Vlad Mazek – Vladville Blog

My head is spinning from all the amazing conversations I’ve had this week and I wanted to offer a bit of an explanation regarding my animosity towards VC involvement in the SMB space. As I hinted previously I am working on building another business and have had the “pleasure” of spending some time with the attorneys and consultants that specialize in the financial world. On one hand I’m incredibly thankful these folks exist, on the other hand it makes me long for the good ol’ days of $500/hour IT and corporate law attorneys charge. Yes, my butt hurts.

And on the subject of anal rape, why the hate towards the VCs? First of all, I don’t have a problem towards the model itself – venture has a place in the world helping larger companies get even larger, helping fund projects banks would otherwise refuse to undertake, helping finance complex deals and provide the means for all sorts of debt reduction, leveraged buyouts, etc.

Which in short is the exact same reason no small business (let’s say under $100m) should ever deal with one. But don’t take my word for it: Go talk to someone that has taken funding without a clear exit strategy that involved the IPO. What they will inevitably tell you is that even though the VC typically steers away from day to day, they shackle the kind of big picture and strategic moves that help small companies make it big.

But how could this be? Isn’t it common knowledge that VC is the very fuel that helps companies grow in the first place? Yes. Big companies. That you can count on your hands – the rest of them are in essence private money that is putting the money on either red or green and only hoping for the ball not to land on black. They’ll take losses and they’ll take big wins but nothing in between works. You can’t just build a highly profitable business with a long term strategy: You have to blow it out of the park so they can either win big or cut their losses.

Now that you know..

What is the lifecycle of a funded company that doesn’t go public?

Well, they’ll let it ride forcing big moves and expenses. While the illusion of grandeur (most of the time a delusion) makes things look amazing the course is to make even bigger and bolder bets.

But once things slow down a little, things get ugly. The employees that are working below their market worth get antsy because they want to be bought out. Things are always on track, everyone is winning (except the employees) and you’re just one step short of retiring to your own private island. But then your boss starts getting really interested in your expense report. And your hours. And your conversations. And increasingly trivial big projects while the costs are cut left and right. How can a company be blowing up big time and at the same time selling it’s Aeron’s on Craigslist? Because it’s being gutted, books cooked and working towards being served to a scrap buyer that might make more with it than the sum of it’s parts.

While this may sound ugly and heartless, this is the norm and this is the process. These folks aren’t evil, they are after returns. I ain’t mad at them.

But the part I don’t like is when a small company, who let’s face it lives or dies on the passion of it’s founders, is shackled and distracted towards someone else’s agenda. This is not VC’s fault: they aren’t funding you to believe in the magic of your dreams. It’s more of a steroid shot.  

Borrow money from the bank: It’s your name, your credit, your decisions, your call all the way. But get taken over by the VC and well, for the convenience of not having absolutely assessed risk you are trading away your ability to control your own destiny. Yes, even if you own 49% you’re still a minority and now you work for whoever owns you.

That is my beef with the VC world: People do business with people. And when that trust is broken and it’s a matter of customer vs. logo and everything else be damned, the small business and innovation loses it’s spirit and it’s potential. I have seen so many friends and so many great business and ideas get ruined in this process.

And it’s that process of killing a successful long term business that I mind the most: When people take a shortcut that both mathematically and business-wise leads to a fundamental change in the values. Because people aren’t throwing money at you to keep on doing what you’re already doing well, they are doing it to maximize the leverage and get their returns to grow faster than they would than if they gave you a loan.

Money is simple that way: It just wants to make more money.

Thanks for your concern, I appreciate it.

Pretty misplaced though. Things have been going so well that it’s hard to believe and I’m one of those folks that doesn’t really get much easy in business: so when everything is going well I try to figure out the ways it could all go to shit in a heartbeat and stay ahead of it.

The migrations business we introduced in October has been insane. We will be launching a hiring spree in January that will likely double us in 2014. Shockey Monkey and our mobile solutions have been maturing and due for a huge release shortly. Ditto for the Unicorn remote support and monitoring tool.

That said, the move from a pure software to a service business has not been easy. Far from it, unfortunately. Even though it’s been a grueling, grunting, bruising exercise it’s what gives me faith that we will more than double and become an irreplaceable component of our partners strategy in 2014 and beyond. Here is why:

Every time we get burned on some service aspect I hear the following: “We need to better define what we will not do and not touch so we don’t have to do this again.”

My response is always the same: No. It just means we need to ask more questions and define a better process for it the next time.

