This owner refuses to call his organization, an MSP. Let's find out why a conversation with Marcus Olson on this bonus episode of the business of tech. I always like to sort of start out because I can get these briefings. And I can try a good job of summarizing your journey. But it's always better to hear from you. So tell me a little bit about what you're doing now and how you got here.
That's a long story. So I'm going to try and consolidate as much as possible. I grew up in Minnesota. So I moved to California when I was about 22, through an acquisition of a startup I was working at, spent most of my time working, you know, in the server rooms in the data centers overnight, and not really interacting with people in technology. And when the company I was working for the startup got acquired, that's how I landed in California and got into consulting, I just needed a job. It paid very well, I didn't understand why I was being paid so well to do, frankly, things that I felt were underneath me from a technical perspective, I learned later why they pay so well for consulting, which is the hazard pay. But nonetheless, that's how I kind of got into consulting. And I worked for a small consulting firm that eventually evolved into an MSP. And that's where I spent about two years there. And as they kind of converted into an MSP I kind of frankly, just felt like that wasn't the direction that I wanted to go. And that I felt it was a divergence from the needs of the clients, I felt it was a business model that was frankly, being created to solve the company's problems and not the clients problems. And so I left and then that's when I started playing.
So I want to ask a little bit about pliancy. How do you view the organization? Yeah,
I guess you know, the term MSP. If you go to our website, if you've read our job, ads, racks, etc, you'll see me never use the term MSP. And that's because I feel like there's a rebirth of consulting. And I'm going to be honest with you, I never left it, I've always felt like consulting was the right play, align yourself to companies are looking for consulting, they want to leverage technology to further their businesses, solve challenges. And as I saw the divergence kind of of this MSP model, it felt like it was being relegated to help desk and while at a time there was a demand for that there was definitely a need for that at that time that we need more help desk, etc. I kind of being in Silicon Valley, and one of the few MSPs of our size, if not one of the only that's kind of born and bred in Silicon Valley, I saw many years ahead of what challenges were going to be. And I felt like consulting was going to be needed more technology coming to these small to medium businesses, these emerging startups, they needed technology to accomplish business goals, not technical challenges. And so I just held on to this consulting approach pliancy for many, many years, and about four or five years ago, when SAS kind of burst onto the scene that became very clear that that's what is needed. You got all these departments fighting over SAS, I want to bring this as in I want to bring that says, and we want to use this, how do I connect that? How do we secure this, and it was no longer about servers and claws. It's a networking really, that stuff really just became table stakes. So we've kind of view ourselves as a consulting firm. We do Bill hourly, for example, in 15 minute increments we are they call me break fix on Reddit all day long, I don't mind. But the way I look at it is that's a variable component. And the idea that you could consolidate that into a predictable one is foolish, you know, every company is different, they have different demands and needs and the idea that you can all all you can eat that and build a sustainable business is different, difficult. So what we do have on the other side of our businesses, we do have predictable models, which is how you use SAS, how we secure it, how we deploy it, manage it, automate it, that's all very, very predictable to us. And so we've built predictable product over there called our plan Z platform. And that is the typical MRR if you will in this industry, combined with our hourly rate, which is built in 15 minute increments, and it doesn't matter when you call us or who you talk to. So whether you talk to me, you talk to a tier three, if you will, in our tech ops team or consultant, same rate, same, same thing. There's no after hours, minimums, etc. And that's just simplicity and pricing. So that's kind of what we are. I'm
super intrigued by this. So is it an intentional choice,
you've never used MSP? Or is this something that you've switched from? Talk to me a little bit about the choices? I think we we are called that very frequently by our own clients and even some of our employees, but I always felt like the MSP term as a race to the bottom began. Right. And as it started happening, I felt like there was this, this pushback from the clients that they were tired of MSPs I would not say that MSPs right now are are looked favorably upon by talent in the marketplace or clients. And that, you know, and I get that it's challenging, I'm not knocking MSPs, etc. I mean, it's challenging, right. But that said, it's like, well, we don't want to be lumped into there. We've got a completely different approach. We do it a completely different way. We're not your traditional MSP and our pricing. So why would we use that term? And instead, we just chose to use no term. We are not any sort of box, we are Plansee. And we have our Plansee platform. And that's our approach.
