Even in incredibly challenging times for smaller MSPs, Ryan Vestby, CEO of VC3, sees tremendous opportunities to transform your business and achieve scale more quickly than ever before.
Note: This article is taken from a live interview and has been edited for clarity and length.
Ryan Vestby started with CompuVision as its third employee at the age of 21, playing an integral part in the company’s growth and evolution through his interest in innovative technologies. After CompuVision was acquired by VC3 in 2022, Ryan’s relentless, disciplined focus on execution in creating what he calls a “Healthy MSP” led to him being named CEO of VC3 in 2023.
Robin Robins, founder of Big Red Media and MSP Success Magazine, spoke with Ryan to discuss how MSPs can overcome the many challenges they face today in identifying their own unique role in the market and exploiting it to its fullest potential. Ryan shares his perspectives on how to not only create a powerful vision for your business, but also execute on that vision to achieve something incredible.
Robin Robins: You’re currently operating in 30 states and generating about $125 million in revenue. Tell us a little bit about your company.
Ryan Vestby: Our organization is obviously growing at a blazing pace. We’re an MSP primarily focused on local government. So, cities, towns, counties, special districts and I’ll call it secondary tertiary markets, the ones that I would say are vastly underserved and need our services and our support. About 60% of our book of business is around that and the other 40% is made up of small to medium businesses, probably similar to a lot of MSPs across the country.
I came in from another MSP based in Canada. We were in the same peer group together, and I got to see VC3 grow up. It was fascinating watching them be really vertical-specific; everyone around the room would be like, “Gosh, we need to be more vertical-specific.” You hear this in every conference you go to, and then you return and you stick with “an inch deep, a mile wide, you got a dollar, we’ll take it.” I believe the one secret to their success was just being disciplined. This vertical is difficult to get into as it’s very much relationship-based. It’s a long sales cycle to build trust, but once you’re in and you’ve built those relationships, it really expands from there.
Robin: What do you see as the biggest challenges for MSPs and what are you doing to overcome them?
Ryan: If you’re a small MSP, say under $5 million in revenue, there’s never been a riskier time than today. And unfortunately, it will never be this safe again either. We take care of a lot of insurance brokers across the country, and the stats are staggering – we’re seeing premiums double and brokerages not even offering cyber insurance to certain customers. They’re just not worth the risk. Massive uncertainty.
A year ago, we were probably in the $20 million range, which is a decent-sized MSP. We were pretty successful. Even so, I sat with my partners and said, “I don’t think we’re big enough to be able to survive and thrive in this world. We need to be part of a bigger organization that has a bigger budget, robust cyber security and the ability to layer in automation. Scale gives us the budget and the capital to be able to do these things.”
It’s going to be trickier as we move into a world that’s far more dangerous. Just 10, 15 years ago, it was a bad day if somebody got a virus. But now, customers can have their data compromised, potentially shutting their doors as a business. And owning that risk from the technology perspective as an MSP becomes really concerning. We’re going to see more consolidation as people join larger, more robust, more mature MSPs to survive and thrive in this kind of world.
Regarding talent acquisition, one positive is that we’ve removed the geographic barrier we all used to have. We’re acquiring talent from across the country, and they might be delivering services in a completely different part of the country. And if you’re willing to hire outside of your geographic circle or boundary, you can be extremely successful, and you don’t need to be big to do that.
Robin: What’s your advice to someone in that $1 million to $2 million range right now, facing the environment that we’re in?
Ryan: I think the #1 thing is just to hone in on the financials. Internally, we use the term “Healthy MSP,” and by that we mean healthy gross margins, healthy EBITDA, healthy book of business.
There are a lot of people sub-million – even above a million – that don’t make any money. Either they don’t charge enough or they’re paying too much to deliver the services. What’s causing that is the belief that the market won’t accept the right price or they’re not going to like a contract or whatever. But it’s all in our head. It’s coming from a belief system that we’re not worth it and the market won’t pay it. But the market is paying it and they do believe it’s worth it. And if you can articulate a great story to the market about how dangerous the world is today, there’s a huge opportunity for you to do that.
Let’s say somebody says, “You’re too expensive, I want you to cut your price.” If that comes up, I’ll respond, “If price is the only thing, then you might not be ready for us yet. Come talk to us when you are.” And then they’ll say, “What do you mean? I’m totally ready for you. What are you talking about?!”
It takes discipline and rigor and belief to just walk away from the bad customers. If you can’t look at your book of business and tell me which ones are the bad customers, which ones are taking all your time and you’re making no money on them, that’s the first step.
The difference between a successful MSP and one that’s struggling is execution and belief and just following through with the conviction that we’re worth it.
Robin: As you mentioned earlier, we’re in a risky time. If you were a smaller MSP, or even where you are today, what would you be doing now?
Ryan: Understanding financials is important – that’s kind of like table stakes.
Another thing is how difficult it is to find talent, and we’re definitely at a deficit in regard to people in the technical realm. So I’d be setting the business up to be able to access talent from anywhere. We’ve been dabbling in the global talent market for the last seven years. And it’s so amazing to be able to move from scarcity in your own geographic location to an abundance of access to the best designers, writers and technical talent across the world. People want flexibility and autonomy to work from home. So, embracing that is important because you can access talent and give them the freedom to do that from home and still deliver.
Then, obviously, focusing on cyber security, because you can build a cyber security practice with the tools and technology that exist in the market. You can put something together, make it your own, repackage it and sell it. You don’t have to tout yourself as an MSSP, but you can have a cyber offering that can really protect your customers.
Robin: You’ve mentioned being disciplined about your market and who you’re targeting. Tell me more about that.
Ryan: That’s the beauty of this whole market. First off, think about everyone who has an Internet connection and uses technology as a potential customer. That market is massive, ranging from one user all the way up to 100,000 users in a huge business. They all need support. And so, it’s finding what that niche looks like and how we can support it and really focus on it. But again, you’ve got to make money at it. You’ve got to be able to be profitable. It doesn’t make sense to spin your wheels and put in the effort if you can’t make a living off it.
