit, Nick. So you were kind of walking us through, you know, taking an example of patching, and we want everyone to be exactly the same, and yet it doesn't always work that way because, um, our tools, our reports, our methodologies of doing things, but Everyone has something different. We can't patch at Tuesday at 5:00 PM because we're doing XYZ. And they say, oh, we can only patch on Saturday at 10:00 AM. And, you know, just one example, right? Or we require these things before a patch is produced. The other client says, I don't care about any of it. And so now we've put so much burden onto our technicians to say, wait a second, I'm handling this bank over here this way and this IT or this law firm over here that way. This investment company over here that way, and it just becomes a mess and it becomes nearly impossible to bring someone new into the MSP and get them to operate efficiently because of everyone's different and everyone's a unicorn. So I think that gets us into this specialization discussion, Nick, and I'd love for you to walk us through some of this.

Yeah, I think when we talk about this, we'll certainly, as we go through various episodes, we'll be unpacking more of the tactics for how you can maybe create a bridge between hardcore standardization into more specialty over time and specialization in general. But we talk about that, it's really thinking about, you know, kind of shifting the value equation in, in some senses, but also niching down, you know, in a lot of ways to combat the complexity that you have to deal with because every client is so unique and they need very much specific, potentially, you know, business outcomes that they're trying to drive. I think in any facet, we'll always find a normalcy in a few business outcomes that you're really good at, right, today. And we'll be walking through that as part of this video of an exercise. But it's really starting to reshape, reshape, you know, how you're going to market in some senses, but also where you are, you know, taking a lot of, you know, inspiration from where you're already doing things really well today and maybe cutting the path on some of the things that are just very time-consuming in nature. Because if we think about the engagement model, the client engagement model, I think is so important, you know, for these conversations that you're having. But if you think about, you know, all the standards that you're doing today, you're often still doing a lot of firefighting. You're often, you know, having to shift between different sets of priorities. When we think about all of the things that you do support today, think about, you know, just in your MSP today, how many different services you actually offer. Not just the packaging, you know, that you have. Maybe you have 3 different contracts, right, that you offer as part of your service, but what is the underlying, you know, services that you're actually delivering as part of that? Often it's, it's quite excessive, right, within there as well too. So specialization kind of turns this, this on its head and says, hey, you know, we're, we're going to niche down, we're going to deepen, you know, some of the competencies that we're really good at but also do less to be able to complement what we're doing well and not be strung out all over the place so that the only time the client's speaking to us is when, you know, they actually have a problem, which is most MSPs out there. Are you hearing that too, Wes?

Yeah, yeah, exactly. And this is where, if you're listening today, you should start to be thinking, oh, okay, now I understand where Nick and Wes Spencer are coming from. Now I'm starting to understand what we're talking about here is not, you know, to heck with standardization and we shouldn't have standards and ITIL is evil and CIS is poison. No, no, no, no, no. All of those are internal things by which we use to measure, to know we're doing the right thing, to know we're offering what needs to be offered and configurations are correct and processes internally are being kept. What we're really talking about is how you interface with your clients and how you push towards specialization to where you're meeting the needs that they want to see. And I'll give you an example of this. And Nick, I know this will resonate with you. If I have— we all have a general practitioner as a doctor, right? And that GP's job is just to do the normal things, the health checkups, asking the normal questions. Hey, how's everything going? You got any issues that you may want to talk about? I know, you know, someone at your age and this gender might have these, these, these things. And, you know, maybe it's, you know, hey, yeah, I'm having trouble sleeping at night or whatever it might be, and their job is to assess and take information. And if it's a basic thing, then they take care of it. But if they start to realize, huh, yeah, wow, this is definitely an issue, we should probably get some blood work done, and we should go send you over to an endocrinologist, all this kind of stuff, they refer you to a specialist. Now think about that for a minute. You check into the specialist, and what is the specialist doing? One thing. All they care about is what their specific specialized field is. Now they might reference things that come from other sources to help make their diagnosis, and all these kinds of things, but we go to a specialist who is only focused in one particular area of medical science so that we get a great outcome, so that that specialist is focused on only one thing. And so that's kind of where we're getting at today, Nick. And I think that really kind of, uh, opens up what that specialization kind of looks like. And I've got a slide here. I know we're not going to talk a ton about slides, but walk me through a little bit about how an MSP might be able to do some of this.