Got it. So, you know, let's let me put this into some tangible bits for people give me a little bit of sense of the size, revenue kind of numbers that you use to describe the business. So listeners can understand the organization.
Sure, sure. So we are bootstrapped. So we don't have investors or anybody like that at the moment. And that's intentional. We're 130 people, I believe, somewhere in that range, our average growth year over year is around 70%. And we've been hitting those numbers for roughly for four years or so four or five years. And to be fair, we used to be called TSG. And we weren't your typical stodgy three letter boring consulting company. And in 2015, we kind of took this idea of moving from private cloud, which a lot of companies do now or didn't do over the last couple of years, we started doing 15 years ago. And we said, we need to get out of private cloud, there's no runway there, it's going to be you know, we need to get out of that wall was our most profitable thing. And that's when we started building SAS orchestration platforms and going that route. But yeah, so we're about probably trailing 12, somewhere around 30 million in revenue, maybe 32, somewhere in that range.
Gotcha. Now encoded in what you said earlier, I want to I want to wo dive in a little bit more to get a sense, you do have contracts with your customers, right? And there's components of it that are recurring, and components that are in our consulting, can you describe, describe that, for me how those relationships work,
listen, if you're gonna go into the market, you're gonna be different, then you need to, you really need to focus on lowering the barrier to entry. You know, the idea that if you want to offer a different, different solution, than then you need to share some of the risk with the person that's, that's choosing you or signing up for you or using your services. Because you gotta remember, they're representing the company and their own job. And if they choose pliancy, and it's a two year commitment, or whatever it is, and pliancy doesn't deliver, well, why didn't you hire IBM? Right? All these other MSPs, their pricing was the same, they all had identical pricing, they all had the same offerings, the same solutions. That's what our friends use. That's what others use, why did you choose planes, he lock us in for a year, they're not delivering. And so I've never done contracts, we've always been month to month, we have 90% retention of our clients, there are years that we go by with 100% retention. And so, you know, really, we've got great social proofing, with some of the amazing companies that we work with that are very bold, and we have such a low barrier to entry, you got that amazing social proof, holy moly, they work with these companies, these are amazing companies, and they don't have contracts. And I think that's been a huge vessel for us to get the adoption that we have in the growth that we have, especially with no sales team.
Okay, now, you said, so no sales team talk to me about kind of how acquisition
works. Yeah, it's all word of mouth, right? No surprise, right. All MSPs are word of mouth, or the majority of them are, we just simply feel like the best thing you can do for growth, and I'm sure many other MSPs you know, feel the same way, which is like listen, focus all of your effort, money, etc, on delivering results that are worth talking about. And if you do that, that will drive your your sales. And so rather than spend money on outbound sales teams, and commissions and all of that, we just say, let's just deliver a better experience and let that do the driving. Now we do have to people in our sales teams, because there's obviously red lines, legal situations, updating, there's a lot of things that happened to close a sale that are not related to outbound or commission, which we don't do any of that. So we do have two people in the sales team that meet and vet clients and figure out if they're a good fit, we turn away about three quarters of our people that come to us, because they're looking for something that's more like a traditional MSP, or can you just do this project or, Hey, we only have one office, we need you to support great for, you know, many MSPs doesn't fit our model, and there was just a lot of noise as we grew. And so we hired two people to help kind of manage all that inbound.
Okay, can you walk me through the bootstrapping then? So you know, kind of how you go through the entire process a little bit to give me a sense of how that how that all came about?
