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Building a “Why” Company with Colin Knox, Gradient MSP CEO


Colin Knox S2F Podcast Image

A lot of people can share what they do, but not very many can share why they do it.

Not Colin Knox, though. After taking some personal time after selling his last company, Colin was able to focus in on what matters, what he has to offer, and where he can bring solutions to the market. And, from that, his company Gradient MSP was born.

Colin joined us on episode 59 of the Stride to Freedom podcast. Together we discussed everything from what his company’s all about to building effective teams to remote company culture. Check out his interview and read on here for some amazing insights for leaders.

MSP Problems and Solutions

The MSP (Managed Service Provider) industry is a leaky bucket for billing, invoicing, and reconciling. Because MSPs work with so many clients and suppliers, a lot of things can slip through the cracks. With so many moving parts, financial reconciliation is very manual and time-consuming.

And this is exactly what Colin’s company, Gradient MSP, is determined to fix. Through their innovative integration platform, they help MSPs with the following:

  • Simplifying information from vendors and suppliers
  • Comparing data against your PSA (Professional Services Authorization)
  • Identifying where you’re not billing clients for services

Through this streamlined process, Gradient has been able to recover $4 million in profit for MSPs—so far! With a product launch in 2021, they’re still in the early days of bringing this platform to MSPs everywhere.

Blitzscaling Your Company

Colin loves to study and learn about business building and management. He shared the concept of “blitzscaling” with us, a term originally coined by Reid Hoffman.

It refers to a business strategy where you go hard and invest everything you can into the initial build of a new business to dominate the market. It works only in industries with a one-player-wins-all outcome.

Gradient’s focus in the MSP industry allows them to take most market share. By investing heavily at the beginning, they can reach a critical mass that leaves MSPs with only one option on the market—Gradient.

While blitzscaling may not be for every company or industry, the takeaway is this: focus on both your business and your business-building strategy. Otherwise, you won’t be able to scale and grow to meet the needs of your customers.

Focusing on People and Company Culture

Colin is passionate about building strong teams and a positive company culture. Even before the pandemic, he believed in remote teams. Why? Because there’s a myth that physical proximity = company culture. Just because people are in the same room doesn’t mean there is good culture!

Company culture is built. And it can happen whether the team is remote or in-person. Here are a few things Colin focuses on:

  • Giving employees autonomy over their roles and work
  • Hiring specifically for company culture and team fit
  • Using innovative technology to connect people (i.e., a virtual workspace where employees can “sit down” and have meetings)
  • Ensuring everyone is on the same page through regular, timely meetings

Most companies don’t put enough focus on culture. And, because of it, they’re not going to attract or retain top talent who will achieve the vision of your company. So, focus on people—focus on your why—and you’ll be able to grow.

If you want to hear even more insights from Colin, such as how he grew a business in a pandemic and raised $10 million in Series A funding, make sure to check out the full interview on episode 59 of the Stride to Freedom podcast. You can also check out Gradient MSP or connect with Colin on LinkedIn.

And if you want to know more about us at Stride Services, contact us today. We offer back-office accounting and CFO services, including stable and efficient bookkeeping, cash flow management, and actionable analytics for growth.

The Stride for Freedom podcast is hosted by Stride Services. Contact us today to learn more about our back-office accounting and CFO services, including stable and efficient bookkeeping, cash flow management, and actionable analytics for growth.

You’ll enjoy this Podcast episode with Elliott

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We are fortunate to have Larry available to spend time with us on this edition of Stride 2 Freedom. If there is a speaker you’d like us to interview, click here and let us know. Stay well. Stay safe. Stay healthy.

Show Notes and Links From Episode:

Colin Knox: LinkedIn

Gradient MSP: Website/LinkedIn

Colin Knox: Top 10 Takeaways

Colin Knox: colin.knox@meetgradient.com

And if you want to know more about us at Stride Services, contact us today. We offer back-office accounting and CFO services, including stable and efficient bookkeeping, cash flow management, and actionable analytics for growth.

