The Canadian solutions provider talks lists, plans and pitfalls, and the company’s evolution and goals for the future.

Allison Francis

September 13, 2019

11 Min Read
Champagne toast

Vendasta has been busy lately. The digital solutions provider has two reasons to celebrate, having been named as a runner-up in the competitive ranking for Channel Futures’ 2019 Managed Service Provider (MSP) of the Year, and among the CIX Top 10 Growth companies, an impressive list reserved for the most promising growth stage companies in Canada, both in the span of two weeks.

The MSP of the Year award was announced at the MSP 501 Awards Gala Tuesday evening as part of Channel Partners Evolution in Washington, D.C. The event honors the 501 top MSPs as determined by Channel Futures.


Vendasta’s Brendan King

The Canadian Innovation Exchange (CIX) delivered its “Top 20 Early” and “Top 10 Growth” lists on BNN Bloomberg last week. Companies are chosen by a selection committee of technology industry experts and investors from across Canada.

“It’s exciting to see the emphasis on ‘scaling’ companies’, says Vendasta CEO Brendan King. “Very few Canadian technology companies are reaching that stage. There is a lot of support for startups, but not a lot for those who get past that checkpoint in their success. It’s great to see CIX recognizing companies that are reaching this milestone.”

We sat down with King to talk about Vendasta’s plans and pitfalls, the company’s evolution and goals for the future.

Channel Futures: How have you evolved since your first years of operation? 

Brendan King: When we started, we were building foundational digital marketing products for small businesses like reputation management, listings and social media management. Some 10 years ago, this was a newer concept. Small businesses hadn’t considered their digital reputation, and we were able to prove the value by showing them how they stacked up against the industry leaders in their space.

CF: When did you begin seeing a need to evolve your business model? What trends prompted and supported this decision?

BK: When we started, we were a point solutions provider and had a very high growth rate. From our experience in the space, we knew that the cost of acquiring SMBs was high and that SMB churn is generally high too. This led us to distribute as white-labeled products through partners — resellers who already had a relationship with the SMBs. Originally, those partners were in the media space, such as newspaper, yellow pages, radio, TV. They were undergoing a huge transition from selling traditional print-based products to digital products, and they needed our foundational solutions.

CF: You’ve evolved a lot. Try to address each major pivot and expansion so we know not just the how, but the why of your operational decisions.

BK: Vendasta’s early success was dramatic because advertising was changing. In the past, all you needed was a newspaper ad, a yellow page listing, broadcast commercials, and maybe a board at the bus stop. All customers would do was either come see you or call you to get more information.

Around 2008, the landscape started to change. The iPhone came out, Google was everywhere, the internet was everywhere and people were searching…

…online. As we all know, the best place to hide a dead body is the second page of the Google search results. The value of digital presence quickly became critical for SMBs, and once they are found, they need a good reputation and customers to advocate for them. It turns out listings, reputation and social are a foundational set of required products, especially for traditional media selling advertising.

As our partners sold these solutions, we learned that they don’t really have a “product” problem, what they have is a sales and marketing problem. They’re going from selling high price point products in traditional ads, to much lower margin, smaller gross dollar products, like digital. They need to reduce their cost of acquisition, and this is why we built out our sales and marketing automation. It’s become the engine of how we produce success.

At the push of a button, we can get the name of the business or the phone number of the business. We’re able to get information about where they’re listed, where they’re not, where they have wrong phone numbers, how their reviews look, how they compare to their competitors, if their website’s mobile-friendly, if it’s fast enough, if they have the right information on it, how their SEM is doing, how their search engine marketing is doing, how their SEO is doing, how they’re advertising compared to their competitors. When we send that information to them, and as they interact with it, our AI watches and delivers hot leads to the salespeople. This way, the salespeople don’t have to boil the ocean. They get to have fantastic conversations with customers that are looking for solutions to problems they previously did not know they had.

As we built the marketing automation and CRM — selfishly, to sell our own products — we realized that we could use this base data to sell any product or service in the martech stack and our next evolution was born. We built out a marketplace, where we could bring in the best-of-breed products across the entire martech stack. That’s what we did from 2016 to 2018.

Now, we’re becoming an end-to-end platform and bringing in all the products and services across all things an SMB needs. This is where we’re actually becoming more of an MSP. We’re bringing in products that traditionally MSPs would sell. We’ve added G Suite, we’ve added Microsoft’s Office 365, Constant Contact, MyCorporation. Some of these are productivity tools, and now we’re moving into the other stacks: HR, infrastructure, things that typical MSPs would sell, but also things that banks, accountants, any other vertical might provide to the local business. Our goal is to become a single source of truth for that local business.

When a small business has a problem, they turn to somebody that they trust. If they have an accounting problem, they turn to an accountant. If they have a marketing or an advertising problem, they turn to a media company or an agency. If they have…

…an infrastructure problem, they might turn to an MSP or a telco.

We’re expanding areas of trust. For instance, we found that web companies were providing websites, but they were also being asked by their customers — the small business — for productivity products like G Suite and Office 365. We’re able to provide those. But the key here — the value in how it’s all driven from start to finish — is the access to products and services, the marketing automation, the sales and CRM, the billing, the fulfillment, the management of tasks, the reporting and easy access for the SMB. It’s the end-to-end platform that powers it all.