Sure. Yeah. I mean, obviously, we all know that any trunk Slammer or backpack, whatever you want to call it. It takes about 99 bucks in some time on Legal Zoom to start an MSP, and I was no different, right? It's 22,008 or something like that. And, you know, the crash had not yet begun. It was about a month before that. And I just decided to leave the MSP I was at and the clients naturally I mean, this is every how every professional services company starts, right. Whether it's a law firm or whatever you leave here the talent plans go, Where are you going? We're gonna follow you wherever you go. Now for me, I wasn't planning to have another MSP. I've I was just planning to go get one of those really cool jobs at a Silicon Valley startup, the idea that it'd be waterslides and buses picking me up. And I'm from the Midwest out man talk about stories when I go back home. And instead of one of the clients, and it was Sri Shea, who was at Khosla ventures, matrix partners, you know, he was a client I was working with back at the other MSP was like, listen, I invest in people, and not ideas. And that's something you learn as you work with more and more investors. I just love the way you have been working with us, I love your approach to technology and how involved you get with our business to help us use technology. I think if you started a consulting firm, you do exceptionally well. And, you know, I was like,
I know how hard these businesses are, you know, man, these are hard businesses to grow. I just worked at one. But I felt like I don't want to let him down. And I felt like oh, man, well, he believes me, you know, maybe I could do something different. Maybe I could make something big. And so I agreed. And they were our first client. And of course, the other MSP was, you know, oh, they're gonna sue me potentially, and all of that. And I said, I'm scared, you know, I can't afford, you know, a lawsuit or any of these sorts of things. And the client was like, we'll pay for all your legal fees. You know, if you're willing to do this, and we'll be your first client. And I was like, okay, and I remember writing on a whiteboard, saying, This is what I need to pay my bills is when you need to eat. I was already stockpiling ramen. For this adventure I was going on. I was living in a studio apartment with three people at the time. And I remember by the end of that week, I had surpassed what I needed. And then some with clients that had heard you know, that I had gone out on my own and wanted to join the adventure. And so that kind of happened. And then I immediately started deploying the ideas I had that they MSP that they didn't want to hear, right. They didn't want to displace their labor into automations, or smart technology, because that was their bread and butter. I said, No, if we put VMware in a data center, and we start leasing this back out in a controlled manner, they don't need to buy 5000 Other PowerEdge servers, they can pay $100 a month and have access to ours. And they said, Do you know how much money we make on a PowerEdge server? You're crazy. And I said, Well, it's not about that that's tied to labor. That's not predictable. That's, you know, the cap x. And so the first thing I did was I started doing that. I remember I took two broken PowerEdge servers and put them all together to make one or whatever. And you've been in data centers, I'm sure Dave, there's always that section of the data center where it's like the wild, wild west, and you're like, What is going on over there? Cables all over the place. servers aren't secure. They're just tipped sideways. Well, that was me. Yeah. And I found that two and $1 month colocation I put the VM or two Dotto, I think was what was around at that time in it, and I spun up an SBS server and the next client that called me said, you know, we want to get spun up Renu a new firm, and, you know, we'd like to use you and I said, Great, I got this solution called TSG. Cloud at the time, which is private cloud hosting, I can put you on that. And by the end of day, today, you'll have SBS and email working, and it'll be $100 An employee a month, they said, sounds good does. And I was like, holy moly, it's starting right. Like this is amazing. You know, like, this is exactly what I was hoping for, I can build automations, and VM or I can deploy the templates I get this is this is, this is great. Then the next client did the same thing. And they agreed the next one and the next one. And then pretty soon all of my clients were on that solution. And that meant I could manage them with consistency meant I could produce a quote to them, when new clients are coming that was predictable, I could tell them exactly what their costs were going to be. And exactly. So that grew. And pretty soon we had hundreds of users on that and everything. And you know, the great thing about that is, is that is what allowed me to hire better talent, pay them better. We kind of were when people want to leave this industry. And you know, this, they there's really nowhere to go, if you're already at maybe one of the bigger MSPs or something. It's like, Oh, I love working with all these different clients in this technology. But I feel like I've hit my ceiling in this industry. And the company I'm working for doesn't have management tears, it doesn't have a lot of unique areas I can go into. I feel like I'm in a cul de sac. And so I offered this 20%, you know, increase where they can come over here and have a new ceiling, it's a little higher, and they get to work with these amazing clients. And so I just kept picking up this amazing talent and they would deliver amazing results. And we had the product that allowed us to offset and bring revenue in that wasn't tied to labor, which allowed us to then reinvest in that product. And so I think that was that was really the key to the bootstrapping was listen, like you have to have the financial capabilities to invest in differentiation, the differentiation will drive your growth, drive the talent, and it's just patience for many, many years just patience of doing that.
Now, I'm gonna assume we're talking now, in 2022. I'm gonna assume you're not running a bunch of stuff in play of private cloud that you're now leveraging all kind of public cloud facilities and SAS. So is that a fair assessment? And what's the stack looks like a little bit?
