MSPs Competing Together

Business IT/MSP Talk
1

Hi All,

I’d like to get your thoughts on something. But first, I would like to offer some background so context is provided.

TL;DR

I ran an MSP and consulting practice for 15 years. Corporate America for another 15 years. I’m currently exploring the return to MSP life with a modern twist and would like to ask for your thoughts.

Background

In June of 2000 at the age of twenty-two, I had been an employee for four years at Best Buy (pre-geek squad), CompUSA (remember them?) after getting my A+, and a mid-market insurance company while getting my MCSE. Those four years were all it took to convince me I wasn’t cut out to work in a cube for someone else, and I started an MSP.

It bootstrapped, starting with literal ads in the newspaper and snail mail direct outreach. Earlier, at the insurance company, no expense was spared. Racks of IBM “mini-fridge” servers, an extensive network, thousands of PCs. When I went out of my own, I was troubleshooting CD-ROMs for retired folks and I can even remember trying to keep one eye on the screen running a batch job at someone’s house while watching TV with the other on 9/11 events.

Everyone pays the pied piper.

Things grew, and I continued gathering my own clients as well as subcontracting for other firms. I started a branch in China when one of the clients sent me there to build out the IT for a fastener factory.

Thirteen years later, I was out. I had made a critical mistake of focusing most of my effort on subcontract work and ended up building someone else’s client book. When that relationship ran its course, I needed to shift gears.

Corporate America

From 2013-2026, I went back “in-house”. software company, manufacturing companies, etc. Worked my way up from being a system administrator to senior engineer taking point on the SaaS team. In a new city, I did infrastructure architecture for a top-3 bank, and at the company who invented bubble wrap. A third of that company spun off where I served as an enterprise architect, then finally led the cybersecurity operations team as a director, got my CISSP, then led the cybersecurity architecture & engineering team as director at HanesBrands.

During my time as an employee over a 15 year period, I was part of M&A activity four times. Less than a year after moving to the new city, I joined 10,000 other employees in a divestiture that was bought by private equity. That company went public for about a year, and was then bought by another private equity company. This time it was also a merge so nearly all IT was “made redundant”. Joining another firm several months later, that firm was bought out a few months in. I joined Hanes, and sure enough – about nine months in they got acquired too. Made redundant again. It’s getting a little old.

New Landscape

So, here I am in a new world where corporate America, which was never really “my thing” anyway, seems to have spilled over in terms of Private Equity (PE) led M&A (Mergers and Acquisitions). Nothing seems immune – MSPs, HVAC companies, doctors offices, plumbers, youtube channels (e.g. Veritasium, Donut Media, etc.).

It makes sense in a system where PE can deploy client capital, saddle the target(s) with debt, strip bare, and resell (see Serta mattress company, Toys R Us, etc.). The fees they collect for deploying the capital, etc. are beyond the scope of this note. However, the economies of scale are something that is a legitimate advantage (in my view), and something I’d like to (finally) finish on to segue to my ask.

The Ask for Your Opinion

So.. this community (and this topic in particular) may have folks in similar positions, or those that in some way or another want to operate an MSP. It’s our passion, we genuinely care about outcomes, and some of us wouldn’t want to sell to PE anyway as then, well, what’s our purpose and what would we do?

The ask is this.. is there a model where MSPs are more successful together than independent? Is there a “farm co-op” or “Morgan and Morgan” or some other realistic way of maintaining independence and ownership while being able to compete with the consolidated folks?

Specifically – cost of acquiring clients and distributing it through a group of companies. Or, broadening service capabilities by leveraging skillsets from other organizations as subs as needed? Or, along those same lines, broadening abilities to expand time coverage, or purchasing power..

PE runs MSPs under local brands and existing staff, just rolling up the paychecks. Surely something similar can be done without the ownership and control change.

Anyway, looking forward to your thoughts and discussion. Thank you for listening/reading if you made it this far.

All the best,

David

2

I think you could do it, but it is an awfully large hill to climb. I have spent my entire adult life up until 2017 in the managed services space. IBM, TPI (now ISG) and EquaTerra (now KPMG) on the buy side writing RFPs for customers and doing vendor selection, and finally at Atos where I was a CFO in my last role, all before moving to AWS in 2017. Even at AWS, I worked on standing up their managed services offering. I think the problem you face in co-op arrangement is you need to have standard processes across all of the participants. If you do something one way and Joe Blow runs his business a different way, or with different tools, etc., that disparity of service provision will make it virtually impossible for you to respond coherently to RFIs/RFPs. You are also putting your sales force in an impossible situation. References would be a nightmare, and every deal will be bespoke, instead of having standard sales materials to work with. AND, if you sell a deal that involves more than one provider, say because of geography, who owns the customer relationship?

NOW, if you went the “franchise” route, developed one brand, one way of serving the customer, and the quality at every “franchise” had to live up to a standard, then maybe you could make it work. Think of something like McDonalds. Its pretty much the same quality wherever you go. But it would be an enormous effort to design the processes, develop the IP and train every new “franchisee” to do it the way the brand wants it done. And of course there will be fights over who has better tools or better processes, etc.

3

Both models already exist, which I think answers the “can it be done” question directly.

TeamLogic IT is the franchise version. One brand, one playbook, franchisees operate to a standard. That’s basically the McDonald’s comparison @Louie1961 made, and it’s been running for years.

The 20 is the co-op version, and it’s proof the cooperative side works too. Members keep full ownership of their companies but adopt a shared tool stack, standard contracts, SLAs, and a common help desk. They call it “standardization in reverse.” You get a lot of the franchise benefits (purchasing power, shared services, broader coverage) without handing over equity. So yes, both the franchise and the co-op model are out there, and both are growing.

Here’s my catch, and it’s the exact reason I never joined The 20: I didn’t like their standardization model. That’s not a knock on them, it’s a preference, and I’m not the only one. Plenty of independent MSPs feel the same way. That’s the core tension nobody can engineer around. There isn’t one right way to do this. Techs have strong opinions about tooling, process, ticketing, documentation, all of it. Get two of us in a room and you’ll get three opinions on the right RMM.

Which is what makes any “together” model hard. The thing that makes it work, everyone doing it the same way, is the same thing a lot of good operators won’t sign up for. The franchise and the co-op both solve the standardization problem by requiring it. So the question isn’t whether it can be done. It’s whether enough owners are willing to give up their own way of doing things to get the scale.