A few weeks ago, we played the first half of Michael George's keynote address at Navigate 2014. Well, it's now the moment you've all been waiting for, as we'll be completing the keynote address, True North, on MSPradio.

On this week's episode, you'll hear part 2 of Michael's keynote speech, where he continues to tell us about the major paradigm shift that we're in the midst of and how MSPs can leverage outsourced labor to minimize risks and become better business owners. Tune in now to find out how you can achieve your True North!

If you haven't listened to Part 1 yet, I recommend you do so first: Listen here.


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Episode Transcription:

Nate:                       Hey folks will come back to another episode of MSP Radio. I am your host Nate Teplow and it’s finally here. We’re going to play for you the 2nd half of Michael George’s Navigate 2014 keynote speech. We played part one a few weeks ago and it was very well received. We had a lot of people listening to it and a lot of good feedback. Michael is a speaker so we will be playing for you part 2 of that keynote speech here on MSP Radio today.

                                    Before we get into it I would like to remind you that you can subscribe to this podcast on iTunes or via the Stitcher App if you are an Android user. You can get these episodes straight to your iTunes account weekly when they are published and if you are a frequent listener, we would also appreciate you leaving a rating or a comment on the podcast account. It obviously helps new people find us and we would love to spread the show that way.

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                                    So getting into it, part 2 of Michael George’s keynote speech at navigate 2014. If you haven’t listened to part one, I highly suggest you go back and listen to it. It’s a fantastic keynote and I think you will notice that listening to part 2 here.

                                    Just to catch you up on it, Michael spoke about how MSPs can find their true North as a business and he touched on the labor dynamics that are happening in the world and also within the industry and how MSPs can take advantage of those to become better business owners and grow their business. So he was in the middle of giving some examples of some of our own partners who have used this new model for managed services and I think we will pick it up right here just where we left off on the last episode so hope you enjoy part 2 of Michael George’s keynote address at Navigate 2014 here on MSP Radio!


Michael:                And so together with his partner and COO David Campbell, Hannon embarked on a transition from what started as just being an early adopter with Zenith and embarked on a more aggressive outsourcing model with us.

                                    Earlier this year, he went and acquired a neighboring MSP, a company that had done a pretty good job of selling and in fact the acquisition was really around client acquisition, not talent acquisition. They had a different tool and some not so good technical people and shortly after the acquisition, after installing the platform they were able to reduce the IT staff of the acquired company by more than 50% and increase the customer service to those customers. And today as you can see he is a over a $5 million business; terrific growth! And it’s just begun.

                                    Hannon has the opportunity to be the Google or the Amazon or the Facebook of our future. This is where it begins. And he is someone that did not start out in this business this way or selling hardware. He was a VAR, turned break-fix turned MSP. He’s resetting and adjusting the sales and doing so quickly. He is also a fun guy. I mentioned customer sat, he measures it, counts it, engages in it and Optimum Network throws a theme-based party every year for their customers and invite them in. They had one just this past week. It was a disco themed one.

                                    I asked Hannon to wear his John Travolta outfit with his Afro; I think we would all have seen him by now if he did. But 3 years ago during this dynamic growth, they had to move out of the old office space and moving to a new one and it was right around the time they were having their theme-based party, it was a Latin themed party and he thought how fun it would be to bring in some live alpaca and llama to his event and of course shortly thereafter he was served with an eviction notice from his new landlord.

                                    But look, this is what can happen when you reset your sales. You cannot change wind, you cannot change tide but you can change the course you are on.

                                    To understand cloud dynamics, it’s also important to look back into recent history. Again history is a great predictor of the future, it repeats itself.

                                    Let’s look at the rise of big-box retailers, the superstores and the demise of the small local business, the smaller local home items businesses throughout America.

                                    1962 is the year Walmart, Kmart and Target all opened up their first large format retail stores. But it really didn’t take off for a long time. In fact December 11, 2001 is the day and the date that should be emblazed in every small business retailers mind. It’s the day China joined the World Trade Organization. And in the 5 years that followed according to the economic policy Institute, there were 133,000 manufacturing jobs lost in the United States. But the small retailer was even more dramatically affected. In fact in 2001 there were 2.6 million companies registered as a small retailers in the United States and by the end of that five-year period, 1.4 million, over 1 million small retailers closed their doors. And in that same period, Walmart alone rose to $476 billion in sales. It’s more than 176 countries in the world’s GDP, it’s enormous!

