MSPs and Software Spin-Off Businesses: JoomConnect Update

How can MSPs (managed services providers) push into software development for on-premises or cloud services? I explored that question a bit about a week ago. Now I've got some updated thoughts from Chris Chase, CEO of both Directive (an MSP) and JoomConnect (a Web software add-on for MSPs running ConnectWise). JoomConnect now has 400 partners leveraging its software and business marketing solutions. The big question: How is Chase building and managing two companies at once? And what inspired him to get into the software business? Here's the interview, packed with updates.

MSPmentor: Refresh my memory: When did you launch Directive?

Chase: Directive was launched in 1993, web design and marketing division for local and regional clients in 1996.

MSPmentor: So when did you launch JoomConnect and why?

Chase: JoomConnect was launched in September 2009. That year we were moving from break-fix to managed services and building out our new website at www.directive.com. We wanted to let our clients log into our website and the ConnectWise Client Portal at the same time with a unified login, so we developed that for ourselves internally.

At a ConnectWise User Group Meeting, they broke up tables and asked everybody to come up with the best idea for ConnectWise. The table with the best idea would win a cash prize.  I was there with a new employee who had just started a week or two before. When it got to my turn to offer up an idea (I was going to mention a cool trick we were doing with agreements in CW), I had went to the bathroom and the new employee leaked JoomConnect, he didn't know it was a secret. My table convinced me to present about it and the idea received enthusiastic applause and a standing ovation. JoomConnect won the contest. From that point on, I knew we needed to get it launched sooner than we originally planned.

MSPmentor: How are you balancing your need to focus on two businesses?

Chase: I have to admit it's been very difficult. I've promoted from within with great success and have great people who have taken on my old roles on the MSP side of the business. I'm still very involved but the day to day is being handled by my staff. I've been focusing on growth, strategy and the tools we use etc. The Marketing we do for MSP clients is also used for our own MSP business and has been "forcing growth" on the MSP side even when I'm not ready for it.

I am mostly focused on the JoomConnect side of the business. But still LOVE my MSP Practice.

Recent Achievements

MSPmentor: What have been some key milestones this year?

Chase: There have been a few I'm pretty excited about. Many of these have been in the works for a long time but all came to a head this year.
  1. We've reached profitable stage in the business and recovered costs from the startup of JoomConnect and we are re-investing heavily.
  2. We have setup our new studios and high quality AV broadcasting equipment for JoomConnect TV which is launching soon and will cover JoomConnect training, marketing etc.
  3. We now have 25 staff members and will have 29 within the next 60 days
  4. We passed 400 MSP partners actively using our JoomConnect and our Marketing solutions.
  5. Our marketing solutions are now available to all MSP's that use CW or not. We have partnered with ASCII this year and have been traveling all over the country recruiting new clients that use other PSA solutions. ASCII was our first non CW/HTG trade show circuit.
  6. In August we are introducing what we call "GEO Protection" so no two clients in the same area have the same marketing.  (we already did this a little bit but it's more formal now and covers more of our solutions than just the Website design)
  7. JoomConnect now provides full printing services and fulfillment for our MSP clients company swag, business cards letter head etc, as well as all printing for direct mail campaigns, newsletters and more. We have a 5k' printing facility in our building and handle all QC ourselves.
  8. JoomConnect has had a complete re-write and 30% code reduction for our 3.0 version that was just released.
  9. We have made leaps and bounds on our company culture and this has played a huge role in our growth.

Next Moves

MSPmentor: Any key goals for rest of year and 2013?

Chase: Lots of them. They include:
  1. We plan to reach 500 partners by the end of the year. It could be more, but we have had to slow down to maintain performance levels so we have increased lead times and done a partial new client freeze for the second time since we started.
  2. Just being honest here... We have had some ups and downs with growth spurts and performance issues, hitting deadlines and keeping up with support. It's not out of control or anything and it's manageable but we have had to figure out the formula for X amount growth requires X amount of support people.  This has been our top priority.  We have maintained a very very low client turnover rate, we have only ever had five clients leave our service in three years.
  3. We have some really exciting plans for White Labeling our services and training and empowering our MSP partners to get into the web business but with a twist, which is currently a secret! I can tell you the "twist" but wouldn't want it talked about yet publicly.
  4. On top of our MailChimp integration we launched last November we will also be launching Constant Contact integration with ConnectWise in November this year, giving our clients the choice of which bulk email service to use.
  5. Our free quick campaign lite integration for ConnectWise will be getting a new version in August/September. There are 100's of ConnectWise partners using this free service who are not even clients yet.
  6. We have seen an uptick in the Vendor side of the market (VirtualTone, Reflexion, CharTec, etc) using us to build out their ConnectWise integration's for their products as well as web design and marketing efforts like nationwide SEO, PPC management etc. We plan to formalize this and expand on it in 2013.

Big Risks, Big Rewards

As I've mentioned before, I think the best, most profitable MSPs will ultimately build their own intellectual property (in this case, Directive launching JoomConnect). But software development can be a particularly process for MSPs -- especially those that have smooth-running recurring revenue businesses and don't really want to get into the complexities of code development.

If I had to guess, I suspect fewer than 10 percent of MSPs have truly successful software development teams working on customer projects. And fewer than 1 percent of MSPs actually build out their own software -- on premises, or on the cloud -- as part of a separate business launch. Again, consider those figures educated guesses at best.
TAGS: Technology PSA
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