Yeah, I think, you know, a really good exercise, if you will, in some cases, like, is to audit your own website and your own messaging. Um, you know, I know that's not, you know, the leading indicator of how you're positioning everything in your MSP, and certainly not, you know, where a lot of MSPs will say they get a ton of, um, you know, their new customers from. But I think it's good to kind of audit how are you pitching yourselves and what are you saying that you deliver you know, on, on those services as well too. But when we talk about specialization, it's kind of shifting this notion of, well, one, we're going to have to be a little bit more strict about who we serve and what we do for them, right? To Wes Spencer's point on, you know, the, um, you know, the actual niching down of doing one thing even, right, would be the, you know, end-all be-all if we could get there. But obviously there's going to be a bridge that we have to cross, you know, that entails a lot of internal audits, a lot of shifting of priorities, things like that. But it also, you know, what we do by niching down, if you will, into a certain specialty or a certain area, a certain vertical even, is that we begin to develop a different value proposition. And when you think about that, you're actually able to speak to your target customer much more directly as part of that. And you're also able to offer them, you know, a unique phrase in a single sentence that solves their pain point, right? If you think about, hey, we're, we're an MSP that specializes in hospitals, you know, you can really have a differentiated value proposition even on the tagline or headline of your website that says, you know, hey, we, we help, you know, hospitals get HIPAA compliant, you know, in 6 months, whatever you want to say, right? That, that value prop, but it's, it's really speaking directly to them. And by doing so, you, you can offer your services at more of a premium, you know, uh, offer as part of that. But I think the big thing with this as well too is, is that you're seeing, you know, it's more of this value-driven service to them because you're deeply understanding their pain points, um, and it's so focused on their business or business type that you're often then seen as a strategic partner which is the shift over, you know, in some cases, you know, some clients see MSPs as just another vendor, you know, just another tech vendor, IT vendor that we're working with here to fulfill a certain need. What are your thoughts on this, Wes? Love to get your take just on, you know, kind of the side by side here.

Yeah. So, so if you kind of look at this, we all— this is a good thought exercise for us to work through. In my— when I— in my banking days, we had a facilitator come in for our annual and he asked this question to us. He said, Hey, I got a question for y'all. He said, how many of you, I want you to go through and tell me what makes your bank different than all your competitors, and you're not allowed to say customer service. And as soon as he said that, I'm like, oh crap, I can't think of anything. And my brain was gonna go to customer service. And the guy said, look, I work with banks all day, every day. I know how y'all think. I know how difficult it is for you to practice being a bank because you've been regulated into commodity. There's really not much different from one bank to the next. And so you knee-jerk into the easy answer of, "Oh, well, we just have great customer service." So does everyone else. And if everyone else says that's their differentiator too, surprise! It's not your differentiator. And that led to a wonderful discussion. So that's why that first, you know, that, that first difference that we had on that, that, let me pop it back up again so you can kind of see it. This whole client perception, you know, we say that we're a trusted partner. But my question to you listening And what I would love for you to ask your teams is, is that true? Or is that just words that you use? What does it actually mean to be a trusted partner? And I'll give you some things that I think might be good KPIs to measure whether you're a trusted partner or not. It could be things like, do you, when you meet with your client, do you have access to the top of the company? Are you talking to the CEO, the decision maker? If they're pawning you off to somebody junior, there's a good sign that they're saying you're not worth my time. Another thing should be, is your technology roadmap and your deliverables aligned to their mission strategy? Do you even know what this quarter and what this year the client is most focused on doing? You might even have to help the client understand that. Some small businesses are so foot or hand-to-mouth that they've never even thought about goals. They've never even thought about what they should be pursuing. They've never thought— and you have to ask, you have to pry it out of them. But if you're not having those kind of conversations and your roadmap and delivery is not matched up to where they're going, you might be missing something, right? So that's one good way to say, yes, we're definitely a trusted partner. And an easy way to get there, to Nick's point, is as we start to specialize, what comes out of it? I'll tell you what comes out of it. We understand that business. We understand their industry. We understand what they're trying to solve for. We know what their requirements are. We know what the crown jewels of the company is. We know how they expect for service delivery to look. We know all of those requirements. And that is what drives it for us to have a much better outcome of deliverables coming out of it. So that's where I would start is with the client perception is go ask yourself and we're going to have a worksheet here in a second and show this. But go ask your team, do we really meet those goals? And what is our spoken criteria by which we can say we're a trusted partner? And then I would go look, and I would look and say, which of our clients are we a trusted partner, and which of them are we just another vendor? And then you should make a decision to say, how do we correct being just another vendor? Or are we OK with being just another vendor? And if that's the case, fine. But you should really go and assess that and map out your clients and start to understand that. So Nick, what I'd love to do is let's shift to to that second one. Let me bring these slides back up so we can kind of see it here. Help us understand from the offering perspective the difference between a commodity MSP and a specialized MSP.