                                   There is an important lesson for us in all of this. And I don’t share these facts with you to scare you but to focus you, to focus us together. In the great words of Oscar Wilde, “Nothing focuses the mind like the site of the gallows.” And we need to treat this as the gallows, as though we are heading towards the rocks and make our adjustments.

                                    The big guys are coming into this space. They’ve already declared it and they are on their way. And when they do, it’s a dog eat dog world. The same phenomenon one that happened in that small retail environment is happening in our industry today – the big guys want the small to medium business market. It’s been the holy Grail for technology companies since the beginning of IT but it’s always been unattainable for them, the economics never worked. The cloud enables them access to a place they’ve never been to before. It gives them a new opportunity. We can measure it a whole lot of different ways but there is no denying the SMB is an enormous market and the cloud is an anonymous market opportunity within it estimated to be $125 billion over the next 3 years.

                                    And look, the big guys don’t chase niche markets. They don’t! So you know is going to be really, really big! And again, who can forget what is so well and deeply emblazed in the minds of the American psyche, what Steven Spielberg brought to us in his 1975 breakout film Jaws. And there where police chief Martin Brody is on the back of the boat and he is chumming fish into the water, he is baiting the shark that they are in pursuit of. And there were a lot of great scenes but this is really the great line from that movie because for the first time in their pursuit, they get to see the shark. He breaches out of the water right there before Martin Brody’s eyes and he gets up and he walks into the wheel house where Capt. Quint is in command and he nervously lights a cigarette and he says, “We are going to need a bigger boat.” Size matters! Size matters in this market in these times and with this kind of paradigm shift.

                                    Just look at the superstore example I gave you. And now when you leave this room, go back and look at the websites of Walmart or Kmart or Target or the mission statements in their business plans and look at their promise. They say, “We are the single source for all of your home good needs at the lowest cost possible.” And then go to the website of Amazon Ajour, Rack Space, Verizon or Comcast business services, it says it right there in black and white, “We are the single source for your small business IT needs at the lowest cost possible.” They are coming at this market and we need to do everything we can to not be dis-intermediated from the business owner the way that the small stores were. We need a bigger boat and together we are that bigger boat. We need to make sure that we just get on board together.

                                    We are making enormous investments in building a world-class platform, enterprise class software at your hands. We are using the economies of scale to bring together best in class products. Together we can be that bigger boat.

                                   Through the course of this year so far we have added more than 110,000 endpoints to our service. Our 516 well trained well educated certified NOC technicians will have addressed more than 14 million alerts to full problem resolution 86% without any partner intervention whatsoever, 92% without any on-site support. That does not include the 1.1 million alerts proactively suppressed through elite server care where we have more than 20,000 servers and growing.

                                    Our 77 well trained certified service desk technicians will have answered more than 10,000 of your client phone calls in under a minute and for those who do proper on boarding to completion with 92% first call resolution. Our hundred and 43 people strong in our project management and engineering teams so far have delivered 2 cloud-based products. The first generation in our C-3 infrastructure as a service offering designed to enable you to have a private cloud at public cloud pricing and Sync 24/7; our file sync and share offering. That’s along with 604 new feature enhancements over the 9 releases we’ve had, this year so far 33 since we took over the company.

                                    Our 16 and professionals in training and technical support partner enablement have provided 142 on-site visits to help your technical teams. They’ve made 5226 outbound technical check in calls and have performed 2627 health checks to help you optimize your portal. That same team produced 210 educational data sheets, white papers, e-books, webinars, MSP TV, MSP Radio programs and 242 blogs designed and dedicated for partner success. Use them and many do.

                                    We have added 461 documents to the documentation center where 36,000 people have served themselves. We provided 19 comprehensive courses and 98 individual topics through Continuum You where we’ve educated 4,500 of our partners, 674 of them fully Continuum IT certified. And if you add to that the 74 people we have in sales and GNA, for you math qualms that have been following along, you would know we employ today 879 people, that’s a big boat! And it’s getting bigger every day.

