What I Learned in Ten Years of Building My Successful MSP

10 years isn’t such a long time, right? Well, it is if you are a Managed Service Provider. This week’s Datto Partner Podcast features Andrew Schmidt, who started Hexistor in 2004 and has experienced years of success as an MSP since. The cloud storage industry has changed a tremendous amount in the past ten years, and Andrew will share his experience with adapting to change and communicating with customers from various verticals. Podcast host is Rob Rae, Vice President of Business Development at Datto.

Rob Rae:

Hey everybody. Rob Rae, Vice President of Business Development with Datto, and welcome to this week’s partner podcast. Thank you very much for joining us this week. We actually have a really special guest this week, one of my favorite guests. We are bringing on a Managed Service Provider, a Datto partner, so that we can actually pick their brain, talk about the industry, talk about the Cloud, talk about anything that you guys are living through on a day-to-day basis. Today we’re being joined by Andy Schmidt of Hexistor Data Protection Services based out of the Chicago, Illinois area. I’ll introduce Andy in just a moment. For any of you that are interested in participating in this podcast, or if you have any feedback, we’d love to hear from you. Our podcast email address is podcast@datto.com. Don’t hesitate to share any input, any suggestions, any recommendations to that email address. We’re going to talk about a number of different things here today. Andy is actually [inaudible 00:00:59] the IT industry. His company’s been in business for almost twelve years now, and for those of you in the managed services space, you know that that’s a long time. This is before the Cloud existed, manage services even existed, yet he’s evolved. He’s continuing to work with a number of end user customers and grow a successful business. We actually have a significant win with Andy in the hospitality range, so we’re going to talk about all of that today. Andy, thank you very much for joining us today, and welcome to the podcast.

Andrew Schmidt:

Thank you.

Rob Rae:

I want to start with you giving us a ten thousand mile view, a quick introduction of Hexistor and where you guys are based out of, what you guys are doing, how many employees you’ve got. Introduce us to your company very quick here.

Andrew Schmidt:

Okay. I started Hexistor in 2004 providing data storage and email storage for the broker-dealer community in Chicago. This was after the large power outage on the east coast. It brought to light the fact that maintaining [inaudible 00:02:11] commodities, markets, or businesses. We worked with several customers in the Chicago area to integrate a number of technologies to provide them with storage that was remote from the data centers. The integration would be things like high speed internet connectivity through a bonding of T1’s or DS3’s so that, basically, we were providing them with disk-on-a-string. We evolved that model since then to be far more sophisticated now to provide business continuity and disaster recovery, and the ability to boot images and do bare metal restore in a total data center or server failure.

Rob Rae:

One of the things that you guys self proclaimed to, and probably definitely can back this up based on just your experiences, is the term you’re a “pioneer in Cloud backup service.” Ten years ago, I’m assuming, when you first started looking at this, it wasn’t called the Cloud.

Andrew Schmidt:

No, it was not the Cloud. It was putting together high-speed dedicated private lines. I’ve been in IT now for thirty years, and I worked quite a bit on the development of the Internet, ARPANET, which evolved into NSFNET when I was working at the University of Illinois, which evolved into NSF, which became the Internet when the network access points were all interconnected. This is really dating myself, but I was heavily involved in that initial Internet infrastructure. I took that knowledge and went to AT&T and helped commercialize those products for general purpose for everybody to use them. I was able to take that knowledge of how to build high-speed connectivity between two locations, whether it was T1 or DS3, and bonding those together to provide that cloud-based, even though it wasn’t called that, as you pointed out, that cloud-based connectivity and cloud-based service. That was very, very basic, though, because it was just the ability to have replication of information, but that was it. It provided you some safeguards, but nothing that would approach what we can do now with bare metal restore or virtualization. At the time, the VM didn’t even exist.

Rob Rae:

Yeah, absolutely. We’re going to go a little off-topic here, but it’s always something that’s been interesting to me, is where do you think the innovation from cloud technology and the evolution of cloud technology is coming from? Do you think it’s coming from either the end user, who’s go the demands, the MSP, who’s looking for the next big opportunity, or is it the vendors that are driving it with the technology they’re innovating? What’s driving all of this?