Yeah, so our stack is most of our stuff is in GCP. And I'm talking way beyond my paygrade right now. Now that we got like the engineers And developers and things. But most of that runs in GCP. And most of it is delivered to Kubernetes containers and whatnot, micro services. And so that's kind of what runs our platform and our automations and everything. And then I would say maybe 5% of our clients might have a server on site, or another 10 15% might have some AWS needs, because their life science, but for the most part, we're really looking for companies that are brand new, that don't have technical debt. You know, while other MSPs might be fighting over that 100 person, client, you know, oh, man, that would be a great deal. We just see red flags of technical debt, which is like, Great, now we're gonna have to move, you know, deal with the fact that they've got a bunch of physical assets or this, that and the other thing, and so we generally only go after small clients that we believe in, that will grow. And then therefore, we can deploy our solutions and our approaches and our automations and produce predictable results for them, as opposed to inheriting technical debt. But yeah, so we also are built on top of Oct. I believe we were the first MSP to deploy Okta. They didn't have any multi tenant, they didn't have any. This is like six years ago. We reached out to them and today you know, Microsoft would have smacked us on the hand for breaking the EULA. Oct at the time was like, you want to do what now you want to take our API's and you want to build on top of them a multi tenant ID version of Okta. Okay, go for it. And so we were in their retail channel, we just bought octus pliancy, and then built this platform on top of it. So none of our consultants were logging into plain C, they are sorry, into Octa, they're logging into us. And through the API's and orchestration of controlling Octa, which meant we could create division of access and role based access control and all of these things that you couldn't do because Octo is not multi tenant in. And still to this day Octa is not multi tenant it. But all of our clients are on Octa. And so we use Octa as one of the major pillars of our automation, same with Duo Duo didn't have a multi tenant MSP program back then. So we worked with Duo when they were smaller, built a multi tenant version of that. So yeah, that's kind of the unique offering that we have is that we're taking some of these enterprise products and solutions that
are not accessible by most MSPs yet, and then bringing that accessibility to small emerging businesses. So I implied in that is a little bit I want to get a sense of where your people spend their time. Because it's a it's a, I'm hearing different pieces. And it doesn't sound like it's as much of the traditional kind of infrastructure stuff, as many other MSPs buy, think about how do your people spend their time with the customers?
Yeah, well, first of all, the definition of infrastructure has changed and is continuing to change. A lot of what we see as infrastructure today is connecting disparate apps together and moving data, making them work. HR wants to use this platform, it's got to connect to that platform. But we still do a lot of AWS for our life science clients. So we do obviously roll Meraki and do all of the the traditional office build outs, zoom, etc. So I would say the majority of our people are, well, first of all, we have a unique model. And this might help you understand so so we do not have the tiered approach that most companies have where it's like you call and you get tier one, and they try their best and it goes to tier two or tier three. We have a named account approach, which means you get a consultant that will fix your outlook and then also help you deploy Meraki helps you build out the complex boardroom help you with AWS. And so they generally are more consultants, right. And we find that that works best from two perspectives. One consultants prefer to own their clients and the relationships. They really like that sense of ownership. This is my client, the results that this client is having his mind, when you start having tier one, tier two, tier three you start to have Timmy screwed it up now that now the clients unhappy because they you know, and there's this like struggle of this for us versus them and everything. So we still do them the majority of the gamut of what any other MSP or IT consulting firm would do, if not, sometimes more. It's just really deployed in a different way. But one of the more unique ways we might spend some of our time and it's not always the case we wish it was more is we primarily work with startups and emerging companies. And so they look at how we run our business and ask for advice from people like our VP of ops or HR. Oh, what do you guys use? How do you do this? And man, that's my favorite consulting. I wish we got asked that more. And we aren't getting it asked. It's asked being asked of us more. But I really wish that more would ask which is what should we use? Should we use Amex or Divi? Please use Divi, we can help show you how that can sync to QuickBooks and how you can have all this amazing self reporting for receipts and everything. Or we're gonna use ADP please don't use ADP. You know, can you please use gusto until you're about 50 people or maybe look at Zenefits if you think you're gonna scale. So we love consulting on that sort of stuff. And we eat our own dog food. I mean, we are pushing the limits of technology that runs our own business. We didn't even hire a finance person, I think until we hit 30 million in revenue. So you know, it's like why because mostly was automated, right? We had consultants that love technology go into these areas. He is of our business and say, How do I do this with less? What's the new modern tech stacks that we can be using to solve these problems? Right? We ate our own dog food on that. And so anyway, that's where I wish they'd spend more time. We could spend more time. But otherwise, it's it's just structured different. It's still the same work just structured different.
