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Foreign.
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Welcome to Coruscant Technologies, home of the Digital Executive Podcast. Do you work in emerging tech? Working on something innovative? Maybe an entrepreneur? Apply to be a guest at www.corazon.com brand. Welcome to the Digital Executive. Today's guest is Tim Thompson. Tim Thompson is the founder of Cybertrends Inc. Tim built an MSP from 0 to 7 million in annual reoccurring revenue. No shortcuts, no silver bullets. Just the hard work most owners aren't prepared for. After 25 years of building and operating MSPs, Tim has seen how the story usually plays out. The business grows, the owner becomes the bottleneck. Every decision, escalation and problem flows back to one person. Not because the owner is bad, but because the business was never built to run without them. Today, Tim helps MSP owners in the 1 million to $10 million range move from technician trapped to operator run by installing real structure, leadership and accountability. So the business scales without the founder holding everything together. Well, good afternoon, Tim. Welcome to the show.
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A
Thank you very much. I'm excited to be here.
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B
Absolutely, my friend. I appreciate it. And hailing out of Kelowna, British Columbia, Canada. Awesome. When I do an international podcast, I'm in Kansas City. So I appreciate you making the time today, jumping calendars, time zones, etc. So Tim, if you don't mind, let's jump into your first question. You've spent 25 years building and operating MSPs and scaled 1 from 0 to 7 million in annual recurring revenue before founding Cybertrends. What were the key experiences that shaped your path from operator to advisor or MSP owners?
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Yeah, that's a great question. You know, the reality is it people start IT companies to solve IT problems and they don't really have the business acumen to of scale or learn how to scale. And so I bootstrapped this company from 0 to 3.2 million. I ended up losing about $750,000 that year. And I realized that I couldn't be the smartest person in the room. And so I figured out right around that time I need to figure how to delegate, how to get out of my own way, and don't be afraid to ask. And so during that learning process, I ended up hiring. I put the right people in the right seat on the right or the right people in the right seat on the right bus between accounting, sales and leadership. And I took it back up to from 3 point to 3.4, all the way back up to 7. So, but you got to be in, you have to be In a position to not be afraid to ask for help and learn to kind of get out of your own way. And once you do that, you stay in your own lanes and things kind of continue to grow and scale.
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B
Really appreciate that. And sometimes our egos get in the way. I'm not saying that's the issue in your case, but you're right. Once you get the right folks in the right seat on that right bus, things do really manifest themselves. And it is important that some things you just gotta delegate and trust in your people. So that's awesome. Thank you. And Tim, you often talk about the founder bottleneck, where every decision flows back to the owner. What are the early warning signs that an MSP is heading into that trap?
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Well, it comes back to the ego again, right? It's like you have to be involved in every decision. And the reason why we hire people is we need to empower them to make those decisions. Right. And so the ego is the most expensive line in the. On the P and L or the balance statement is what I kind of talk about quite a bit in my coaching program.
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and so we don't hire somebody to tell them what to do. We hire somebody, they tell us what to do. Right. And so when you have the right people in the right seat on the right bus, then it has the ability to let them do the thing that they're very good at. And so if you have to be involved in every decision that the business is in, you're never going to get to a point of scaling. So you have to empower your staff. The reason why you hired them is to make those decisions. They may not be always the right decision. However, if you have to let them, you have to empower them to do the thing that they need to do. Absolutely.
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B
I appreciate that and not heard that before, but I like what you said. The ego is the most expensive line item there on your profit and loss statement. I think that's pretty cool. But you're absolutely right. You're going to break some eggs. Even when you hire people that are, they've got to make decisions sometimes without you being there. But it's okay. We Got to make mistakes, we got to grow and you just got to trust in your people. So I, I really do appreciate that. And Tim, many businesses, many business owners look for shortcuts, whether it's frameworks, automation tools, acquisition just to scale faster. Why do you believe execution and operational maturity matter more than quick wins?
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Process. Process is a repeatable task, right? And so when we, my coach and mentor, Dan Martell, who actually lives in Kelowna as well, and he sits on the world stage with Tony Robbins, it just. The simple skills and fancy fail. So when you create simple repeatable processes, especially now in the world of AI, we have everything automated, right? So we gotta be able to implement those. So whether you're onboarding, whether you're doing ticketing, whether you are hiring or whatever, the thing is that you're working on, you know, SOPs and frameworks that are fundamentally sound and repeatable, that other people can actually implement, not just you out of your head. So creating those standard operator procedures or those playbooks are simply the key on how MSPs will get from 1 to 3 to 5 million. And so, you know, operational maturity, what I talk about quite a bit in my coaching program is you will only attract the type of client that you can support based off the operational maturity level and processes that you have. And servicing a $5,000 a month contract is very different than a 10,000, a $50,000 and $100,000 a month contract to which I had. And so the ability to implement those pro repeatable processes is the key or the framework that will allow you to attract those customers to continue to grow and scale.