Yeah, I think, you know, that's extremely important in the sense of what are you expressing, you know, in these engagements all the way from your pre-sales activity into your ongoing touchpoints with the client of what you're actually delivering to them. You know, we often get caught into the trap of, We're selling backup tools, we're selling, you know, our EDR to them. We're using very technical or security-driven terms, lexicon that the client just kind of glazes over when we start to begin to get into that versus saying, you know, hey, I've acknowledged and have listened to, you know, your goals that you have for this year. I'm aligned, you know, and you can hear me, you know, express that I know exactly where you guys want to go and I'm aligned to take you there. "and these are the business results that you've expressed to me. You know, can we agree that this is the best path forward for us?" And that could be around, you know, instead of pitching Microsoft 365 or some other toolset, you're pitching, you know, modern work within their workforce. You're pitching the ability to have a remote workforce that's secure. Everybody can resonate with that, you know, at the top layer versus thinking about getting into the weeds about talking about Intune and MAM policy. And all this, this tech jargon, you know, that really puts you into that, that view with the client. In a lot of those cases, if they're not technical, of just being, you know, just another IT vendor that you're working with, you know, to fulfill these services. And you get caught into that commodity trap where, to Wes Spencer earlier, your main headline on your site and how you express yourself is coming at it from this lens of we have the best customer service. And you might, right? It's not trying to knock on, you know, what you guys have built internally in that regard, but in a world where that's proliferated extremely, you know, that's not going to stand out. And you can't really express that, especially not in a pre-sales motion if you're trying to win new customers that way as well too. So it's really driving into— you clearly understood, you know, where this business wants to head. You can then step in also on top of that as an additional layer and act as that business advisor, you know, because you understand how technology can take them through that journey. And we're at a no better inflection point than this overhype of AI, right? Because clients are coming to us, you know, so frequently with these questions of, where do I start? I have this project in mind, or I already just started doing these things, right? And I want you to come in and look over and see that it's okay. And usually they'll come in and say, like, holy cow, like, you've opened up a whole new security vector in your organization. I think that that, you know, is a great time right now to reignite those conversations and kind of work through this exercise that we're taking you through today and through these worksheets of this bridge between how you can start to reframe your offering to the client as well.

Yeah, exactly. I love it. Now, Emily had a chat that came in, and I'm gonna tease into this because she's kind of reading my mind here. You know, one question we could ask is, do they have a proactive or reactive mentality when it comes to issues? And Emily, what a great thought, because if we, if we go back and bring the slides back up again, the next thing. So we talked a little bit about— oops, wrong slide. There we go. We talked a little bit about the client perception and really asking ourselves, is this true? Is this not? Then we asked about the offering and Nick kind of walked us through that. You know, is it just tools that we're bringing to bear? No one cares about your tools. And then now let's talk about the conversation because, because Emily's kind of sneaking into that, you know, a commodity MSP, the answer is going to be like, hey, I pay you money. And you fix my stuff. I pay you money and, you know, I send a ticket in, you answer the ticket. I pay you money and, you know, I don't have to ever worry about cyber because you promised me it's never going to happen. I'm never going to get hit by something. That's why I pay you. That's the commodity mindset. You're not really providing value versus the specialized MSP is this: help me grow. And a good sign of that, to Emily's point, I'm going to bring it back up here again, is Are we proactive or reactive when it comes to issues? Are we getting in front of these things? Are we asking them the right questions? Now, just so I'm not buzzwording you, I'll give you an example. When we sit down with the client, do we say, "Hey, Ms. Client, I'd love to know, as Q4 kind of comes into play, I'd love to be looking at next year already. Anything in particular that's very important for you and the company next year that you're starting to focus on?" And they might say, "What are you talking about?" You're just here to fix my stuff. And because, you know, you're a commodity MSP, you say, yeah, you know, one of the things we're realizing is technology directly maps to the strategy of every one of our clients. And we're doing a better job ourselves of asking those questions and just making sure that we're staying on pace with where you're going so that we're able to deliver for you what you're going to be able to need next year. And they say, oh, OK, well, cool. That's a cool conversation. And they say, you know, I think I'm 2 years away from retiring. I feel like I'm just ready to step out of this thing and the grandkids are here and, you know, I want to get down to Florida and do all the things. You say, man, that sounds wonderful. So what's that transition plan looking like? Well, my son's going to take over. Okay, great. So let's talk about that. And can I have a conversation with him together? Maybe you start to talk with him and you understand where he wants to go with the company. He says, you know, we're going to modernize some of these things. I know that Mom had it this way and she just, you know, it's her style and she didn't like anyone interrupting.