Episode Transcript:

Russell Benaroya: Hello, everybody. Welcome back to another Stride 2 Freedom podcast. I am your host, Russell Benaroya. What is the Stride 2 Freedom podcast? The Stride 2 Freedom podcast is the place where we bring on guests that help business leaders get and stay in their zone of genius.

What is your zone of genius? It’s your superpower. It’s that thing that you do that feels effortless for you, but to others it seems like it’s such a big lift, and it’s where you want to be spending the majority of your time.

I’m particularly excited today because this is our first international guest episode. Well, maybe it’s our second. Colin is in Calgary today. Can you still hear me all the way up there, Colin?

Colin Knox: Yeah. We can hear you loud and clear up here.

Russell Benaroya: I’m thrilled. The Stride 2 Freedom podcast is brought to you by Stride Services. We are an outsourced bookkeeping, accounting, and fractional CFO services firm for high-growth professional service companies like IT managed service providers. What is our genius zone? Our genius zone at Stride is helping business leaders use data to make better business decisions.

Okay, enough about that excited to jump in and introduce Colin Knox: from Gradient MSP today. Colin, great to see you.

Colin Knox: Thanks for having me.

Russell Benaroya: I think about Gradient as the leaky bucket in the world of MSP billing. There are so many holes where MSPs don’t properly bill or recognize the cost that they’re incurring, and being able to effectively and appropriately pass it through to their clients because there are so many moving parts that make the reconciliation very manual and time-consuming. You’ve kind of saved the day there. Is that a fair assessment?

Colin Knox: I wouldn’t call us the leaky bucket, but we’re the super patch that gets that done with the leaky bucket.

Russell Benaroya: Yes, you’re not the leaky bucket; you’re the patch.

Colin Knox: We’ve got a really interesting integration platform that one of the modules is for billing reconciliation. It highlights and identifies the gaps and the unbilled services. Doing billing reconciliation as an MSP is probably one of the biggest pains in the butt every single month when you’re going through all of these different supplier partner portals and usage reports and trying to correlate that back with a million mouse clicks in your PSA.

We simplify all that by ingesting the information from the vendor partner or supplier partner, comparing that against your PSA and telling you what the adjustments either positive or negative are, and instantly writing that back to your PSA with your approval. One of the coolest things is we can automatically identify where you’ve not been billing clients for services. And that happens an awful lot.

There’s a big disconnect that happens between your service delivery team turning things on, deploying things, getting new licenses, creating new users, and stuff like that. And even with account management, and then a breakdown of all accounting and accounts receivable, when it comes to doing the invoicing. So we solve all of that. We make it a pleasurable experience and a much faster experience. So far this year, we’ve recovered just over $4 million in profit for MSPs.

Russell Benaroya: Wow, that’s tremendous. You had a window after the sale of your last company where it looked like you took a little bit of time. In fact, I think on your LinkedIn that your professional role was time with family. I want to hear a little bit about that space that you created.

And then why in this next chapter of your journey, of all of the things that you could pursue, you thought that this was the important problem to solve that was purposeful for you?

Colin Knox: Yes. We had a fun run and experience building a company called Passportal. We exited that to what was at that time called SolarWinds MSP, now called N-able, worked with that business for a period of time, and then took some time off. It had been a very grueling 11 years at that point of founding, building, operating, exiting, and integrating businesses between my own MSP and the channel vendor I built. And I needed time off, and I needed time to spend with family and evaluate life and what life was and what I wanted it to be before embarking on what may or may not have ever been the next endeavor.

So we took some time and enjoyed it and did a whole bunch of really fun things. Over the course of that time, I stayed in touch with watching what was happening in the IT channel and the MSP market. I kept reviewing and reading the myriad of posts and questions on the MSP subreddit, various Facebook groups, and all the industry media. I started to clue in and recognize that the IT channel is a very difficult place to succeed with a business.