CF: What were your first steps (e.g., customer discovery, financial analysis, competitive analysis, etc.)? What were you surprised to learn during this stage?

BK: I don’t think there were a lot of surprises. I’m really thinking about this, because if anything surprised me, it would be that the needs of the enterprise customers are almost exactly the same as those of the agencies. That surprised me. I would have thought that enterprise companies would have billing figured out. They don’t. On one hand, we’re trying to democratize this technology for smaller agencies, but we’re learning that larger enterprise companies have the same needs. That would be a surprise.

We were evolving. We see it as evolving, not necessarily business pivots.

CF: Any pitfalls in the course of these pivots? Any examples?

BK: Everybody makes mistakes. There’s a lot of products that we made that nobody has ever heard of, so we did a number of things that we killed fast, a lot like Google does. As long as you learn from those mistakes, are they really mistakes?

We built a Groupon competitor called Daily Deals. We sold it, and as far as successful things goes, we had customers in Canada, up and down the east coast of the U.S. and even in Latin America, and we were doing pretty well with it, but at one point in time, there was a number of Groupon-like competitors that raised more than $20 million. There were more than 20 of them, that raised a lot of money. We ended up selling those products to our customers at the time and  moved on. I don’t know if that’s really a mistake, but that’s a little bit of foresight. You know what happened to Groupon, as they stand, it’s really not the dominant player it once was.

CF: Through the evolutions that you’ve experienced, has it ever cost you customers?

BK: When we were building out our point solutions, we were best-of-breed in those point solutions, and then we focused resources to build a platform to deliver those solutions. I think we had some growing pains then because we were not able to provide the customization in certain verticals that some people wanted and that we were able to provide before. Had we stayed as simply a point solution provider, we’d have a much smaller market cap, but we…

…would have been able to specialize into certain verticals.

Instead, we’ve kept our product to generalized best-in-class, but now we’re bringing in those verticalized products in our marketplace, so for a time, until our marketplace was ready, we probably lost some business in specific verticals that we could have had.

CF: When did you realize you were a managed service provider, i.e., in the technology channel?

BK: When we’ve been looking at our long-term vision, we always wanted to be able to provide products and services to a set of what we call “cloud brokers” to help solve their customers’ problems. We started in the martech stack, but we’ve always wanted to be in the productivity, protections, operations and connectivity stacks. The business vision has never changed and we’re inching closer to it.

It’s sort of two-fold. Right now, we’re allowing digital agencies to become MSPs, insofar as delivering productivity services like Office 365 and G Suite, but we’re also allowing MSPs to compete in the marketing and advertising space. They have some trust with their customers in that space. We also allow other ISVs and MSPs to integrate into our marketplace. The platform is a foundation of opportunity.

CF: What assumptions did you make about the MSP market that were or were not unfounded?

BK: We assumed that there would be a greater gap in logic, but the space is ripe for transformation. When we reach out, people are reaching back. It’s encouraging to see.

CF: What operational shifts were you required to make in order to support and grow this evolved business model?

BK: As you grow as an organization — and we’ve gone from a small organization in 2010 to 300 people today — we’ve had to make many organizational shifts in terms of organizational structure, so moving from a flat structure to a functional structure to a structure organized around our product base to, now, a structure organized around our customers. That is the shift, having a structure organized around your customers, that allows you to be able to focus on the vertically specific industries. You know the old saying, “You ship your work structure”? We, by focusing on the customer, are able to accommodate the differences in the MSP.

The MSP world is a complicated one, and the sales cycle is different. There are a lot of differences, so that’s how we’ve managed to do it — by being able to focus around the customer.

CF: Any other juicy details you’d like to share?

BK: There are a lot of MSPs in North America, and most of them are smaller — fewer than 10 employees — and they’re struggling to make the margins work for their company. I think Forrester said that over half of them are looking to get out.” With the platform that we’re trying to build, we’d be able to serve those MSPs and make their lives fun again.

Today’s SMB needs a full set of solutions, and in order to do the full solution, you have…

…to bring in different products and different services. MSPs are like a broker — that’s why we call them “cloud brokers.” They’re bringing in not only different products, but different solution providers, and delivering that solution to their customers.

The Vendasta platform is going to allow them to do that. That’s where our evolution is going, so that our marketplace consists not just of products, but of services too, so you’ll be able to find local providers.

If you don’t know how to do telephony and you want to bring in a telephony expert, we’re going to be able to bring a local one in that you can put as part of your quote, your package, your bid, your sale, your delivery system and make it work. That’s what we’re going to do. That’s a pretty juicy detail.

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About the Author(s)

Allison Francis

Allison Francis is a writer, public relations and marketing communications professional with experience working with clients in industries such as business technology, telecommunications, health care, education, the trade show and meetings industry, travel/tourism, hospitality, consumer packaged goods and food/beverage. She specializes in working with B2B technology companies involved in hyperconverged infrastructure, managed IT services, business process outsourcing, cloud management and customer experience technologies. Allison holds a bachelor’s degree in public relations and marketing from Drake University. An Iowa native, she resides in Denver, Colorado.

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