Know why you’re in business

May we live in interesting times.

It’s important to know what the mission of the business happens to be. Yes, the purpose of every business at it’s core is to generate the profits and act in the best interest of it’s shareholders. However beyond the business dictionary of what defines a business there are people other than the shareholders: there are also stake holders, employees, customers, vendors and community at large which has a vested interest in what that business exists for and what it’s overall contribution to the society is. Beyond just printing money. If you own or work in a business, or interact with one as a client – you likely have many alternatives – so at some point it’s not really all about the money (unless you’ve got a Groupon, then everything changes)

Then there are investors. Investors, for better or worse, have no emotional, sentimental, ethical or even business responsibility to consider the business they invest in beyond their own expected rate of return. And whether you like it or not, once you take other peoples money you work for someone new.

In the past month, nAble, Kaseya, LPI and another platform not yet announced has been “bought”; GFI will shortly be announcing a helpdesk/PSA platform purchase.

And my vladville.com inbox is damn near full of petrified MSPs who are wondering what the heck is going on. Allow me to dumb it down.

Cancer Mode

I have lots of friends and lots of respect for the people that work(ed) for the RMM companies stated above. I wish them all tons of luck. And while many that have emailed me had asked if I was about to do a victory dance about yet another thing that I was right about (consumerization leading to lower growth leading to consolidation) to assume that I take any pleasure in this or that I’m a journalist is a fundamental misunderstanding of what Vladville is and who I happen to be (or what I actually do for a living). But that’s another rant.

So, if you’ll indulge me and allow me to entertain you with my worthless college education, here is how the business works: You have a brilliant idea and you start working on it and it proves to be successful and you’re selling it but you just need more of everything. Banks don’t look kindly on new startups so you pitch it to third parties that want to make their cash grow. You take on investors (angels) and your business grows. In size, scope, complexity and yes revenue. Your investors are not impatient or short term focused, they tend not to get super involved in your business and the have relatively little riding on you. Then you get bigger and bigger and bigger and bigger and through series of rounds you raise more money and prove your product or service on a bigger and bigger scale.

Now you need a LOT of money. And the folks who have a LOT of money to give have a lot of requirements, expectations and involvement. They have no heart, no soul, no motive other than to make your company explode onto the wall street – not because they are bad people, but because their business is managing someone elses money and delivering returns. Their business is not RMM, their business is taking $1,000,000 from Bob and returning $1,100,000 over X amount of time or they get fired. Their incentives are different and their expectations are very clear.

So you take the wrong pill.

You commit to growing and growing and growing… and maybe you do and maybe you don’t. But when you don’t, you no longer get to call the shots, manage risk or make long term strategic changes – you no longer own a business, you report to your investors. And sometimes those investors just want to get out.

If you think that is ugly, consider what happens to great companies who get rolled up with others, loaded with massive amounts of debt, get their perks, benefits and community initiatives cut while the organization is overleveraged, loaded up with debt and left to die.

You are in business of making money. The only question left to answer is at what cost?

Addressing Your Concerns

I need you to quickly forget the previous section.

Every merger, acquisition or takeover starts with the announcement that “our best days are ahead of us” and that there will be no changes, business as usual.

Now, unless you’re a complete idiot, you might want to ask how the best days can be ahead of you with no changes and why you’d have to sell anything anyhow. But enough about the semantics of the English language and common sense, this is M&A.

And to the point of many concerned folks – I don’t think you have much to worry about.

The companies that got bought out simply peaked in their ability to grow. That is because the service providers that they served have peaked in their ability or willingness to grow – and the top level of service providers is using enterprise level tools not MSP level tools. So I don’t think any of the acquired folks made massive strategic mistakes – their investors probably wanted them to grow faster or get out and they either got into the mix where they can grow rapidly or the latest round of investors had to cash out.

Those are the breaks.

That is business.

Those are the decisions that the big boys have to make and that is the challenge of maintaining the correct perspective in what you do, what your values are and what your organization and business are truly about. Because when the game becomes about the money and money alone, it’s just a matter of who can hit the highest score before they die. Nothing wrong with that, nothing new or strange about it, it’s just not for everyone.