A very opportunistic, very massive industry, but when you look at research and analysis from service leadership with Paul Depoe, the lowest quartile of the industry of MSPs don’t profit, they don’t even make breakeven. They’re losing money. Then you have the second lower quartile that is just breaking even. Only 50% of this industry as MSPs are turning a profit and doing what they likely intended for their business to do to give them some level of financial success and sustainability of a business and build enterprise value.

That struck a chord with me and concerned me. On the other side, I spent a lot of time in the break off just getting pings and pokes from a whole bunch of channel vendors and private equity companies asking me for advice on investments that they were considering, or various product categories, or just the industry as a whole. And the more that I talked with a lot of those, the more I came to realize that every single investor that had made an investment in this industry or a business trying to get into the IT channel, either they or they knew of somebody that had lost money because they were not successful in cracking into this market with a channel program and channel vendor.

So it showed me how difficult it is to succeed here. And coming from a history where I was able to successfully build a very profitable fast-scaling MSP, exit successfully, and get a return for myself and other minority investors that were part of that business, and then do the same on the channel vendor side where we were able to crack and were able to get 1000s of MSPs to build their strong business, exit successfully, and get a massive return for all the investors there, it made me realize that maybe there’s something in my experience and my history that can help more businesses succeed in this industry.

When we look at and talk about our why and our purpose, it is quite simply to give everyone an opportunity to succeed in the IT channel. Whether that’s as an MSP, to help you find and get to profitability through things like billing reconciliation, automating that, recovering unbilled revenue you didn’t know what’s missing, saving time, saving effort, presenting more opportunity to you so you can invest and learn your business to find success. That’s one side.

The other side of our business, and there will be more modules that we launch and some very soon here for MSPs, to save even more time and reduce even more risk that has caused them great financial stress and strain and overall business stress, but the other side of the business is helping channel vendors as well. Not through coaching or consulting, but by recognizing that one of the biggest barriers and struggles in reaching this market is by having product integrations with the PSAs that the MSPs use. So that it is a solution that’s the ease of administration, ease of management, ease of deployment, all of those things and facets that come into play that an MSP needs to be most successful with a product that they’re either going to take downstream to their clients or even use internally.

There’s a lot of difficulty in creating those integrations because there is a closing of ecosystems due to market consolidation and competitive alignment and a whole bunch of good reasons for that to happen. But it’s also a massive R&D expense to focus on building those integrations and even weighing which ones you build first, and which ones you even build, versus making your product the best possible product in itself for the feature functionality and outcome that it’s driven to deliver, instead of building all those integrations.

So what we offered since we were able to connect in on the billing reconciliation side with, I think, nine PSAs right now, we extended our API so that a channel vendor can integrate with Gradient and automatically support integrations with those nine PSAs. Essentially, allowing them to provide billing reconciliation automation down to their reseller partners. And in the future, in the next few weeks, you’ll see the next use case of that to make their products even tighter integrated down through those PSAs.

Russell Benaroya: What came to mind for me was the Zapier for the MSP industry. You’ve built some of the connectors, like plumbing.

Colin Knox: Yeah. It’s very similar to that. I would say where we will be a bit different from that is that we’re not building automation workflows the same way. We’re a lot more making sure that the data that you need in the right place in your PSA is there. So we’d be a little bit closer to a segment for the MSP market, where we’re making sure that if there’s a piece of information in one of your vendor suppliers, and you want that in your single source of truth, where you want your techs looking and living all the time, we’ll make sure it gets there.

Russell Benaroya: You’ve mentioned some things that I read. You talk about building smart, highly effective teams and getting out of their way. I’m wondering, one, where did that discipline come from? Because that’s not always innate for many entrepreneurs that have a hard time — they say it, but the survey says they don’t do it — literally have done it and the results show. I’m curious if you could share a little bit of that perspective and where that learning and discipline came from.

Colin Knox: That’s funny. Early on, I was a big micromanager and needed my fingers in almost everything. But I learned over time that as you gave more freedom and autonomy to the experts of those subject matters that you had hired, the better work that came. And the more you put emphasis on coaching, sharing the vision, setting your own expectations, and making sure that those were understood the better that those deliverables came. And the amount of innovation that resulted from that, even across things like innovation and marketing, but thinking outside the box and trying different things ultimately focused on an outcome, not on a specific project or a task is where we started to see our greatest results. So that was good.