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B
Thank you, I appreciate that. And you're absolutely right, in order to scale, you've got to have strong but simple and repeatable processes. That is important. And again, you talked about Dan Martell and of course I follow him as well. And he's just got a lot of great advice and kind of companies that he scaled and the stuff he teaches. So really appreciate that. And Tim, the last question of the day, as we look ahead to the future, how do you see the managed services industry evolving over the next decade and what will separate the MSPS that truly scale from those that plateau or disappear?
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Yeah, I don't know if it's a decade. I think it's probably in the next two to three years is really going to weed out the weeds here. Like I'm involved in AI companies trying to get into the MSP space and I see MSPs, the leaders on AI right now that MSPs are leveraging, AI are the ones that are really starting to accelerate. So we're in this precarious area of the MSP landscape because older individuals like myself that have been in the game for 25 years are trying to get out of it and they're running a 1, 2, $3 million shop with minimal margins or EBITDA, or now you have the PE groups that want to buy those, take them out so they can move on and do whatever they want to do. But then we can implement the AI strategies to increase efficiencies, which, and by doing so that will increase your margin. So we can take a, a 10% EBITDA and turn it into 30 to 35 pretty quick. Right? If you have the fundamentals. So to the question, it's going to be leveraging the tools and the technologies that are going to create and we always use the word outcomes, it's the big buzzword right now. But I say we need. MSPs need to leverage AI and technology to create better outcomes, which ultimately create a better experience for their customers. And if their customer has a better experience solving their business problems, then they will become that much more stickier and continue to grow and evolve. And when leveraging AI properly, either through a QBR or through a prospect's mind and solving business outcomes and experiences, you'll have a better chance of either winning that contract or maintaining that contract in a longer term fashion. It's not about blinky lights and shiny stuff anymore. It's about creating those experiences that those customers need. And right now the big experience that their MSP customers are looking for is how do we create efficiencies while leveraging AI? And so I say this all the time. MSPs don't need to know exactly how the Open Claw and Claude Co and cloud coding works and all that stuff. You have to have a conversation, you have to ask the right questions to uncover opportunities and then take that away from that prospect or your customer and then figure out how to solve that problem on your own. And we're not. The MSPs that are not necessarily mature enough to think that way are struggling to try and gain traction in the AI space because they think they have to solve that problem in itself within a meeting. And you don't. You just have to open that question or that conversation up and then take that away. So the ones that are asking those questions, that are learning AI, that are leveraging it, that are create partnerships with companies that are delivering a solutions, those are the ones that are going to stand tall in the next two to three years. And in 10 years from now, who knows what that's going to look like? Absolutely.
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AI is just getting, it's just getting more advanced. Obviously I've been playing with Cloud cowork, which is very powerful. They've got tools like OpenCloud and it's only going to get better. But you're absolutely right. People that are embracing AI can really provide that customer experience, that value to their customers and now are certainly going to be way ahead of the game. And MSPs are certainly going to have to really rethink their process as AI starts to really proliferate. So I appreciate the insights.
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Yeah. And so one last comment on that. Like, when we all MSP owners, most owners in general doesn't matter where they are working 60, 70, 80 hour work weeks. But you know, bringing Dan Martell back up, you wrote a book called about your time. And so one of the things that I really preach when I talk to companies is like, you have to start figuring out how to get rid of the $10 tasks because a $10 task doesn't build a million dollar company. Right. And so, so we have to figure out ways to start working on the business. So we need to buy back five to 10 hours a week so that they can focus on AI and learn with it and understand how it fits into their ecosystem of their customers. And if they don't and they're heads down and they're building servers and they're selling Office 365, they're never going to get to where they need to go. And so part of the ego is like, I got to do everything and I got to work 80 hour work weeks and now you're asking me to do 10 more hours of working on the business. It doesn't work. So you have to figure out a way to take that time. Whether it's watching YouTube videos, whether it's podcasting, whether it's just reading, it doesn't matter. They have to figure out a way to start focusing on areas that are going to give them leverage in the future.
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100%. I'm with you on that. Just have to get very creative, get and carve out that time to just start building. So Tim, I really appreciate your time today and I look forward to speaking with you real soon.
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Yeah, great. Thank you very much for having me. I appreciate it.
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Bye for now.
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D
Mom, can you tell me a story?
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Sure. Once upon a time, a mom needed a new car.
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D
Was she brave?
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She was tired mostly, but she went to Carvana.com and found a great car. At a great price. No secret treasure map required.
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D
Did she have to fight a dragon?
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Nope. She bought it 100% online from her bed, actually.
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Was it scary?
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E
Honey, it was as unscary as car buying could be.
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D
Did the car have a sunroof?
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It did, actually.
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Okay.
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Can you.
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Good story.
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Car buying. You'll want to tell stories about. Buy your car today on Carvana. Delivery fees may apply.