If you can sufficiently define the scope of what you’re willing to do and not there is no limit to the amount of business you can lose. And in real life people don’t grade on the curve or love you for what you do for them – they judge you by how often you’ve failed them and how many mistakes you’ve made. Trust me, I’ve got refund checks to prove it.

So how do we move this forward? Well, as I discussed in this weeks webinar it’s all about surrounding our partners with the end-to-end solution: marketing that makes sense, process and support that extend it beyond just tech work, mobile strategy, support strategy and coming soon – a training strategy.

The strategy of the service business is simple – do whatever it takes to get the user to the cloud, once there make sure they leverage the power of the cloud. This has been a bit of a tough bargain between me and some partners that want their clients to be limited and kept in the dark on many of the features but what’s the sense of going to the cloud if you’re going to keep the same crappy process that’s gotten the on-premise solution to choke in the first place? A lot more on this later.

Quiet Time

Although I haven’t had the time to blog here as much as many of you would like, I did also hear and notice that the “channel” has been kind of quiet too. It’s a sign of maturity – by now all the hype has kind of died down and only a handful of vendors have proven themselves to be trustworthy and capable of innovating and moving their partners up.

The rest are being unwound, cost controlled and being financially book cooked for a sale (garage or rollup); it’s a natural progress of any business particularly the short sighted one.

As far as I can tell, IT in SMB is doing really well or it’s going out of business entirely. It’s somewhat polar: few really big winners and many losers. And when you’re doing really well but see the carnage of Marketing-In-A-Can and Indian-In-A-Box MSPs and VARs all around you then you probably thank your lucky stars and try not to brag too much about it.

I of course wouldn’t really know much about the humble part but I know this much: It’s one thing to be a perpetual hype machine and quite another to be a valuable revenue generator. Any jackass can throw a great show and be the next big thing, but after the champagne bubbles out and people go back to work and start solving true business challenges they are back to dealing with the real world problems and people problems. That’s where we’ve been for years and that is where we’re moving to become even more valuable in 2014: It’s just a whole lot more work. But given the choice of more work or unemployment is an easy one: None of you would make it working at a Verizon store.

Before I share some seemingly pessimistic and insensitive commentary, that is written in a hope of helping motivate you, let me say that I understand and I relate:

I too am pissed off about not getting stuff I don’t deserve. I don’t like many aspects of what I have to do in order to obtain the kind of life I want for my family.

But I have no other options. I’m just not pretty enough for porn.

Now that we have the Vladville tone firmly established, let me share a post from Facebook that I thing highlights the challenge of compromise in corporate America – and how it transcends the plight of minimum wage and is even present in every day mental handicap of many people you may have working with you across all levels of income.

http://www.forbes.com/sites/rickungar/2013/11/18/walmart-store-holding-thanksgiving-charity-food-drive-for-its-own-employees/

Mixed feelings on this one… Yes, it’s sad. Yes, that is what happens on minimum wage and it’s sad. But if that is not the incentive NOT to stay at the bottom and show 0 effort then I don’t know what is. No, not everyone can be a CEO and not everyone is going to get to waste 4 years in college, but “I do my job, give me more than you agreed to pay me for it” is not going to end well. That IMHO is the true “entitlement” in USA, expecting more for not doing more — not the food stamps that help people that get stuck in minimum wage temporarily.

Now every time you post something about doing the bare minimum the defense points from the more compassionate people are always the same: 1. Minimum wage is not livable wage 2. Many people cannot afford to move to a place where there is more demand and thus higher pay for unskilled labor 3. Employers should just pay people more. Fair points but unrealistic in the economy and legal system we have – income disparity is in place to reward people who can maximize profits. End of conversation, you can disagree with it and bitch and moan about it’s unfairness but it’s all about the highest score at the end of the game and nothing else matters.

Now, I shared the above in the typical Vlad compassionate way and was told the following:

“This store is 5 minutes from our house, and it says a lot more to me about opportunities here, than Walmart’s wage structure. We are a community engulfed in brain drain, it’s not that people don’t strive to provide for themselves, but far too many of them have to leave here to accomplish it. I’m sure you are not often accused of being an optimist Vlad, but incentive and hard work don’t seem to be worth as much here.”

The key word is “here”: If your work is not being rewarded then you need to get the fuck out of “here” and move elsewhere.

The Solution To Economic Class Warfare

Walmart is not an inherently evil corporation, it is an American corporation that behaves in the same soulless way that they all do: their job is to maximize corporate profits that are reinvested in further growth or dispersed as dividends to it’s shareholders who spend it, donate it, reinvest it or otherwise. In order for Walmart to continue to grow it needs more demand and more people.