And it made a lot of sense because it’s funny when I was employed by other businesses and stuff, it always frustrated me that it felt like I wasn’t trusted to be able to deliver and there were all these follow-ups happening to me. And then submitting work and being told, “Oh, no, I wanted it this way.” “Well, then why didn’t you just do it that way?”

So I totally get it and understand it. I know that I didn’t manage in that way earlier, but I have a lot of respect for that now and a lot of appreciation for that, that if you hire good people, let them do what it is you hired them to do. And until they’ve lost your trust or your confidence, then you can move in and have a little bit more influence and make it known that you know the trust was lost, or confidence is waning in a feedback-type scenario. But until you lose that confidence, until you lose that trust, let them go and do it. Just coach them along the way.

Russell Benaroya: We have a principal at Stride, which is optimized for outcomes and not for tasks. You said that very specifically, which I appreciate. I love the discipline. You talk about this concept of blitzscaling as well that you’re a believer in blitzscaling. What is blitzscaling?

Colin Knox: I think the term was coined by Reid Hoffman, and the concept was popularized by his book, aptly named Blitzscaling. Generally, it’s a business growth concept that does not apply to all markets and does not apply to all product categories or service categories but can often drive excess and create market and category leaders in categories that are not yet defined yet highly opportunistic. And generally, in a category where the opportunity only exists as a one-player-will-win type category.

I’ve played in categories like that before, and believe we’re creating a category the same way now, where parts of what we do aren’t necessarily one-player-wins-all. But I’d say the end mission and vision of what we have for our business and platform will truly be essentially one-player-takes-all.

So in a scenario like that, you have to invest hard early to “blitz” the market, much like the football term. You put all effort and all resources towards establishing that foothold and that stake in the market so that you are eliminating, as much as possible, the potential for competitors or new entrants to enter that category. That’s an area that I’ve seen success in before and it’s things that we’ve been employing at Gradient given the concept of what we’re building today.

As an integration platform, like I explained on the vendor side, there are not many vendors that will build multiple one-integration-to-reach-all. So we are blitzing that category and making sure that we are the one that everybody integrates with, by having the most downstream integrations, the most valuable and powerful integration use cases, by getting the most vendors initially integrated so that we hit that critical mass that doesn’t make sense for anybody else to even consider entering that category. Because why not just do it with Gradient?

That’s some of the stuff that we’re pushing towards. And I’d say in a lot of spaces, and as an MSP, it likely doesn’t make sense to blitz-scale unless you have a truly unique offering. What you would see with a company like Electric is they are blitzscaling because they are taking a very unique approach, and almost creating a category within the MSP service provider scope that makes sense for them to do. and they’re seeing great success and doing it too.

Russell Benaroya: Well, you mentioned Electric. The way I perceive it, Electric is like an 800-pound gorilla MSP that’s growing through acquisition, but also organically to dominate local markets. I see they’re blitzscaling; I would not have associated blitzscaling with that business model, but you see something different.

Colin Knox: Very much different. Yes, they’ve acquired some MSPs and they deliver some MSP services that feed on the ground and in a very manual effort. But I would liken them very akin to a progressional focus of considering an Uber or Rideshare type category.

They are leveraging humans and technicians in the early days to build up and create this service offering. The bulk of their service delivery is automated if you look at their back end. They are essentially taking RPA and Chatbot and conversational AI that’s existent in the enterprise realm, that IT departments are deploying all over the place in their enterprises to minimize the amount of technicians they need in their IT department to service help desks and everything else for their 1000s of users.

These guys are doing that at scale now, building their own technology and technology stack to be able to allow conversational AI to deliver service to their end customers, which at the tier one level support, is totally awesome. And they’re getting all of this stuff done for them. So they’re blitzing and bringing on a ton of clients that are taking on this type of service offering and paying less for it because it’s a less handheld, less human-driven beast.

