Why I won’t let OWN go direct

Every now and then Vladville is not an act and I tell you exactly what’s on my mind. Enjoy.

There is always this sinking feeling of suspicion that my company will go direct.

In part, it’s justified. I am constantly being pushed to go direct by people within my company who have never had the pleasure of doing technical work with a technically handicapped client. Sure, the allure of business, the look and feel of pretty charts of untapped markets of underserved small businesses, home offices and end users is stunning.

Yet, nobody has yet figured out how to sell technological value to technologically ignorant client.

Do you think it’s a sheerer coincidence that smallbiz VARs rarely ever gross over a million in revenues, or just a few at best?

Is it shocking that the only successful and highly profitable tech firms only reach their greatness once they start moving up the client chain where they provide value to the tech staff in a firm that actually values technology instead of fearing it?

Has anyone caught on to the trend in our business, whereby a company can only reach mediocre profitability margins if it rejects personalized consulting service and engages in the cookie-cutter MSP services that address only the standardized technical processes, protocols, alerts and standardized responses?

Nirvana, right? No. Because you see, even at the big stage of larger managed service providers, there too is despair and recognition that scale cannot come from selling something that the client inherently sees no real business value in. So they drop their MSP focus and try to be the shining beacon to the would-be-VARs-and-MSPs, leading them to the same rocks their ship got stranded on: 

Although the article got pulled as of this writing, it stands as a bit of a monument to the whining folks that hit another wall in their venture:

“Mike and I have been writing this blog for some time now and it seems that channelinsider did not find us when it came to writing about valuable resources for managed service providers this week.

I know it is a bit self serving to ask this but if you read our blog regularly it would be great if you could take a minute to let them know they missed us by leaving a comment on the article.

Full article here

That being said we truly believe we are the only educational resource that we have been able to find that does not have any affiliation to a vendor, has grown a managed services practice over 5 million dollars (not including product revenue), and  can share this experience.”

The experience that you, the MSP/VAR of course will have to fork over some cash to hear..

I am not suggesting that everyone is in this business to be a multimillionaire, rather, I am trying to suggest that the folks that get lost in their delusional picture of how technology scales to serve it’s consumers often lose perspective of the actual client and just how valuable they find all of this stuff.

The folks that don’t have that connection to the actual end user are the ones that are lost in the dream of infinite revenues from untapped markets which just need to be enlightened. And when you ask for examples of successful and massively profitable ventures providing similar services, you don’t hear about the guy next door or the local franchise. You see business cases from IBM and Unisys. You see charts from EMC and Citrix. You get quotes from massive research firms.

Yet, when you look around, most people in the VAR/MSP space are well below a million, with just a few collecting more than that and a virtual ghostland in the 8 figure range.

But don’t get me wrong – it’s not all about the money, or growth projections or the opportunity. Plenty of people are where they are and are perfectly happy with where they are going.

I have beef with people who don’t work with the customer, don’t understand the customer, and are desperately trying to make everyone believe that there is cause to profit off people who really could do just fine without you and your product/service.

Of course, it’s not simply enough for me to say it, or to point at the billions of dollars that have been lost by companies trying to court the customer that was adversely served by technology.

Earlier this week someone spoofed our corporate phone numbers and sent a credit fraud SMS and automated voicemails to a bunch of people in the 742 area code. Not only did the fools that got the message call us, but even after being told about a spoofed/forged number and it’s consequences, they still left a voicemail! Some were even so foolish to provide personal information, note that they don’t even have an account with the said bank and just wanted to check in. Yes, really.

Now you see, when you work in a bubble separated from the actual consumers of technology you don’t get the dose of reality that smashes that “predictable service for predictable revenues” dream to pieces. The reason why it’s so hard to build a massively scalable, massively profitable IT operation is in the fact that end user education is so expensive and unpredictable that in the end only big, highly skilled and highly specialized companies generate huge profits. On the other end of polar spectrum sit highly specialized, highly trained individuals working their niche.

In the middle? Hit and miss, and the odds are against you.

Compound this problem with the fact that the general population is getting more technologically savvy and that information technology, be it corporate or personal, is a basic expectation in America – from buying insurance to flight tickets to vacation research to homework – it’s all online and you have to be too.

Trends suggest that catering to the technologically ignorant is a dead end. With everyone suddenly convinced they know exactly what the market needs, and all crashing into it at the same time, the same conclusion is inevitable for even the largest ones.

Which brings me to the bitter conclusion these so called “masters” and “gurus” and “business experts” need to come to terms with: that businesses and business models die and that there is only one fundamental business metric that matters: the profit.

So if what you aren’t doing isn’t profitable, and you know the opportunity will soon sunset…. in terms of the Bob’s…. What would you say it is you do around here?