How A Small MSP Rose To The Top 1% In The Industry
We sat down with Titan of the Industry Jason Waldrop for a brief Q&A on his company Red River. You can read more in the Aug./Sept. 2023 issue of the magazine.
Q: Starting As A Small MSP, How Did You Grow And How Big Did You Get Before Merging With Red River?
A: Around the late nineties, we got into Voice Over IP, which led to us managing their servers and desktops. The whole industry started to form. Kaseya launched Autotask behind that. We rode that wave and built a data center practice and a significant collaboration practice.
By 2019, we had 200 employees. We were growing at scale with acceleration and ran an investment banking process, ultimately landing with Red River. It was a perfect 1 + 1 = 3 fit. Red River was predominantly public sector and VAR, and we were commercial and managed services. We’ve been able to cross-sell into markets as well as develop new services.
Q: At What Point Should An MSP Look At M&A?
A: It’s such an individual answer. When talking with a business owner about what they should do with this precious thing that they put all their time, energy, and money into for years, I always say the best deal is the one that you’re happy with. I wanted to keep going for a while and I was looking for some place I could hang my hat and grow with scale. Some folks are at the end of their career and need the business to have an enduring legacy and wind up in the right hands. Some get tired of running a business. There’s a whole host of motivators, and those motivators are going to drive different outcomes depending on the situation.
One of my mentors told me, “Don’t do anything until you know what your next move is going to be. You don’t want to wake up and not have thought through that, because you’re going to have a considerable noncompete in front of you.”
Red River Essential Information
|Headquartered||Claremont, New Hampshire|
|Market Served||Extremely large MSP. One of the largest Kaseya implementations in the world, servicing customers worldwide. Includes a half dozen verticals, one of them being SMBs, and five other verticals in the larger Russell 2000, with a considerable public sector business as well.|
|Top Growth Indicator||Top 1% of the industry. Financials are confidential, but we can confirm they are in the top 1% of our industry.|
|President Of Managed Services Division||Jason Waldrop|
|What Makes Jason A Titan:||Before he began his journey at Red River, Jason Waldrop founded CWPS, a small MSP in Washington, D.C. After growing his business into a major regional MSP, it was then acquired by Red River in 2019. He is in the top 1% of the industry, which is no small feat. He serves on Fred Voccola’s Kaseya CEO Advisory Board.|
|What Red River provides:||Red River is a turnkey IT solution provider providing end-to-end technology outcomes. It is organized into three business units (BUs):|
1) A large VAR and technology solutions business.
2) A managed service business.
3) A considerable public sector business. Their programs division is state and federal, with customers buying enduring service contracts that include storage-as-a-service, computers-as-a-service, or IT service delivery contracts.
Each BU focuses on four technology areas: cloud, cyber, collaboration,
From a topline perspective, it is larger in the public sector. From a services perspective, it’s larger in commercial.
Q: What Are The Toughest Challenges For MSPs To Deal With Today And How Are You Overcoming Them?
A: Talent acquisition and talent retention. We’re a 24/7 operation, so there is more churn. Overlay the work-from-home, post-COVID environment and you must be incredibly intentional about culture. We used to have our service desk and NOC guys work in the office. You could feel the energy, put your arm around folks and mentor them.
I’m afraid the early-in career folks aren’t aware of all the stuff that happens when you’re in the office–sitting in a team meeting next to senior folks and hearing how they behave on a call, getting mentored in real-time as they’re working a trouble ticket, hallway conversations . . . I worry that it’s going to be costly as they try to advance through their careers and costly for businesses like ours that need to scale. The most effective way for us to scale is to hire into the NOC shift and bring them into a client team and then turn them into subject matter experts over time, and if they’re not in the office, it’s hard to make those progressions. We’re doing a lot of hard work there to create intentionality.
Q: Have You Seen A Slowdown In Opportunities?
We are not seeing it slow down. I have considerable growth targets put on my business from our board that they have effectively said, “Whatever you need us to invest to deliver those growth targets, we will.” There’s a strong belief that–what I’ll call the outsourcing market–has a long way to go, especially where we’re living in that Russell 2000 midmarket commercial space.
Fred [Voccola] from Kaseya will tell you that is where the most action is because 1) it’s an unsolved market, and 2) it’s the last market to outsource. It’s that middle market that held onto their IT departments for so long. They are finally saying, “We have to take some or all of this and bring a third party in to help.”
Q: What Would Be The Marketing Strategy If You Were Smaller?
A: You must have a good technical solution and figure out how to assemble a good delivery team. Learn how to hire good salespeople and assemble and manage a good sales and marketing operation. Those are the critical keys to success, whether you go vertical or horizontal.
For MSPs that want to grow, make more money, and be more excellent, what contributed to getting you to where you are today?
Grit is a must. The highs are very high, and the lows are very low. There’s always some problem, and it’s on your desk. You’ve got to grit through that stuff.
Sales & marketing. Businesses mature in stages. A good technical team can attract some customers and serve them well for a while, but if you’re going to get big, at some point, you’ve got to figure the sales and marketing thing out.
Build a team. Where I see folks stall is when it comes to that moment when the owner can no longer be everything. To get past that level, you must figure out how to hire people and grow the business.
Figure your mousetrap out, and then really figure out how to sell it.
Q: What Are Your Thoughts About Fred Voccola And Kaseya’s Vision Of Bringing All The Tech Into One Platform?
We’re a happy Kaseya shop. It’s just an amazing outfit that they built. What Fred’s done speaks for itself. He has made a handful of very smart acquisitions. How many other CEOs can say that virtually all the acquisitions they’ve made have plugged in and worked? He’s acquired these businesses the right way, too. Think about where Kaseya was before they brought Fred to the table and where the company is now. It’s the default RMM platform. As an MSP, the fewer clicks your technician has in a ticket, the more money you’re making and the better you’re serving your customer. So, to the extent that you’re an MSP that can have many of your core services consolidated around one engine, your techs are going to have fewer clicks and there are going to be more automation opportunities than if you have separate systems. All that is going to drive a better, more efficient outcome for your client and drop more to the bottom line for the business.
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