But over time, I’d say they’ll probably get to a point, with all their own collective learning and conversation database and everything else, that they’re delivering an automated level of service that will be difficult to compete with. Not to say that they’re going to own the MSP market, but think of what they, in turn, could do for the rest of the MSP market.

Right now, you see them maybe as a foe if you’re an MSP. But I would watch them very closely to see how quickly you can probably tap in and become part of their network to leverage their technology and data set to minimize things.

So I see them more as a disrupter to the master MSPs. And this can be totally wrong; I haven’t talked to Ryan over there in a while. But I would see them as a disruptor of the hosted help desk, hosted NOC type concept that a lot of MSPs use today, instead, moving that downstream to be a conversational AI, automation RPA back end.

Russell Benaroya: You have a very soothing disposition. Maybe somebody’s told you that before. If they haven’t, then I’ll be the first. What I wonder about, Colin, is, what are you like when you get anxious, nervous, angry, or scared? I’m curious. And you have a lot of experience, you’ve seen a lot of ups and downs.

Colin Knox: I think there are very few people that get to experience the emotional catalog that I have. My wife probably gets the closest experience of that.

Externally, I’d say I’m a lot more stoic in situations where there are high stress, high anxiety type situations. Over the course of my life, I recently shared in a keynote that Bill did, I ended up, not coaching or anything, but through life experience was taught that demonstrating emotion would generally yield negative results.

And I mean that when you look at things like bullying or showing hyper excitement over something in a seller, or somebody else being able to leverage that emotion. It’s like having the poker face quintessential situation there.

So I would say I try to approach most things pragmatically. I generally try to not focus on the problem, but steer towards solutions, and try to manage and work through things. That being said, I’ll demonstrate emotion every day. But I would say I’m a lot more tactical in how I present that and who I present it to, to make sure that, again, I’m most likely and in the highest probability to get the outcome that I feel I need.

Russell Benaroya: Thank you for answering that. I see you as a student of conscious leadership. And if you’ve ever read the book, The 15 Commitments of Conscious Leadership by Jim Dethmer and Diana Chapman, I think it captures well the internal dialogue that we can use to better manage ourselves in a situation. Because so much of how we react is a story we’re telling ourselves in our head that may not be grounded in fact.

Colin Knox: No, absolutely.

Russell Benaroya: I appreciate you giving a little bit of vulnerability there. Let me ask you about the launch of Gradient because it looks to me like you’ve launched during COVID, October of 2020. I’m curious what that was like launching a new business during COVID, and how it may have helped you.

Colin Knox: I think in every kind of disaster, there’s opportunity. So my MSP, I founded at the beginning of a local regional recession. We live in a very predominant oil and gas industry region. So when I started my MSP, the cost of oil was tanking down big time.

Then I started operating Passportal at the height of the global economic crisis and recession. So this time, starting a business during a global pandemic made it just feel natural. But there are a few things.

I’d say nothing in choosing to start or delay or anything about our business was necessarily driven by the pandemic. In everything in life, you will never find a good time. You will always have an excuse. There’s not a good time to do something. And it doesn’t matter if it starts a new business, it doesn’t matter if it’s launching a new product or building a new product, it doesn’t matter if it’s having a kid, taking a vacation, breaking up, whatever it is. There’s never a good time.

With us, it was strategically considering what we wanted to do. I don’t even think we necessarily fully defined what we wanted to deliver. We knew why we wanted to do something, we had an indication of how we would go about it, but we didn’t know what. So we were having a lot of conversations with various MSPs that we were close to, various vendors, and there was a little bit of chatter about what they were doing and all this stuff.

It got to a point for us that we wanted to be able to control any messaging, and we didn’t want there to be any strange assumptions or stories out there of what we may or may not be doing. So we decided to launch the brand and the company at a time when we didn’t even know what our product offering was going to be. So we did that formally in December of 2020.

