Chris Galati is the CEO of Two River Technology Group, a Holmdel, New Jersey MSP founded in 2004. Galati took the helm in 2022, focusing on driving down the cost of goods sold while maintaining exceptional service. In this interview, he reveals his profit-boosting strategies.
MSP Success: What are the top three business indicators you use to measure your company, and why?
Chris Galati: EBITDA, CSAT (customer satisfaction score), lifetime value, and MRR (monthly recurring revenue) are the top metrics we track. EBITDA gives us a good sense of how profitable we are and that our finances are in good order. CSAT keeps us in touch with how well we are supporting our clients and identifies that we are providing the service that they expect. Lifetime value helps us make sure we are profitable with the clients we’ve acquired. MRR drives the very thing that makes the business valuable.
MSP Success: After Two River Technology Group was sold and you came in as the new CEO, what was your top challenge?
Galati: Two River Technology Group was already a well-run, successful MSP and a market-leading technology ally in the area—the challenge was how do we make it even better? In analyzing the COGS (cost of goods sold), I wanted to figure out how we could reduce those without sacrificing the exceptional customer experience our customers had grown to expect. For every dollar we could save in COGS, we could add a dollar directly to EBITDA. This strategy produced better results than if we only focused on adding revenue because even with best-in-class profit margins, for every dollar of revenue, you only end up driving 20 cents to EBITDA, whereas, for every dollar saved in COGS, you add one dollar to EBITDA.
MSP Success: What is your single secret to success this past year?
Galati: Being detail-oriented to get into the weeds and see how we could tweak an already well-run, profitable business to make it better. Analyzing the COGS and combining it with the Kaseya 365 [license] purchase allowed us to drop our overall spend from $14 per endpoint down to just over $4 per endpoint, saving us approximately $10 per endpoint without having to make any additional sales and without compromising our customer service. This savings went directly to the bottom line.
MSP Success: What is the biggest challenge you overcame this past year related to growth?
Galati: Two River was highly leveraged. [We] had maximized the efficiency of [our] technicians but reached a point where further individual productivity gains were impossible. We either needed better tools or more staff to progress. Implementing Kaseya 365 solved this problem by freeing up technician hours, improving accuracy through automation, and integrating multiple software interfaces into one platform.
Initially, there were concerns about centralizing everything and fears of resistance to change. However, no one could argue with the economics of making the change, so we had our technicians demo some of the components. They found Kaseya 365 far superior to what we had been using and wondered why the switch hadn’t happened sooner. This change not only improved efficiency but also reduced technician fatigue and made their job easier, which improved job satisfaction. It also underscored the importance of not letting our own preconceived ideas get in the way. Frank [DeBenedetto, company founder] said to me, “I realize I was a little bit of a roadblock prior to this because I had it in my head that change would create a disruption.”
MSP Success: What partners or tools helped you along the way?
Galati: Adopting Kaseya 365 has been the most transformative experience of my career. Kaseya 365 redefined our IT and security management by giving us a unified, cost-effective approach to managing, securing, backing up, and automating all client endpoints through a single endpoint. It doubled our profit margin by delivering unprecedented efficiency and enormous cost savings. Because we switched tools up, we introduced automation that Two River didn’t have before, which brought a whole new level of efficiency. This meant we could do more with less. Before, when I was analyzing COGS, I was comparing different tools and functionality line by line, but Kaseya 365 made this easy because I could see the vendors we were spending money with that weren’t doing as good a job.
MSP Success: Who is the most impactful business leader whose leadership style you try to emulate or are influenced by, and why?
Galati: I’m impressed with [Kaseya CEO] Fred Voccola’s true leadership and his style of working within the MSP community. I admire his ability to speak and get the community behind him. Also, I respect how he recognizes when they make mistakes, owns up to them, and fixes them. I don’t think too many leaders admit to mistakes like that, which is truly admirable.
MSP Success: What book would you recommend to other MSPs or SMBs trying to grow their business?
Galati: The Checklist Manifesto by Atul Gawande. It paints a different picture in terms of following checklists and doing things the right way. While it explores the medical and construction industries, it translates well to MSPs because the more accurate we are, the more we do things the right way, the happier customers are.
MSP Success: What words of wisdom would you give to other MSPs looking to grow their business?
Galati: It’s important to focus on your core competencies as well as building long-term relationships with your clients and being that trusted advisor. It’s equally important to invest in your team and your culture. Joining a peer group will help you learn from others who are doing it well—which gives you a faster way to move forward while also making fewer mistakes in the process.