Andrew Schmidt:

Well, I think it’s a combination of all of them. One is the migration of applications into the cloud. The cloud is such a generic term that it sounds too generic to be applied for all those specific points. You have things like email applications…I think those are very easily migrated into the cloud. We work a lot with point of sales systems for our customers, and those are being migrated into the cloud. There’s this acceptance and reliability of the cloud in running those applications that would make a lot of sense. We see a tremendous amount of applications and data that are locally hosted. That’s where working with our customers to build solutions that are specific to their needs, it’s key to be able to support both a local and a remote backup, and that’s where Datto and Hexistor pair well together in working with our customers to meet their needs.

Rob Rae:

Fantastic. Now, you have a very specific example. I know you were working with one of the largest hotel chains in the country, and I know you’ve implemented Datto, or are in the process of implementing Datto across there. Can you talk a little bit about that?

Andrew Schmidt:

Sure. What Hexistor does is we’ve taken this model of local and remote backup and provided it to several large hospitality franchises. There’s specific requirements, and applications are very generic. It fundamentally comes down to they’re just running a collection of servers with applications that are mission-critical. We have experience with those applications and those services, and we can recreate them in a time of disaster very quickly, but at the end of the day, they are just computers and data. We have quite a bit of traction in the hospitality market, but with that said we can do everything from a Re/Max to ACE Hardware. It’s all just computers and data, but the applications get moved into the cloud over time, some get moved from the cloud back to the customer location. There’s still a tremendous amount of information at the customer location and mission-critical applications at customer locations that we still see a tremendous growth in that market, because information is everywhere. I think what’s interesting is that people are beginning to appreciate the fact that the applications and information are what are critical, and the machine is just a device that runs that and has access to that information. The display, the tablet, whatever you’re working on, that’s just interface to the information, and the information is what’s valuable. If you can maintain the instance and the integrity of the information, then you’re safe and your business will continue to run.

Rob Rae:

We did a podcast a couple of weeks ago, and one of the topics of that podcast was verticalization. We talked specifically about the education field. We had an MSP join us who is very, very good with K to 12 schools, and our virtual product is having a lot of success there. You mentioned that you’re not exclusively in the hospitality industry, but obviously, you’ve got a very successful sale here, and a very successful customer, and obviously some experience in hospitality. For anybody that’s looking at verticalization in hospitality, is there any nuance, anything specific that you think in that vertical, is there an objection that they may have that you haven’t seen anywhere else, or a need that you might not see anywhere else? Are there any nuances to that hospitality verticalization that you could share?

Andrew Schmidt:

I don’t think that there is a particular nuance. I believe what there might be is they’ve crossed that threshold of appreciating the value of the information, understanding that the information is just that, it’s just data, and it can run on any machine, any instance, and because they value the information and they know that their business is reliant upon it, I think that’s probably one of the key points. They know that downtime is bad, and they can quantify downtime, and they know that if they can mitigate the downtime and reduce it dramatically or make it transparent, then that drops right to the bottom line for the corporations.

Rob Rae:

Lead with talking about the downtime and the cost of the downtime, because they generally have a better understanding than anyone else.

Andrew Schmidt:

Exactly, they have a better understanding. I think that there are a couple of verticals that do appreciate that, or they can measure downtime. Probably manufacturing is another good vertical where they know the cost of a machine. With my customers, they appreciate the value of a point of sale system or a reservation system, and you know that if it’s down, it is directly translatable into lost revenue. In manufacturing, they know if a machine is down, it’s directly measurable. It’s a line item. They can be quantified and appreciated so that if they can mitigate or reduce the downtime, they have a number for that. They’ve crossed that mental threshold into thinking about how it’s going to affect their business. I think that’s key, is that they have that appreciation.

Rob Rae:

I find a lot of times, when you’re especially in the sales process, or trying to demonstrate that you are knowledgeable with their industry, that a lot of real-life examples tend to work. I’m not sure if you have any, and I’ll put you on the spot and ask you if you have any stories. While you think about that, I actually do have one myself where, we obviously, myself and my team, we travel a lot for Datto, and I don’t get an opportunity to meet all my customers out on the road. One of the places that I actually really like is, of course, Orlando. Don’t judge me, it’s not the Disney Orlando, I really love the city of Orlando, when you get out of Disney and into the city where the people in Orlando actually live. I found this awesome farm to table restaurant that I absolutely love, and every time I’m there, I’ll grab as many people as I possibly can and go out for dinner. I walk into this place one day and I literally have fifteen customers and prospects with me that I’m buying dinner for. I walk in the door, and they’re like, “I’m sorry, our systems are down, it’s cash only.” I don’t know how many people were out there [inaudible 00:12:46] looking very hungry, very [inaudible 00:12:52]. It’s unfortunate, but in that scenario, in that situation, they lost my business. [inaudible 00:12:58] and how much money, or how much [inaudible 00:13:00] if they have to do cash only because of some type of outage. Do you have any examples like that or anything that you can share, something that you use during the sales process? I know they already understand it, but those kind of analogies help a lot.