We didn’t bring any type of product to market until July of 2021. That was just a stepping-stone type product that doesn’t even exist anymore that led the way for us to be able to launch, ultimately, what we were going to launch with our billing reconciliation module in November of ‘21.

One thing that it did with the pandemic was forced us to focus on how to digitally reach people, how to create a level of morality in our campaigns and brand, and hyper-focus on listening to the market and what the market thought and what they envisioned we were going to do or the value that we could deliver to them. And use that to refocus our R & D efforts.

The other thing is we had a plan and an intention that for whatever next business we were going to do, we never wanted to have an office space. We wanted to have a distributed remote workforce. Before we sold to SolarWinds at Passportal, we were trying to find a way how could we convert to a fully remote workforce. We were raising a round of funding at that point, and with the scale of staff we were going to be bringing on, we had concerns about the local talent pool. Then we were looking at bigger office spaces, and that exorbitant cost associated.

One thing the pandemic did was force us to do that, and I’d say we’re really glad we did. We’ve got some 53 employees now across 20-plus cities around North America, and even an employee over in Brazil, that I’d say allowed us to find some of the best and brightest people for those specific roles that I don’t think we ever would have found or even found as quickly as we did, being confined to a certain municipality.

Russell Benaroya: Any pro tips on cultural things that you’ve done to create more connectivity among a remote workforce that you’re really happy with?

Colin Knox: I think, in general, remote or not, most companies do not put enough focus on culture. They just assume that culture will happen and be a thing and it will be a good culture. I believe, personally, that there’s a false assumption that you would have a better culture or a stronger team because everybody sits within the same four walls.

The reason I say that is because having had two businesses where everybody sat within the same four walls, you see a significant amount of disruption where people don’t get along, and they don’t like sitting side by side with people. And that can be anything from so-and-so smells funny, which we’ve had in the past, to someone who talks way too loud, I can’t focus, to just don’t them.

Like we had an office romance that broke up and that caused tension around them and for everybody else. So I think whether you’re in an office, on-premise type business, or you’re fully remote, focus on culture, and focus on driving a culture that is productive, and conducive to a strong and successful business.

Being fully remote, we’ve done a lot of things to support that. One, we hire, very specifically, people that align with our culture and the culture we want to have. The personalities and behavioral traits of those people, while also making sure they have the aptitude for the role that we’re doing, or that we’re hiring for. But that is number one and key to us in making sure that people fit the culture that we have built and with the people that are joining.

The next thing is we give the opportunity for that culture to be fostered. Yes, there’s a concept of in-person collisions in an office that drives ideas and innovation, creativity, and everything else. We have a virtual office that we all go to every day. It’s in our internet browser and it’s pretty cool. It’s an eight-bit kind of style video game type thing that you walk through hallways to get to meeting rooms. We hold meetings in virtual meeting rooms, not in Zoom. You have one-on-ones. You can walk to people’s desks and their video and audio come up and stuff.

So you get that exposure and feeling like you’re in an office. You can still bump into people and see people and have interactions that still drive that same type of benefit. Beyond that, we’ve got a little app that creates and arranges virtual donut meetings between the staff. Again, there’s water cooler talk and you might not be going to the water cooler, but this app always connects two people who don’t generally work together to sit and have a 30-minute conversation about who they are in their life, what they’re doing, what they’re excited about, and all of that type of stuff.

We do weekly, all-hands meetings to make sure everybody is in alignment and knows what’s going on and what wins we’ve had. We’re doing an annual off-site, full company retreat in September where we’re flying everybody into the same city and booking a big venue. We’re there for, I think, four days off of collaboration and team building, and then some actual working and meeting.

So there’s a lot of things that we do that way to make sure that people feel connected and attached and know what’s going on and feel like they know the people that they’re working with. We have people that have worked together for months and never have met in person. And then they’ll see each other in person and they’ll hug. Not just, “Hi, I’m so-and-so.” They have an emotional connection. That’s been super awesome with what we’ve been able to do here.

