Ryan Denehy is a three-time entrepreneur with two exits to public companies. He started Electric in 2016 and revolutionized the MSP space with the first automated IT platform. Today, Electric is over $50 million in revenue and services small businesses across America. Robin Robins, founder and CEO of MSP Success and TMT, spoke to Denehy about how his sales background launched Electric’s success and how MSPs can create an on-ramp to premium offerings. This is an edited and condensed version of that conversation.
Robin Robins, Founder, MSP Success and Big Red Media: Tell us a little bit about Electric. Why did you start it? Did you have a different approach when starting this company?
Ryan Denehy, Founder and CEO, Electric: I got to know the MSP space really well while running my previous company—we were building retail analytics software designed for small business retailers. We sold that product through a network of local VARs and MSPs.
But I got the idea for Electric in 2013, when I spent the better part of a weekend setting up the wireless network and laptops for all our new hires. I remember thinking to myself, “I know all these great MSPs; I probably should have hired one to support my own company.” But at the same time, I was thinking, “I’ve got all this great software I’ve been using to run every other part of my business, for invoicing and payroll, etc.” I thought it would be cool if I had a piece of software that me, the small business owner and nontechnical person, could slot in alongside all the other software I’m using to run my business. I’d have loved to just click a button and have these laptops show up provisioned with all this software ready-to-go, and not have to involve any people in that.
I was already running another business at the time, so I just put that idea on the shelf. Then, at the end of 2014, we sold the retail analytics business to Groupon. After we got there, I spent a ton of time looking at how they ran an SMB inside of a sales team. Even though they have nothing to do with managed services, they were very good at figuring out how to cost-effectively call SMBs and prospect.
By the middle of 2016, I ended up leaving Groupon with two very powerful things: an idea I was super passionate about and a lot of strong opinions around building a sales team that could grow that business organically faster than is typical for the industry.
We started from scratch with a streamlined offering at about half the price of a comparable MSP, geared to more tech-savvy, SaaS native companies with less complex environments.
Robins: What did your sales strategy look like, when you first started the business?
Denehy: We started out sending one or two thousand emails a week, focusing on companies in the area that fit our ideal customer profile. With the pushback and questions we got from those emails, we were able to come up with a playbook of the top 20 objections we’d get—and how to handle them—in about two months.
The biggest turning point in making our outbound effective was realizing that you had to reach out to multiple people in the organization, not just the owner/principal. In a small business, there are actually three or four people who could either make or heavily influence the purchasing decision. That increased our database of leads by three or four times overnight. We also realized that we had to send six or seven emails to a person, not just two. A lot of people who are new to sales don’t fully appreciate how annoying you have to be. You can be polite and professional, but you have to be persistent, in a way that might make you uncomfortable at first. And, you have to make a lot of phone calls. We started calling people because our email response rates were 2% or 3%, but our open rate was closer to 20%.
What’s tricky about the early days is how much rejection is involved in sales. You have to just keep going; find the right customer and make sure your packaging is connecting with them. It’s an art as much as a numbers game. You have to read between the lines periodically—zoom out and say, “What is the market telling me? Do I need to do some things differently?”
One of the mistakes we made early on was that we didn’t want to be too reliant on our onsite time-and-materials work. But we realized that every customer who was going through some kind of change in their business needed someone to run cables. That was our way to get our foot in the door. For about a year, we had a couple of technicians on staff running around the city every day, running cables. We won a ton of business that way that we never would have won, had we been too dogmatic about not doing that type of work.
Robins: One of the things I often talk about is the importance of being a scrappy entrepreneur when you first start a business. But at some point, you have to go from scrappy to strategic. So, for you, is that still your approach today, now that you’re $50 million in revenue?
Denehy: Yeah. So, at the scale we operate at, we’re getting a lot more focused on creating an easier on-ramp for the companies that we work with. One of the biggest things we get is companies coming to us who meet all the criteria and are a great business that we want to be working with, but they have no IT support at all. Going from having no IT solution whatsoever to a really deep managed service engagement is often too big of a leap right out of the gate. So, one of the things that we spent most of 2023 working on was creating some lower-cost offerings, where we can begin the relationship with the customer, and they can begin their managed service journey.
Particularly in a world today, where businesses are a lot more cost conscious, you really have to make it easy for the business to say “yes.” I feel like it’s on us to figure out the easiest path forward, in a way where they’re going to get everything they need, and we can still make money.
Robins: Do you have any final words of advice for the MSPs reading this? What strategies would you tell people to focus on over the next three years, with regard to today’s economy?
Denehy: It partially depends on what the biggest bottleneck to growth is. For most MSPs, I think it starts at the top of the funnel. Good economy or bad economy, you have to go all out and make sure you’re getting your message in front of as many people as possible, across as many channels as possible.
Now, that’s not revolutionary advice by any stretch of the imagination. But I think that’s also what makes it so useful. You just have to get out there and do it.
The other piece of advice would be to make it easier for the customer to say “yes.” You don’t necessarily have to do anything different behind the scenes. There are different ways that you can leverage the things you’re already doing to engage more customers and enable them to work with you rather than having just a single, cookie-cutter way.
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