Andrew Schmidt:

Unfortunately, yes. It reminds me of two quotes. One is, “Unfortunately, yes, and the good news is it works.” The business continuity and bare metal restore works. I hate to say it, but unfortunately, the technology works because the servers go down. That example that you cited has definitely happened at point of sales servers that have been very, very important, major bars and restaurants. Yes, we have definitely brought them back very quickly. What we do is we bring them back very quickly in a virtual machine instance so we can keep the business operating. What that does is it buys the IT manager time to think about how they want to then fix the problem, so if it’s a RAID controller, if it’s a cryptovirus, whatever happened, they have time now to sit back and think about it. They’re not in a fire, they’ve just put it out, and now they know it’s going to come back up, or they know that they still have a problem, but now they get to solve it on their terms, and that’s key. Now, the other quote that comes to mind is, “It’s not if it’s going to happen, it’s when it’s going to happen,” because it’s just a matter of scale. The longer you run mission-critical applications, eventually, one will fail. Something will eventually happen that causes a key system to go down. It’s that appreciation that knowing that that’s going to happen, and being able to quantify that and put a system in place, and these systems are not difficult to implement. I think they’re very easy for our customers to work with. The technology is great, so once you’ve crossed that threshold of appreciation, it’s very easy to do the right thing.

Rob Rae:

Great. We are coming up to the end of our podcast here. Obviously, we wanted to bring you on here. You’ve got a ton of experience in our industry, you’ve been in business for a number of years successfully growing your business and continue to successfully grow your business. Ten years is a long time in our industry, twelve years for your organization. Any advice for the MSPs out there? Maybe I’ll do it from this perspective: Worst mistake you made, best decision you’ve ever made.

Andrew Schmidt:

Wow. I think the advice should be to work with the customers the get them to appreciate the value of downtime, the cost of downtime. There’s so many examples. It’s difficult in some industries to quantify that, it’s a lot easier in others, like manufacturing. I think that we’re coming through the thresholds. The Internet used to be a threshold, and as bandwidth speeds are increasing, that’s becoming less of a threshold. Fundamentally, it comes back to focusing on a customer, understanding their requirements, and understanding what their applications are, where their pain points are, and being that evangelist, often educating them, that they have these capabilities. We do come across many cases where the customers, they don’t even understand or appreciate the fact that they can recover from a disaster, and they can recover very smoothly, and almost if it never happened if they plan ahead and think about it.

Rob Rae:

Fantastic, appreciate that. If anybody wanted to get a hold of you, ask any questions that they may have out of this podcast, or if they want to continue the conversation with you, do you mind sharing your contact info with everybody?

Andrew Schmidt:

Sure. I can be reached at andrew.schmidt@hexistor.com, and our main line is +1 (877) 236 6472.

Rob Rae:

That’s Hexistor, H-E-X-I-S-T-O-R. Is that correct?

Andrew Schmidt:

Correct.

Rob Rae:

Andy, thank you very much for joining us today. We really appreciate your time and sharing your experiences with us, it’s fantastic. Thank you again on behalf of our listeners.

Andrew Schmidt:

All right, thank you.

Rob Rae:

As a reminder that if anybody wants to participate in the future podcasts, or if you have any feedback in regards to this, please don’t hesitate to reach out to us. The email address, again, that you can reach us at is podcast@datto.com. If you have any ideas, if you want to listen to this or hear anything specific, if you want to hear from other partners, hear from any executives here, any other additional vendors, if you yourself want to participate, would love to hear from you. Don’t hesitate to reach out to us again, podcast@datto.com. I want to thank Andy again for joining us today, and on behalf of everybody here at Datto and myself personally, thank you very much for listening to our podcast. Be sure to listen to next week’s episode. Thank you, again, for your time. Take care.

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