Russell Benaroya: I appreciate you sharing that. I am familiar with that donut application if that’s what you’re referencing, as a way to create Coffee Chat moments. The virtual meeting rooms, is that a third-party application that you’re using?

Colin Knox: We use a tool or product called Gather. You build out your own virtual office space. And just a month ago, we outgrew our former virtual office. We did pull a virtual office move, which was kind of fun. It’s been awesome and people love it. We hold interviews there even for staff joining.

Russell Benaroya: I love it. Every company has a culture. Culture is going to get created; it’s just whether or not you’re going to be intentional about what it is you’re creating. That’s one that comes to mind for me. The other is, in a remote workforce environment, having a remote workforce is a true deep commitment to co-created principles — principles on how we all behave with each other and with our clients — like the language that we create together that helps guide our reactions or responses and our actions have proven to be important.

Because when conflict arises, which it invariably does, just to be able to say, “Hey, what’s the principle that plays here? What are we employing here in this conversation?” We’re having a good method to sync up, to have a clearing so that we can reduce the drama, which is a remote workforce environment when people are isolated just by the definition of them being remote, can tend to spin up those stories I had referenced earlier.

Colin Knox: Yeah, totally.

Russell Benaroya: You raised about $10 million, maybe more than that about a year after launching. Tell me about the raise, your investors, and what you’re hoping to achieve with that Series A round.

Colin Knox:  It was an interesting situation. We were fortunate to have founder capital from our exit from the previous business. So myself and my co-founders got together and funded the business for the first while there. We had started to consider some outside funding to continue scaling and driving the business. We had already had a couple of investors that came forward. One had participated as an investor in Passportal, and the other was going to in our next funding round, and then we ended up selling instead of completing that funding round so they didn’t get in.

Those two parties had come and pretty much demanded that we take money from them on this one. Strategically, it made sense, so we took a bit of money from them. As we were growing and starting to see some great early traction, we figured, “Why not go out and raise maybe a few million dollars and have that in the bank to go after this problem?”

And the more conversations we were having, the timing was really good for the capital markets and the dynamic that was going on at that time. There were some people that were pushing to be able to put more money and they wanted it to go. So two to three million quickly grew to 5 million, and then we just said, “You know what, I wonder if we could get 10 million?”

So we built a model around what we would do with that 10 million. We got some great feedback and input from some friends in the industry who had recently raised money. We went through a bit of a playbook and we drummed up a lot of interest. I’d say we had introductions to about 85 venture capital firms. We had meetings with 32 of them over the course of two weeks. And within three weeks, we had term sheets. Ultimately, we made a decision within less than 10 weeks from the start to finish.

That was a bit of a whirlwind. The due diligence went quickly, but we were selling on this opportunity of being able to create a platform that eases considerable pain for MSPs but also provides a gateway of access for channel vendors to be successful in this industry. And being a connector of sorts makes the market more fluid and accessible.

So we brought on our lead investor and some other additional investors behind them, and they’re all very highly convicted about the mission that we’re on and the impact that we’re trying to assert on the industry. So far, so good.

We’ve been delivering against that investment thesis, and we’ve been finding success. To date, we’ve got some 600 MSPs using our billing module to reconcile over 2 billion in annual revenue. We’ve recovered more than 4 million in unbilled services and continue to grow that. I think next week we’ll have six integrations that have been built off our API. And I’d say in the next few months, you’ll see that growing closer to 30 with the pipeline of vendors that are in the build mode right now.

Russell Benaroya: I’m going to ask you one more question. As you know, I had seeded you with several questions of which I have asked none of them during this call because I just wanted to follow the conversation. Your responses prompted curiosity, which is really what this podcast is intended to do.

Is there something that people don’t ask you about or that you do like to share, but don’t often get an opportunity to?