"Du—

I don't— I understand. We've been dealing with that forever. We love her, but we're ready to move with that too." And then you say, "Could we kind of get together and talk about what some of those, those things are? I'd love to hear from you what some areas and pain points and inefficiencies you have. And I actually have some things I'd like to share with you about that. Next time we meet, can we kind of get into that?" You see how this works? Just an easy example of ask the question open-minded, let them come back with where they're going. Yes, it could be a million answers. It might not be that. Very likely is not that. That, but it gives you an idea of you jumping into how you grow discussion. And here's why I think this is so important, is think about the MSP of tomorrow. You're not just providing tools, you're not just giving them licenses, you're not just firewalling their firewalls, you're not just patching the patches. You're literally coming into this conversation with the client and you're helping them grow, helping them become more efficient. We talked about AI a minute ago. What is AI but yet another tool that you bring into their, their, their, their, their repertoire to help them do something new? So the MSP of tomorrow is focusing on business processes, is focusing on what the client needs to become successful and better operators of their company. You're not just slinging software, and I don't think that should be a threat. That shouldn't be scary. But understand, if you don't know how your own business works and you don't know how to scale your own MSP, how are you going to walk into those clients and be relevant with them given how much technology drives everything that we do. So to me, I think this is wonderful. And, and last thing I'll say about this, Nick, and I'm curious what your thoughts are, is this is a moat that we've been looking for. And here's what I mean. We hear so often people come up and they say, I'm tired of these ankle biters coming in and eating my lunch, and I'm selling at $250 a seed, or whatever the number is, and some guy came in for $75 and swept me out. Guess how much that's going to erode and disappear when you're in those strategic level conversations with your clients and you're talking about all of that kind of stuff. They're not going to want to leave you for the cheap person down the road because they know what they're getting out of you and they know the value that's being provided because you're helping them grow in scale. And so this is how I look at it all. Bringing one more comment in from, from Josh over here. Josh, thanks for joining us today. AI readiness is a great way to talk about your data security products, projects. That's exactly right. Clients don't want to buy data security projects. They want to buy AI. And so if you have to do the right things to get them to what they need, it gives you the opportunity to say, we got to do this right so that salary data is not just one search away for all your employees. So, so you nailed it, Josh. That's exactly right. Nick, anything else stand out to you on the, on the conversation aspect before we move over into value?

Well, first, I just want to call out that it was such a smooth reframe that you provide there, that, that example, you know, of saying, hey, aren't you just 'Here to fix my stuff.' And it's like, 'No, we see this, you know, alignment with technology and align to your goals, and this is how we want to show up for you today,' right? I've watched that quote, but it's a really easy, like, one-liner, right? In the sense of, 'Hey, this is the new value I'm looking to provide.' And that can totally shift the value perception that they provide to you. And I think to your point earlier too, on just like, how do you know It's like when they're making big decisions about their company, are they involving you, you know, in those conversations? Because they most likely will. They see you as that business strategic partner, especially if everything's going to touch technology at some form or facet. They're going to want to understand your opinion, whatever lens that comes from, right? Like when we talk about specialization, that could be around business productivity side of the house, it could be around the security side of the house. But it's up to you, you know, to decide that based off of your core competencies today and where you guys feel like you have a lot of differentiation. And to the point of AI readiness, you know, we're seeing that so popular right now, just the basic email campaign to get those conversations on the books, you know, and then start to reframe who you are to your customers as part of that. And it really begins with, you know, thinking about how hard it's been from a security sense. If we dive into that real quick, it's like, it's been like pulling teeth for some of these clients to get them to do the basic cyber hygiene, right? MFA is a great example that we've struggled with for some clients. In fact, Microsoft touts that 41% of their ecosystem doesn't, you know, has MFA as the only adoption percentage, right? As an example of that. And so with AI, you know, I've done a lot of AI readiness projects on the side of myself and often, you know, it's barely even a conversation. Because they understand it's table stakes to move forward, you know, on these projects or with these business outcomes truly of what they're doing. A good example of that, they came into, you know, this loan officer company that was, you know, processing like 20 applications per week, and they were doing this manually throughout the company, and they were growing really fast. So they wanted a, you know, chatbot, chat agent to go in and, you know, reference an internal knowledge base for loan criteria to summarize, like, should this be approved or rejected? So pretty basic application use case, not very super sophisticated, but clear ROI in the sense of what it could save them time on. But when we did that engagement, we did a basic security check that lasted about an hour, and we uncovered all these security holes, like gaps in MFA, still contractors that still have access to data, data sprawl in multiple repositories. And this is gonna be the same, right? Right, what organization you're talking to. But so that conversation around, you know, we need to go in and perform the security checks was just a one-liner, you know, if that. It was just like, yep, we understand we got to do that in order for this to work out well for us. And we talked about risk that way. But the key there was it was very channeled into their business outcomes, right, from that perspective. So we didn't have to go sell them, you know, the lexicon security, the Microsoft tools, the, you know, third-party tools that we're looking to do that and just re-engage the client back into a, you know, high level here. Um, and there's no better time to do it, right, when people are in this hype cycle or, you know, they're oversaturated. They're looking for guidance, they're looking for a strategy, they're looking for somebody to take them through this journey. And so I think it's really important, um, you, you take this time to really inventory, you know, with some of the things that we're talking about here I'd love to get your take too, Wes, just on, you know, what is your, what's your thought process when we talk about specialization and niching down on, on verticals versus, you know, a lot of people kind of gravitate, I think, towards verticals because it seems logical, but just love to get your take on that too.

