Nick Recker is the founder of Path Forward IT, an MSP focused on the healthcare industry, and CEO and founding partner of Blue Alliance, an operator-led MSP investment group.
In this Q&A with TMT and MSP Success founder Robin Robins, Recker talks about the power of industry specialization, how immersing in a customer’s world creates lasting differentiation, and why Blue Alliance offers owners either brand independence or consolidation. He also shares candid advice for MSP entrepreneurs—whether they’re still in growth mode or preparing for an exit—on how to avoid common pitfalls, strengthen their teams, and make the right moves when private equity comes calling. Note: This interview below has been edited for length and clarity. For the full conversation, view the video above.
Robin Robins: Tell us about your MSP journey.
Nick Recker: I started an MSP when I didn’t know what an MSP was. I thought I could make an entire business setting up Gateway computers. I ended up in the basement of a physician who was just starting his practice. After working with him for a few hours, I got the idea to focus on healthcare. Physicians have this incredible passion for their patients. A lot of people don’t think of physicians as entrepreneurs, but they have the same challenges we have. So Path Forward IT grew supporting those physician practices.
Robins: Were you a tech at heart or more of an entrepreneur at heart?
Recker: I think I’ve always been a salesperson at heart. I was technical when I started, but I saw this need. Physicians at that time were largely still inside hospitals, so they didn’t have independent practices. That was really the beginning of this wave of specialty practices that were truly independent. And there wasn’t anyone talking to those doctors like entrepreneurs. They were being talked to like employees of hospitals. That’s really what clicked for me—if you could align your interests with theirs, there could be some growth there. Path Forward never had any salespeople, no marketing. It was 100% referral-based growth. But the short answer is, I’m definitely more of an entrepreneur than a tech.
Robins: So what did you differently from other MSPs that fueled your growth?
Recker: What we were good at is immersing ourselves in the vocabulary and the reality of the customer. What was true then, and I still find true now, is the more end-market differentiation you can have, the better. That is something that is very hard to compete against.
Talk to a customer as if you’re on their side of the table using the same vocabulary. You understand their revenue cycle [and] the pain points of their business. Path Forward IT certainly nailed the core responsibilities of an IT managed service provider then and now, but we also were willing to get our hands very dirty in the customer’s business, related to things like their line of business software. So we always had electronic health record specialists on staff that could help them with the problems they were having back in the 2000s. And now those problems are very different, but they still exist. In healthcare, the payer models are constantly changing, and so we’ve always taken the time to make sure we have advisory consultants that understand that. When they come to us asking for something that most of my competitors can do—a new power BI dashboard or a data warehouse—we can do all that, but we can also tell them what works because we’ve done it for other customers in their shoes. So I think that’s the one through line from 2002 to now. The more you understand your customer’s business, the more you can differentiate. That messaging is hard to compete with.
We spend a lot of time thinking about the MSPs of tomorrow. Our current plan is to try to figure out how all of these emerging technologies are impacting the industries we serve and how do we become the sherpa for that customer rather than wait for it to get to a resting place where we can support it. That’s the shift that has to happen in our industry.
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Robins: Tell me about Blue Alliance, your platform company.
Recker: We want to nurture our brands to become end-market experts. The reason I created Blue Alliance was that I personally think there’s still a lot of power in a healthy MSP brand. There’s a lot of logic to not trying to disrupt that brand as it scales, especially if it’s got a good relationship with its customers.
With Blue, we created a platform where you can co-invest. We’re all one family, we’re one business, but we operate as independent brand storefronts.
A good example of that is all of our customers need GRC [governance, risk, and compliance] services. This is an area where we’re experiencing the fastest growth. For example, every healthcare organization is supposed to have a HIPAA privacy officer and a HIPAA security officer. Most of the time, it’s some poor office manager who doesn’t even know they have that responsibility. That’s an area where we’re offering nontraditional managed services. We offer GRC as a service. But does it make sense for one brand to make those investments? These are expensive consultants. You need different systems. So we do that at the Blue level and then every brand can sell it on their paper. So that’s how we’re trying to unlock the leverage that we’ve gained. Let’s co-invest in things we all know our customers need.