                                    Our business plan for this year was to add 214 people full-time people to our organization, more than half of them here in the United States. And that’s likely to double next year.

[End of recording]

Nate:                       All right, you are back here in the studio with Nate. Hope you are enjoying listening to the 2nd half of Michael George’s keynote address at Navigate 2014.

                                   We’ve got to take a quick commercial break here on MSP Radio. Coming up next we will play for you the remainder of Michael’s keynote and he is going to talk a little bit more about this new smart sourcing model and how to make it work for your business so we will see you all in a few minutes after this quick commercial break.


Nate:                       Welcome back from our commercial break folks. You are here on MSP Radio and we are playing for you the 2nd half of Michael George’s keynote address at navigate 2014. Again if you haven’t listened to part one of his keynote address, I had a recommend you go back and do so and I think we will just pick it right back up where we left off. Michael is talking about this new concept of smart sourcing and how to make it work for your business. So here is the remainder of Michael George’s keynote address at Navigate 2014!


Michael:                Look numbers don’t lie as I said, sometimes people do. And sometimes people prided themselves on the number of employees they employ when asked how big is the company. Again I think that’s the wrong way to measure it particularly in this industry, particularly with these dynamics. But when a partner tells me that I tell them, “The next time you are at a cocktail party and somebody asked you how big you are, just tell them you have 879 people, right, because they are yours! They work for you!

                                    Remember, we don’t sell products. We don’t want you to think of us that way. We don’t even sell services. We enable you to completely change, completely transform your business model and that’s how you need to think about it too.

                                    Charles Love leads all the delivery services for Big Sir out of Tampa Florida. They were founded in 1999, traditional VAR and in 2004 they added a managed services practice and a good one and they embarked on an outsource path. And they saw the history of what I just shared with you about the cloud.

                                    And so in 2010, they launched their first cloud offering, they built their own. And now they are an early adopter to C-3; our infrastructure as a services offering. And they embarked on a full outsource model and they measure their success not by the number of people they employ but by the amount of gross revenue they can generate based on the number of salespeople they have, that’s the kind of mindset and attitude we need to embrace. This will be a game of sales and speed and they’ve done so and in fact allowing people to go either on premise or in a cloud has served them very well in their sales because they approach their client base as they are neutral.

                                   They will put it on [18:44 PRAM] and support you that way or put you in the cloud, whatever is best for you, their customer, their client. And in fact, Charles describes himself as someone that is an agent to himself. He’s building a sales organization and outsourcing everything else to us; service desk, RMM, tech advantage. In fact Charles also proudly wears the pin “100% of his servers are on a lead server care”.

                                    And he loves the fact that we’ve bundled the products in that our technicians on the service desk and in the NOC, look through the same portal and work in the same workplace as his do. He’s got a brilliant sales model. He goes out and for every client that he has and every client that he secures, the first thing he does is put RMM at the highest level across every device in the environment. They don’t ask their clients, they mandate it of them. And the first thing they start to do is they now have the ability to register the life expectancy of all those devices. And certainly he has the opportunity to retire them when they are out of capacity, warrantee, whatever it might be and also to look back to after he took out first line, the ones that were really ready, he could look back 9 months, 12 months, whenever he wants, and he would approach a client and say, “You’ve got 9 months left and if you want, we can just continue to watch this and wind this down and then I can re-platform you so you know there’s a $6200 and service you. Or better yet, I will take all the services, all the licensing and re-key them in my cloud.”

                                   And don’t worry, emotionally small business owners don’t love the idea that they paid for a piece of hardware and now they have to retire it, he says, “I will buy it back from you. I will give you book value on it. I will give you fair market value for that server. And I will pay for it by discounting the services I am giving you over the next 9 months.” That’s really smart! Then of course, when he does take it in, he puts it on eBay and sells it getting the cash now. He’s actually getting money upfront from his clients to go back and discount it back to them and bring them into his cloud environment! That’s really smart. That’s really smart sourcing.