Yeah, I mean, I, I like a lot, I like that idea of really niching down on industries like that. Works well. I've got many, I've, for example, I can, I won't name who, but I've got MSP friend that pretty much only works with banks, and there's a power to that, right? Being able to walk in and say, look, I, I get your world, it's all I do. Um, I understand FFIEC, I understand the requirements. I've actually read the handbook. None of the guys down the street, they're great MSPs, they're wonderful MSPs, they don't know that like I do. Um, I can actually, once we have an NDA in place, I can look at your, your, um, your audit reports and, and what your regulators are saying. We can help build a pathway to be the hero here. And that hero story is so powerful with that. Like, it really is a great way to go. So that is a way to niche, and, and there's definitely value in that. And you might pursue 1 or 2, maybe 3 industry verticals that you work with well. But, but it doesn't have to be that way, right? For example, you might choose to become more focused on co-manage. And let's make sure we understand, everyone knows what we mean by co-manage. Co-manage is where you're coming into a client relationship and you're not necessarily doing everything for them. My buddy David Powell talks about— I'm going to butcher this, but he's like, when we were doing co-managed at Corsica, he said we'd walk in every client, we'd say, hey, generally you're— there's 5 things you got to do. And it's like something like cloud security, telephony, router switch, kind of networking and desktop server, I think is the 5. He said, in our experience, you're usually really good at 3 of those and you're bad at 2. And he said, so help us understand what those two things you're not so good at are, and we'll take those for you. And he's like, it was so wonderful because then the on-prem IT people don't see us as a threat. They see us as coming to help and save the day and something we're just not good at, instead of being like, how dare you come in here and take my job? And he said, we built our business off that talk track. And that is an area of specialization that you can come into and say, that's what we're going to do and we're going to do well. We're going to command much higher prices because we know our requirements to meet the needs of that client. What they have are going to be somewhat unique in certain ways. Because we're coming in, we're adding value to the team already there. So there are multiple ways, Nick, I think you can add into this. It doesn't have to just be an industry niche down. It could also be that focus. What are your thoughts?

Yeah, I completely agree. I mean, I think on one hand, the industry-specific expertise also allows you to fall back actually on some more of that tight standardization, right? Because the level of variance that you're going to get in the requirements or needs leads at a dentist office, you know, across multiple dentist offices, way less variance than you're going to get between a dentist and, you know, a mom-and-pop shop doing, you know, tire repairs down the street, right? It's going to be completely different, um, exposure from what you're going to see from them. So I like it in that sense because it does allow you to scale pretty efficiently, um, with some of those common tactics in that sense as well too. And you can repeat, you could have more leverage because the same material you create, the same, you know, things that you're doing internally will actually allow you to scale across multiple members. But there does get a breakdown there where if we take an inventory of the average MSP, you know, I can't quote many honestly that I talk to that are hyper-focused in just hospitals or hyper-focused in just banks. That might be one arm where they have somewhat of a specialty there and they may want to double down. In that sense, but it's often that they're across all verticals in that way. So I think the better track also is to think what you mentioned there, which is more around what's the business outcome, you know, we want to specialize in, and what do we do really well today where we get, you know, high client satisfaction from it. We, we do it differently than other MSPs. We use it as part of our pitch deck, you know, when we're trying to collect new clients because we feel so confident in, you know, in this part of our practice. And that might be, again, focusing in really hardcore on, you know, security side, or to your point, co-managed, or could be around, you know, very much focused on— we're really good at productivity and we want to double down maybe in AI automation and, you know, things like that. So there's layers of where you're at today, and then there's like, how can we keep getting better at that? And I think that that's a clear distinction versus thinking We should try to get better at 30 different things that we do loosely across clients. I think it's a good, good inventory tracking of even to say like, what does our product catalog look like today? You know, like what are we actually putting on the line items on our agreements, uh, for the contracts that we have to our customers? Is it a bunch of third-party tools and, you know, all these different services like cabling and, you know, um, you know, uh, physical services and things like that that we're doing that We get one off here and there, and then we have to refresh your memory on how to do that and go educate. And their margins might be good, but is it good to have that competency? I, I don't know. You know, internally it's part of that too.