I hear every conventional MSP and I'm putting that kind of in quotes screaming about standardization and process. And you've talked a lot about automation. How do you reconcile that tension there that perception while you're doing one on one consulting with the organizations, you've assigned a person, you're also trying to do automation? How do you reconcile that?
So I mean, first of all, hire a technical writer, I would bet that the majority of MSPs do not have a technical writer, what they do have is a technical person, such as myself doing their best, don't, I think when we were about 10 people, we hired a technical writer that came from Facebook. And what a difference that made, I mean, our struggle with documentation and knowledge base and everything, just I mean, I wish I would have known one or two people, I would have brought that person in. They're an amazing person. So we started really focusing on communications and writing. And so we have like 800 articles in our knowledge base. And the majority of them are not how to fix Outlook, you know, they are hardest pliancy operate. Why do we do what we do? And that was something that Dylan, our technical writer really pounded in my head early. He said, Only document what can't be found elsewhere. People will always trust Google more than your own KB. That's hard. That's a hard pill to swallow. We put so much in these articles and everything. You mean, no one's reading them. No one trusts it. They're going to Google anyway. So 100% True. So we started really focusing on what what matters to us what is specific to us? And can we document that. So we get a lot of our standards are pushed through good documentation. And then number two standards, standards are established before you work with the client, not during. And what I mean by that is, the majority of standards that are broken or not aligned happened in the sales process, not during the tenure of support, because clients will oftentimes signal or you'll get clarity in that sales call that this client is going to be different, this one's going to want this or that. It is really hard. But it is the most critical thing any MSP any business could do is like know, your ICP know your ideal client profile, know what clients are going to deliver amazing results to and be disciplined. The first step you can do to be that to do that is make sure your CEO, and the founder and owner of the company is not involved in sales. I was for a long time. But I had to get out of it. Because I was the one that kept screwing up the standards. I was the one that said, Well, this client is great. I really liked them. They're a little different. But man strategically, you know, it's always wrong. So you really want to make sure that you're ingesting these clients, and you're communicating clearly to them what your standards are, how you do things. And then you're ironclad on that. You don't adjust, you don't change, don't have excuses, you have to be consistent on that, then you can start actually doing automations because now you have consistency. So you know we have automations for example, when a new employee at a client starts, that email that goes out is automated when we create the account on our platform. And it goes out and creates it in Okta and all the different solutions and everything the email that then goes out that walks that user through setting up their duo and Okta and getting on boarded at the client that they're at. Same one that goes out to over 2000 new people, we support a year, whatever it is, same email, we iterated on it over years to improve it and make it better, etc. But that's all automated. So really, it's if you're going to automate, then you have to have predictable, you know, inputs, yeah, predictable outputs. And so, yeah, I would say that that's, that's been critical. And then also, we focus really on the mundane. So when we're building automations, we're not dorks in the basement building Erector sets. And that is a dangerous position to be in is hiring technical people to build automations because they value the rubric golden machine, with the marble spinning and all of that more than they do, the meaningfulness that it's achieving. And so, you know, we really focused on like figuring out, okay, what is meaningful and low, low hanging fruit? Not what is technically interesting, and what's automate that first. And so we started hammering on that. And it took us five years, I mean, to get really where we are today, with all the automations that we have. And then, really, when we started focusing on our customer, by the way, this is confusing, but we call our customers, our employees here. And what I mean by that is any consultant or one that's delivering services to the client, that's our customer. Their customer is the client, so we call clients and customers So customers are the talent that work here. And the reason why is because if you get in the way of their success with their clients, they will leave you and so they're looking to be empowered, they're looking to have the right access to tools and autonomy to deliver. If you get in the way of that they leave and when they leave clients follow, right and so that's something that I we've always establishes, that's our customer. So the automation We do drive experience to them, you know, and then they deliver the experience to the client. So our automations are what can we do to make their job easier? And then we focus heavily on prioritizing those.
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