                                    There is a thing that all people in aviation and navigation learn early on from their trainers, it’s called negative target fixation. It’s a part of the American or the human psyche, the mind that we get fixated on negative targets.

                                    You ever open up the newspaper, you hear about a small plane crash and you look at the photo and there is like an open field and then the airplane kind of hanging in the high wires right? It happens all the time. Or a boat crashed up on a set of rocks with all that free ocean around them, why is that? The mind gets focused on negative targets and get fixated on them.

                                    You’ve overcome that yourself. You overcame that because 3 years ago, in fact it’s poetic that we are here before you because it was 3 years from this coming Friday, 26 September that we acquired the remote monitoring and management business from Zenith and they filed and were declared bankrupt earlier this month and you did not get caught in negative target fixation, that’s why you are here and others did and they are on the rocks. Many have come back but you have the ability and we encourage you to enable others to do so as well because the technical teams inside these organizations just in heavenly resist the idea of outsourcing, they are threatened by it but they shouldn’t be, they should be empowered by it.

                                    We have some partners that are really smart and one of the things they will do profit-sharing by client. And engage their technicians in that process, make them a part of it and share the profits with them in those clients. So now when a group of technicians, good ones that you have around our staring at it and they say, “We are on board in all of these clients and getting this new business, “do we hire a new technician or outsource it?” They are empowered by it. They are going, “This is good for us. This is great! These people are working for me,” in this model, It’s really powerful!

                                    And we have some partners that would actually pay bonuses to their technicians for every project that they put through Tech Advantage. Company makes money and wins, the technician gets a little extra bonus and wins, the company gets a service, the client gets service excellently. And they don’t do it forever, they just do it in the beginning and once they do it for little while, the technician realizes, “I am really empowered, this is really powerful! This is smart sourcing I get it.” They don’t end up on the rocks.

                                    Sailing is one of those sports that takes a day to learn but a lifetime to master. And I have spent a fair amount of my lifetime trying to master it. Now I am a novice by virtually any standards certainly compared to somebody like Peter Isler but I have sailed with a few racing teams. You saw the Newport Bermuda race, and we raced in that. We’ve done the Marblehead to Halifax race, the St. Bart’s bucket race and many more. We’ve even won a few. It’s a lot of fun; it’s a great high-performance sport that sharpens your senses.

                                    In 1992 I was so moved by something I had seen just 4 years earlier that as a young and budding sailor I boarded a plane here in Boston and I sailed or I flew to San Diego where I had chartered a [25:47 cutter rig sloop] and for more than a week sailed out to the finish line of the America’s Cup races and I watched Peter Isler and his team win that race. And the reason I was so moved by what I had seen just 4 years earlier, Peter touched on it – that the Australian team had built a machine that was going to be impossible to beat and they had put together a team, a formidable foe. It would be like any of us trying to stand up against like Amazon. It was insurmountable! It was mathematically impossible!

                                    But they looked in the rules books, much of which was written in the mid-1800s when it was unimaginable that a [26:44 dual hole] boat, a catamaran could go fast. But using modern technology and techniques, they thought out of the box. Talk about “Don’t work harder, work smarter.” These guys were pure genius! They launched a catamaran, that’s transformational! Think about that. And they crushed the Australian team. It was extraordinary! It was the kinds of transformation we need to make in this business.

                                    Look, this is our opportunity. You saw the size of this market we are in. This is an extraordinary place. This is our time to think out-of-the-box. We are already partners, you get it, you understand this model at a fundamental level and now together we need to embrace it. We need to chart our course for true North. We need to launch our catamaran. Let’s go with this market together! Thank you.

[End of recording]

Nate:                       All right there it is, Michael George’s keynote address at navigate 2014. I hope you all enjoyed that. Michael is a great speaker and he is just a fantastic business leader. So there is a lot you can learn from him and I hope you enjoyed listening to his keynote address.

                                   So with that, thanks for tuning into MSP Radio this week. And one last reminder to subscribe to our podcast on iTunes. You can get episodes straight to your iTunes account weekly.

                 Follow us on Twitter using the handle at follow continuum and you can let us know what you think of this show with the #MSP Radio and thanks again folks for tuning in and we will see you next week on MSP Radio!