Raising pay would be a suicidal move for Walmart because it would impact it’s margins or raise the cost of goods sold which would make it less competitive with Target/etc. So don’t hold your breath waiting for that to happen.

The only way Walmart, McDonalds and other minimum wage sweatshops will raise their wages is if there is less available labor that is willing to work for minimum wage. And how do people stop working for Walmart? Education, moving to an area with more opportunities, starting up a business, etc – it starts with people not willing to put up with shit deciding to make a change.

But most people don’t want to be inconvenienced: I like where I live. My family is nearby. I don’t have the time to get a degree or enroll in a vocational program. I don’t want to move. I don’t like those hours that pay more because I want to spend time with family. Insert $WHINING $BITCHING $MOANING, it’s someone else’s fault.

And you see, fellow Walmart Associate and everyone else unhappy with their pay, it is not someone else’s fault that you are making excuses instead of doing something. That is not injustice, that’s your inability to accept inconvenience and sacrifice. If you look around a little and see a whole bunch of people doing better than you.. unless you are surrounded by Kardashians, those people had to go through a lot to get where they are and they feel very little sympathy for you.

Wishing and hoping and praying may make you feel better but that temporary comfort will not change things or make them any better. As much as it may appear that some folks have it easy, barring something illegal, in this country we work for rewards. Yes, the more you work the more disproportionately you get compensated eventually compared to those who show no effort at all, but knowing that fact.. right now.. you have the opportunity to do absolutely nothing or do something.

An optimistic person would tell you the truth and implore you to work harder towards what you want. A pessimist would blame something instead of doing anything.

Diet mountain dew and obsessive attention to detail can be a blessing and a wonderful combination. I recall chatting with someone a few years ago about plans and goals on MSN Messenger a few years ago and talking about how I wanted to get married and start a family and a whole bunch of other stuff. Some came true, some not so much, other stuff way above what I could have expected.

Which brings me to todays topic: You gotta have a plan.

Not too long ago this was one of the most hectic weeks in my life. I had to coordinate and micromanage every little minute of it and often ended up with 20+ hour days. No, I didn’t have to – someone else designed and produced the collateral, managed the schedule, lined things up – but I was involved in every little tiny detail of it all. Not because I didn’t trust my staff, but because I had a plan and I wanted to make sure we did exactly what I wanted to. I rewrote the marketing copy (a few times), I tried to track people down for meetings to get feedback on what we were doing, I for some dumb reason even worried about the booth..

In 2013, this week is just another week. I’ll be doing my actual job as a CEO with an hour or two of showing my face during the ConnectWise reception and the party on the last day. The rest of it will be handled by my team, much like it is done every other day of the year.

I’m not gloating here, nor will I be sitting on a beach sipping a mojito out of a watermellon, all I’m trying to say is that all this didn’t happen by accident. This was planned, took tons of excruciatingly long workdays and unwillingness to give up through a lot of failure. I didn’t find any magic products, I had no amazing epiphanies along the way, I didn’t invent anything. It was just hard work and not drifting too far away from the plan.

And I’ll highlight this because I think it’s important:

One of the most disappointing things about this industry is the lack of respect for hard work.

I love this industry. I think we’re among the smartest folks out there. My criticism towards it’s less than reputable (or outright criminal members) makes some people think I’m a dick – and fuck them, they are entitled to their opinion. But I have not and never will have any respect for people expecting a shortcut or a handout.

If you’re stupid enough to think peering up, copying bad ideas from people who are no longer in business, attending events that are only designed to sell you junk you don’t need, are always on the lookout for the next big thing while refusing to grind it out for the opportunity that is right in front of you… then you deserve nothing but to be robbed by the people telling you that you don’t need to work.

Everyone in the IT chain knows what needs to be done, they know what the clients ask for and are both smart and creative enough to make it happen. Few of them make millions of dollars while the remainder of the crowd makes millions of excuses for why certain things don’t fit their model, don’t have enough margins, don’t have enough time and make no sense. So they troll through life, barely making a single digit percent worth of success year over year, still “working on it” while fawning over the bullshit mill and the few successful people that say the same thing – it’s all about effort.

To those of you that are in Orlando this week – welcome. I hope I bump into you. Carpe Diem – you won’t find anything new today that will drastically change your fortunes, the good thing is you already have everything you need all you need to do is stick with the plan. Good things happen.