So yeah, I, I, yeah, I completely 100% agree with, uh, with that and where you're coming from. And, and I just think that, you know, sometimes as owners we're like, oh, I know I can do all that stuff. What about your people? Can your people reasonably do all those things that you want them to do? The answer is probably no. And so understanding that we should start small and offer what we know we're very competent at and who and how we do it, and then slowly expand as that competency grows— there's nothing wrong with that. So I love that perspective. I really do. I'm curious to know from the audience. Got a whole bunch of people listening on our LinkedIn, Cloud Capsules LinkedIn, also our YouTube and Cloud Capsules YouTube. Give us some, some commentary back. We'd love to know, how are you specializing today? Or if you feel like you're not doing a great job of that, and that's why you're listening today, glad you're here with us. How would you like to start specializing more? Either of those, I'd love to hear back from you. We'll bring those up on chat, and we'll kind of discuss through those. But give us some thoughts and feedback on all of that. So before we get into this work worksheet, Nick. I know one of the other things that we're going to do next week is we're going to talk a little bit more about like tactics for specialization. So I realized that today we haven't really exposed yet what is— what are some ways that we can start the specialization journey. And so that's why we decided to split this whole, this whole discussion into a series. So come back and join us and we'll give you information when the next show is going to be. We're going to talk about that more But anything else you want to tease on tactics? I know that's being held for next, for, for next episode, but anything you want to tease on that?

Yeah, I think, you know, many of you out there might be thinking, you know, it's nice in theory to think about, you know, niching down or, you know, moving into a specific space, but obviously we have an existing book of business, an existing, you know, team of employees, uh, you know, that we, we have today. So it's kind of hard, it's hard to think through the fog of, well, how do I go from A to Z, you know, in that regard, if I didn't want to move into that, and what would it mean for my business? So the tactics are more about thinking about how you can slowly begin to not only digest that, but also thinking about how you can begin, as we're going to start to do today, um, you know, some of this internal audit and internal inventory taking that you can do for your own business to have this nice, not only, uh, thought exercise you know, that you're, you're doing with, with what you're working with well today and your existing team and so forth. But also, you know, to start getting into, um, what does it look like, you know, for me to create a bridge that isn't going to break my existing processes today, isn't going to create a bad client experience, I'm not going to change my team overnight. Um, so there's, there's a lot of tactics, you know, that we've thought through that you could begin to do, um, that really gets into How do you go and accomplish that? So excited to kind of walk down that with you guys.