Colin Knox: It’s funny. I’m an introvert. Generally, I don’t even like people asking me questions. I prefer to stay quiet. I thought about that a lot when you sent that question over. I didn’t come up with anything that I wish people would ask

It’s funny. One question that I love to ask people that I think doesn’t come up enough is what did you want to be when you grew up? I feel like that tells you so much about the person and then the different path or maybe the same path that their life went on. And even understanding the purpose behind those people that they had from such an early natural age, of what it is that they wanted to do, what impact they wanted to have on their life, other people’s lives, community, or the world.

That’s one of those questions that I think people should ask more when they’re meeting each other. What do you do now? What is it you want it to be when you grow up? I think there are a lot of things that could be learned from people by just asking that question.

Russell Benaroya: If you think for one moment that I’m going to let you turn this podcast around and let you become the interviewer, you’re so wrong. I’m not answering your question, though, it’s a great question.

I’ll tell you what comes to mind for me and maybe a good segue to conclude. My impression of you is that it’s less about the what you want to be and it’s much more about the why you want to be. It just so happens that today Gradient has this billing reconciliation module, but the why you exist or the purpose with which you are working to enable MSPs to survive and thrive in this industry and enable channel partners a vehicle to connect with them in a lower friction way is the instantiation of many different modules and applications. Because I think your why is very purposeful.

So when you asked me what I wanted to be when I grew up, it got me thinking that what I like to do is help other people succeed. I’ve always been that person. I was the most inspirational player on my lacrosse team, which certainly isn’t the most valuable. I want to put people in a position where they feel accomplished, and where they can achieve their goals. It just so happens today, I’m doing it through this vessel, but there are a lot of vessels to do it. So I think that why really matters.

Colin Knox: No, it does. I feel like, if you understand any person, or any entity or business’s motivations, you can better understand how you can help them be successful with that, which will ultimately make you more successful. I think that’s almost one of the maybe misguided things in channel marketing these days is what I would call selfish marketing.

Like, “We help you do this. Do you want to make more money? Do you want to sell more?” You’re talking about everything that you want them to be so that you get what you want, instead of truly understanding what it is that they want. I think if you talk to most MSPs, they don’t necessarily go to bed at night going, “Gee, I wish I was way more profitable,” or, “I wish I had more things to sell to my customers.”

I’m willing to bet that most MSPs go to bed saying things like, “How can I make sure that my clients continue to see value in what I’m doing and are with me and committed to me as a business?” They don’t want to have to worry about losing clients. I don’t think many would have been CGM and not adding enough clients unless you’re at a very early stage or whatever.

So I think with anything, if you understand your target market and what their mission and objective is and what’s truly most important to them, and you cater your products and service in marketing and messaging to that, you’d be more successful. And it’s the same thing in leadership. If you take the time to truly understand the people that report to you and work in your business and what motivates them the most and what they want to achieve, then chances are you can drive greater success for your business by helping them be successful in their own personal missions.

I’d say, when we were at Passportal, there was not a single person there that was so passionate about passwords and password security. No, they all had their own things of what they wanted to do. And some of that was to save small businesses from having an attack or a data compromise. Some of it was to avoid MSPs from being at risk.

It could be anything in any way that you can attach to things. I think what we’re doing at Gradient,  I don’t think anybody is like, “Man, I love integration. I love data.” No, it’s the understanding of the impact that what we’re doing can have on an industry and the peripheral industries and segments that rely on MSPs I think is the big part of it.

Russell Benaroya: I appreciate this in the conclusion column because it speaks to why this podcast even exists; to help people get and stay in their zone of genius. It is not what they do, it is the why they do it and how they apply their energy to something they’re interested in.

It’s so fun to talk to you. I had no idea where this conversation was going to go. While we certainly talked about Gradient and the problem that you’re solving and why it matters and the opportunity for the industry, which by the way, I think is tremendous. So kudos to you for your vision, fortitude, commitment, discipline, and culture. Maybe more than anything else, it’s about the humanity which we bring to the businesses that we’re building and some of the learning in the journey along the way. So thank you.

Thank you, everybody. This has been a great Stride 2 Freedom podcast episode and a gift to interview Colin Knox from Gradient MSP. We will see you in the next episode. Have a great week. Bye.

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