Robins: How many MSPs are part of your platform right now?
Recker: We’ve done 10 acquisitions, and there are five operating brands. One of the things that was important to me is to be able to welcome MSPs in formats that are best for where they are in their lifecycle. If you’re the founder, and you’ve reached a point in your life where you’re ready to exit, the right thing for that brand might be to join a healthy, thriving, growing brand. If you’re an entrepreneur who is still in the middle of their journey, and you’re looking to level up and join a team of people that want to help you grow and have resources and insights, keeping your brand is probably the right choice. We can do both.
Robins: When you’re talking to MSPs who are looking to exit, what are some things you wished they had fixed 10 years ago?
Recker: Entrepreneurs are really bad at mixing the role of shareholder and CEO. A shareholder is an owner of an asset who should expect that asset to continually grow in value and return money back to them. If I own a stock, and every year my stock is flat and margins are flat, I want that CEO replaced. When you’re an entrepreneur, and you’re both shareholder and CEO, we give ourselves so many excuses which would never fly if those roles were separate. Entrepreneurs in the MSP space have to be willing to face the brutal facts, and I think that is probably the number one weakness I see.
We make compromises out of fear a lot. If you have a big customer pressuring you to do something, you make a one-time exception to pricing or to your normal delivery standards. It’s a fear-based decision because we don’t know what would happen if we lost that customer. Those are like little black holes, and they start sucking in all the energy you had to innovate or be creative. You just start servicing these exceptions and it makes it very difficult to grow your business. Fast forward 5 to 10 years, and instead of having a thriving business that’s got consistency in delivery and margins, you just have a bunch of one-off stories about why you did something.
So just know who you are, and do not flex from that truth.
Another thing is, entrepreneurs are bad at evaluating the performance of their team members because they’re such friendly people. I haven’t met many villains in our space. What ends up happening is we overuse grace. So at the end of the day, we see a lot of businesses that are underperforming financially. If you’re thinking about selling your business, put on that shareholder role. What team members are maybe culturally fantastic, but they’re not returning two or three times what you’re investing in them? Maybe it’s time to have a difficult conversation.
Robins: When you acquire MSPs, are you making them have those hard conversations?
Recker: I tell entrepreneurs that partner with us that they’re getting a thought partner who’s always values based. But I’m going to be transparent, and I’m going to push them like a personal trainer would push you. I’m not going to settle for mediocrity. Some people are very attracted to that. What most entrepreneurs want is someone that will push them in a values-based way, where they’re not being told what to do, and that’s what we do.
Good leaders have to be really comfortable being wrong about an idea and being willing to let it go and move on. An exercise I do every year is I’ll go back and look at last year’s calendar. I want to be in totally different meetings. I want to have totally different responsibilities. If I’m doing what I did last year, then I have under delegated, and I have done a poor job empowering my people.
Robins: What are your thoughts about selling to and working with private equity?
Recker: I was a solo entrepreneur when I started Path Forward IT. I started another medical-based business in 2013, a medical call center. That grew into a 500-employee business. In 2017, I started a software company called PatientSync. So the same customers. There was an opportunity I saw in healthcare patient access. I had never taken any outside money.
In 2023, like many MSP owners, I’m getting [calls from] private equity. I partnered with a private equity group out of Chicago, and I love them. It has been exactly the same thing I offer the entrepreneurs in Blue Alliance that they’ve been able to offer me. It’s thought partnership, it’s support, it’s resources, connections, guidance. I have had an absolutely fantastic experience. What I would say [to other MSPs], just be discerning. Ask to talk to people that have worked in the orgs, ask to talk to people that have left the orgs after the partnership. Don’t be afraid to ask for access to the people behind the curtain, and to understand how they think. You just have to know who you’re partnering with. Just about every MSP acquirer right now is private equity backed. When you see the multiples that are happening in our space, those multiples are being driven by private equity. We should all be very happy.
If you missed our last Titans of Scale interview, see From Copiers to Managed Services: How Bruce Gibbs Scaled GFI Digital into a $140M Powerhouse
