A few weeks ago, I published a blog post on the rise of private equity money in the channel. Recently, Thoma Bravo, a private equity investment firm, which also owns Continuum and is a major investor in both SolarWinds and Barracuda, acquired ConnectWise (a deal estimated to be worth $1.5 billion). Somehow, this feels like a seminal moment for MSPs.
When ConnectWise was a privately held company
As a privately held company, ConnectWise was considered the center of the MSP community. Not to get nostalgic on you, but I remember being in Providence, Rhode Island in the fall of 2008 at the first ConnectWise user group meeting. Since then, I’ve been presenting at ConnectWise user groups every year. In those early years, what made ConnectWise stand out from the crowd was it made major investments in building communities (investments private equity firms would never make).
On Arnie (and why being a polarizing figure isn’t a bad thing)
I’d like to mention a few things about Arnie Bellini. Sure, when he was ConnectWise’s CEO, he was a polarizing figure at times, but it comes with the territory when you're a CEO out in front of your business like he was. Looking back, his tactics paid off in the end, didn’t they? For example, while many MSPs remember Arnie, I bet they couldn’t name the CEOs of other leading channel brands.
For those of you who don’t know Arnie, here’s something to think about. In 2008, I called Arnie and left a message to let him know I was leaving Mindshift and had plans to launch TruMethods. After five minutes, my phone rang. It was Arnie. He said, “I’ve been waiting for you. Our partners need help."
He then filled a room of ConnectWise partners in Tampa, Florida for me to test my first starter kit. He also agreed to co-host my first starter kit videos and let me use the ConnectWise TV studio. He had me in studio for ConnectWise TV sessions. He had his marketing team work on joint content promotions. By the way, he did all of that to help partners and never asked for anything in return.
More recently, when we texted about the deal, you know what he didn’t mention? The billions of dollars he made on the transaction. He only told me about the $200 million going to his current and past employees with stock options. You want to know what else? The deal made 70 new millionaires. I know a lot of these folks and have spoken to many of them over the past week. I am thrilled for each one of them, especially those I worked with in the early years.
What Thoma Bravo’s acquisition means for the industry
Do you feel Thoma Bravo’s acquisition of ConnectWise marks a turning point for our industry? Do you believe private equity companies with knowledge in building, growing and selling software companies will ultimately be a positive thing for us as an industry? For me, I feel companies built by owners and teams with deep MSP roots and knowledge are a dying breed — but maybe I’m being over dramatic.
Could this phase of our industry maturity be the beginning of what comes next? Are we becoming an industry where AI, predictive analytics, advanced security services and BI lead the way, and what we now know as MSPs become base services and not the real reason why customers buy from us?
Think about the past: Before MSPs, there was a different industry where IT providers were basically hardware companies. We sold and fixed hardware and offered maintenance agreements. Today, that industry is all but gone — or at least — not relevant to why customers buy our services.
For those of you who’ve been in the IT provider world for many years, this is good time to take a moment to reflect on where we’ve come from, where we are and where things could be headed.
One thing I know for sure is this: Those of us who can operate efficient businesses built on high-value relationships with our customers are going to be able to navigate the changes in the channel and take advantage of market conditions as they change.