Love it. So that's, that's exactly what we're going to do next week. So make sure you join us. Just wanted to tease that so, you know, something big is coming up next week. It's going to be good. Josh checking in and I love this. Josh says, you know, for us on specialization, we have 3 main verticals and we help grow those businesses via cyber and operational maturity. I love it. Right. That makes sense. That lets me know what Josh is doing. They have expertise here and they know those industries really well. And the way they grow is through those those two main conduits. I love it. So thanks for sharing that, Josh. Appreciate you and just all the work you've done in helping the MSP channel. If you all don't know Josh Hobine, he's just a wonderful human. So, so Nick, let's spend the next maybe 10 minutes, and we're actually going to have this as a giveaway, so stay tuned on this. But let's spend some time walking through a worksheet that we can use. What's really neat about this worksheet is it's an easy, powerful way for us to start taking this to our team and to start thinking about what our service delivery looks like and start thinking about what we should maybe be doing about it. So maybe get off this full screen here. Let me do this here. There, we can actually zoom in a little bit. So, so here we go. So this is a worksheet that we've made and what it's going to do for us— let me move my peoples around. There we go. What this is going to do for us is this is going to let you start out by looking at your own MSP and what you're doing. And make some decisions as a team. And so what we're starting with first in this worksheet is this idea of keep, kill, or deepen. So when we think about some of the things that we're offering, are these things that we want to continue to do, we want to stop doing, we want to do better? And so we've got some examples here. We've got things— think about break-fix. Maybe you're an MSP that still does a lot of break-fix. And we say, you know, that is just something we're going to partner out. We want to kill this. But instead of just hard parting, you know, hard quitting and leaving them in a lurch, we found it— we're going to find a new partner that wants to take that business and we can peacefully transition it over. And then we ask ourselves why. And we looked at that and we said, you know, our margin's really low and there's no predictability. And this is different than like project revenue. This is just like the small-time kind of stuff that we believe is outside of our ICP. And so our next step is going to be refer this thing out, or maybe we'll take another one. You know, we have a HIPAA-ready audit program, so we're really good at walking into healthcare and understanding their processes. We know the regulations. And we're getting good at that. And so we look at that, we want to deepen it, we want to continue to drive that deeper, we want to talk more about that, we want to go to local medical conferences, and we want to ask for deeper referrals inside the, the medical tech industry and all that. And the reason why is because we know the industry, and so it's easy for us to land with a small thing like a HIPAA audit and then expand into full services. And so our next step is we want to build out an audit program and start marketing that Right? You see how this works? And then what we're gonna do below that, and we'll come back to this in a second, is then we're gonna start looking at ICP. And we're gonna talk about ICP in the series later, but that stands for ideal customer profile. So this idea of saying, let's just, let's start with one ICP at a time. Let's not, you know, bite off more than we can chew, to use an elephant analogy. And let's pick an industry and then a sub-vertical in that industry. And once we know that, what's a good size? Like, we probably, if we're going healthcare, I can't probably work with with, you know, a hospital that's, you know, 20,000 employees. Maybe you can, I don't know, but we need to think about that. What's a good size for us? Who's the primary buyer? Who do we talk to where we can resonate with that will understand the pain correctly? And do we know what, generally speaking, those top 3 pains that they have are? And then let's come back and say, what are the desired outcomes that that client is going to want? Remember, this is all from the client perspective. And then what we can do is we can actually work work through these outcome statements. We come back and we say, we help healthcare companies with 20 to 150 clients achieve HIPAA compliance and XYZ within X amount of time without all of the obstacles and headaches that you see from everyone else. It's what we do. So my— I've got a good friend that does, uh, business consulting, and he calls this what's your, what's your promise. What do you promise when someone works with you? We actually did this at Empath and we kind of worked through what's Empath's promise when an MSP works with us. And then what you can do is you can start to work through and build out some discovery cues to validate this, right? So you, you see some sample questions here that you could potentially ask. These are all open-enders that could potentially be very valuable, and maybe you want to write your own. So what we could do here is we can really start to work through this as a worksheet, and man, start to really use this in a powerful way to start honing down, to start sharpening our edges to be much better. So Nick, I'm gonna put you on the spot here. Anything like that you would like, give me an example of something here that would stand out to you that maybe an MSP might work through and let's do it together.

Yeah. You know, so some of the things, especially working at a couple different MSPs and talking to a lot, you know, that we still kind of have on our stack back today might be something like, you know, web hosting or website management.

Okay.

Well, you know, that's something that we might want to, want to kill, obviously, because there's plenty of other services that can, can maintain that. But it's also very low margin, you know, for us, and abstraction in some cases.

Love it. I'm not sure why it's not wrapping the text there, but whatever. Oh, I do know why, because I got to hit Alt+Enter.

There we go.

Or something. Control+Enter. There we go. All right, cool. And so what would our transition be? Maybe find—

find— yeah, find a partner for us. The partner, just like before there.

Yeah. So maybe you go and find a Squarespace or someone like that, you know, I don't know, and say, cool, we can make 10% on that. Or we just say we don't want any of it, right? And then off we go. Cool. So you see how this works? So this really helps us to identify what things we're doing really well, what things we might want to kill out. You can think of it from an industry perspective. You can think of this from just looking at your service offering, what's in your MSA, you know, what, what all you bill for, looking into your, your billing system, looking into your service offering, all those kind of things, right? And this can be a really helpful way. And we've got this little tip down here. If a service generates constant SOP exceptions and special cases, that might be a kill or a partner-out candidate. So you might think about this and say, well, this thing is working well for us. But actually, maybe it's not, for a lot of reasons why it becomes this spaghetti that Nick was talking about at the very beginning. And if it maps clearly to an executive-level business result, it's probably a deeper, deepen candidate, right? Something like this that we said before, man, this, this sings; this, this makes sense. Clients want this. This is the outcome they want to buy. Well, now we're cooking you're doing with FIRE, right? So, so think about this and be judicious, be honest, be ruthless as you work through all of this. So I'm going to stop sharing that, Nick, but I did want everyone to know we have got— if you want to download that, you can absolutely grab it right here.

If—

let me find the QR code. Here it is. This is the little specialization worksheet. Just pop that QR code in and you'll be able to get it. And I can probably even post a link to it here in a second as well. But yeah, anything else that stands out to you, Nick, from today's discussion that you want to come back to?

Yeah, I mean, I think it's a really good exercise, right? If you do this inventory, you're going to uncover a lot, I believe, in the sense of where you have a lot of sprawl. You might not have necessarily statistical data to back up all of those factors, meaning, you know, you may not have reporting in place today that truly shows your, you know, profitability, right, on all of those services completely. But you got to have some, some level of a pulse based off of what you're hearing from customers and, you know, the satisfaction that they're getting, the, the ask that you're receiving, right? There's, there's the basic supply and demand curve obviously that you're going to deal with, but, uh, there's a lot, you know, of factors that go into that, that you can really peel back. And even understanding that, that ICP comes back again to— I, I think I use the website example loosely because again, it's just one facet of what you're doing, but I think it embodies how you're talking to your clients in most cases, right? Because you're often— even when you go on to some MSP's website, um, they're not talking about business outcomes in most cases. There's not a business outcome tab at the top of your, your website. It's mostly just around like, we do managed services, we have great customer support, we'll do backup for you, you know, we'll manage your Microsoft 365 environment, and, you know, we manage cybersecurity for you, we have a SOC, which they don't even know what that is, right, in most cases, right? So I think it's just that, that inventory, you know, before you even move or think about into specialization or niching into a vertical or anything like that, is, is really just reframing your existing offer. And I think if you do that exercise, which we'll walk through a lot of those tactics, um, as well as we keep going through these episodes, I think you could actually greatly improve not only the client engagement but also your bottom line, you know, for how you're thinking about monetization of these services. Because like we were talking about earlier, they'll see that as more value-driven and they'll come to you with more, um, in that respect. And they'll accept more that you need to do, like we talked about as that example of, hey, we want to build a chatbot, but we need to get the security done first to do that. And so, um, you know, that kind of works the conversation into, I thought you already did this, this into, okay, we're doing this because we want to do this business outcome. So it's reframing, you know, everything that you're, you're thinking about and leveraging this time, you know, where we have a great inflection point of opening up the conversation, you know, to begin to discuss that too. How about you, Wes? How about, you know, any final thoughts there on that piece too?

Yeah, you know, I, I just think that we should— we owe it to our business to really work through this and not to pretend we got mastered, not to pretend we're experts. Find one thing and maybe some ways you can do this. Go find a friendly MSP, maybe in your peer groups, whatever, and self-assess each other and look at your outbound marketing and messaging and see if it lines up to business outcomes that you've identified. As you work through that worksheet, you know, does it match up to what you say that you're going to do? So, so I absolutely love that. And I think that is absolutely the right way to go and the best way to think about this. So next week what we're going to do, and this is going to be really fun, is we're going to start talking a lot more about, um, how do we start to— what are some tactics that we can use to be able to drive deeper into specialization? I'll just give you one tactic that we're going to talk about next, next week is we're going to talk a little bit about trimming the fat. We're going to talk a little bit about niching down. So just one example. So come join us next week. It's going to be October 9th. I'm going to go share this out so you can kind of see this as well. Oh, it looks like I'm not sharing my screen anymore. Let me this real quick as we kind of wrap up here. It's going to be October 9th— there we go— at 2 PM. And so I hope to see you there. Bring some friends, bring your other MSP folks onto the call as well. And we'll see you there. Really excited about the next week as we jump into those 7, I think, or 5 tactics. It's going to be a lot of fun. And Nick, thanks for joining today. I thought this was a lot of fun. Really enjoyed every piece of it. And We'll see you all there. If you have any other questions, you know how to reach out to us both on LinkedIn, Nick Ross, Wes Spencer. Otherwise, we'll see you on October 9th at 2 PM Eastern.

Yeah, thanks, guys.

I think we gotta wrap here. Yeah, here we go.

Nice.

Maybe. I don't know. There we go.