How exactly does ConnectWise Capital work? That's the question I've been pondering ever since ConnectWise co-founders Arnie Bellini and David Bellini launched the $20 million investment fund roughly two years ago. The fund is designed to empower channel-centric technology companies, and has so far pumped money into CharTec, LabTech Software and Quosal. While the Bellini brothers ultimately control ConnectWise Capital's direction, there's another key name IT service providers and potential investment targets should know. His name is Gerwai Todd. Here's why.
Todd is director of strategy at ConnectWise, with a particular emphasis on ConnectWise Capital. He helps Arnie and David Bellini to sort through potential opportunities, and narrow down potential targets for the ConnectWise Capital fund. Once an investment occurs, Todd helps the Bellini brothers to make sure synergies develop between the various portfolio companies.
I don't want to paint ConnectWise Capital as perfect. It has empowered many MSPs with lower-cost, more tightly integrated software since 2010 or so. But the ConnectWise Capital investments have sometimes caused some angst in the market, triggering competitors and some MSPs to worry about continued third-party software integrations. In recent months, many of those concerns have quieted down as ConnectWise continued to balance its investments and third-party integrations. And overall, it's safe to say many partners have benefited from ConnectWise Capital.
Before ConnectWise CapitalTodd joined ConnectWise in 2008, around that same time that ConnectWise recruited Director of Community Jeannine Edwards into the company.
Todd had worked for former ConnectWise President Santo Cannone at Fidelity, and Todd previously studied business and finance in college. While at Fidelity, Todd had several roles -- including a post where he oversaw requirements and software code for loan-related processes.
The Fidelity experience "taught me software is a piece of clay that you can shape," said Todd. "It also taught me that you need domain expertise to do really well in a market. When Santo introduced me to Arnie, joining ConnectWise was a no-brainer because the company had so much inherent domain expertise. Arnie cares deeply about the customer experience."
(Side note: Cannone resigned from ConnectWise in 2010 for an opportunity outside of the IT channel, but he has remained extremely tight with Arnie and the ConnectWise team.)
Focusing on SalesInitially, Todd was director of sales at ConnectWise, leading an eight-person team that grew to 24 people from 2008 to around 2011. He worked closely with Edwards and other peers to connect the dots between sales, marketing and community. Also during that period, ConnectWise decided to get serious about the cloud.
"A few years ago, 25 percent of our new sales were for ConnectWise in the cloud," said Todd. "Today the cloud represents 80 percent of our new ConnectWise sales. The key is we’re still very, very focused on allowing MSPs and VARs to choose how they want to consume the product. If they want it on-premise, you’re getting the exact-same experience that you would have in the cloud."
Translation: Rival Autotask has aggressively promoted its pure cloud architecture and pure cloud strategy, and many other PSA platforms are available in the cloud. But ConnectWise isn't ready to bow to the competition, nor will it abandon partners that prefer on-premises options.
Shifting His FocusAround 2010, Arnie and David Bellini tapped Todd to get involved with the ConnectWise Capital effort. The big challenge: Each time ConnectWise Capital invested in a company, "how would we assimilate and integrate those offerings with ConnectWise? We need to get the sales force positioned and prepared for what's coming. We need to work with Jeannine [Edwards] to get our community team educated on the products. We need all the right business processes in place."
The Quosal investment provided a prime opportunity for Todd to help connect the dots between Quosal and the broader ConnectWise team. The reason: Todd was one of the key people who helped to implement Quosal within ConnectWise years earlier.
More recently, Todd has been helping Arnie and David Bellini to filter through additional investment opportunities. Todd declines to say how much of initial $20 million fund is already tied up in existing investments, but he says ample funding remains available.
"When we evaluate potential investments we ask some key questions: Channel partners -- IT service providers, VARs and MSPs -- need a number of applications to run their businesses. Quosal and LabTech both fit that description. We've used our own office like a lab. We think we can deliver all the tools we’ve vetted that an IT practice needs to run the business."
The Scorecard So FarAs an outsider looking in, it's difficult for me to say if each of the ConnectWise Capital investments has met ConnectWise's original goals. My educated guess: I think LabTech has far surpassed initial goals, Quosal is performing well and CharTec met aggressive goals, though it wasn't a traditional "software" investment and has adjusted its focus from time-to-time, first emphasizing HaaS before shifting more to storage and channel partner education.
Overall, Todd says, ConnectWise Capital has "performed exactly as planned. It has brought together the opportunity to have a suite of products that allows our partners to be more efficient. It’s the message Arnie delivered on main stage" at the 2011 IT Nation conference.
The Power of Three?ConnectWise will continue to integrate with third-party platforms. But Todd says coordinating multiple road maps across three or more vendors requires more than a traditional partnership.
"You can have joint road maps but the next level of automation involves investment and ownership," said Todd. "Think of it this way. Imagine your customers have an aging PC fleet that suffer from bad hardware or software. We think we can identify that condition through LabTech, quote and propose an upgrade with Quosal, then manage the service and delivery through ConnectWise. Can you do that -- and more -- without combining road maps and coordinating schedules in-house? Perhaps you can do it with two companies. But to get three coordinated road maps... to do that you need ownership."
Todd: Word for WordIn addition to an extended phone conversation in February, Todd and I have exchanged multiple follow-up emails in recent weeks. The essence of those discussions is captured in the Q&A below. Some of the Q&A is redundant with the information above, but the Q&A gives you an unvarnished look at Todd's words and perspectives:
MSPmentor: ConnectWise Capital is about two years old now. How did you personally get involved with ConnectWise Capital?
Todd: My work at Fidelity was for a community banking software product. That job presented itself because Fidelity needed bankers with domain expertise to design the product. One of the key things I've learned during 10+ years of working for software companies, is that software is a raw piece of clay. It requires tremendous levels of domain expertise to shape into something meaningful for those that use it.
I was introduced to Arnie in 2008 through a mutual friend, Santo Cannone. Once I had a chance to understand the depth of domain expertise and the high levels of innovation at ConnectWise, it quickly rivaled all other software businesses I have ever seen. The decision to join the ConnectWise team was simple.
MSPmentor: How do you work with Arnie and David on the ConnectWise Capital strategy? Basically, where do you fit into the process, effort, etc.
Todd: It all starts with one goal, to deliver solutions that increase the profitability of our partners. With our experience as IT Solution Providers, we are constantly seeking out tools to improve the operations of our own IT company here in Tampa. Our businesses have become labs. Once we perfect a business transformation process or technology for ourselves, our next goal is to deliver that innovation to our partners. Our investments in LabTech, CharTec and Quosal have all met that benchmark.
We have a very collaborative leadership team. Ideas and opportunities for an investment can originate from all over the company. Once Arnie and David agree with pursuing an opportunity, I assist with the partnership terms and manage the operational integration.
We are not limited by ConnectWise Capital investments to drive innovation. Our Chat and Remote Control offering (ConnectWise Chat) is a great example of this. We have improved the efficiency of our own help desk operations and reached new levels of incident response leading to higher partner satisfaction with the service we deliver through real-time chat support. ConnectWise Chat is now fully integrated into ConnectWise and is available to all of our partners to drive more efficiency into their businesses. We understand the importance of helping create differentiators for our partners in their offerings - in this case chat capabilities within the help desk practice to drive tighter SLA’s and higher contract values.
MSPmentor: CharTec is different from the other two ConnectWise Capital investments to date. While LabTech and Quosal are software companies, CharTec has focused on hardware as a service, storage and training services for MSPs. What attracted ConnectWise to CharTec?
Todd: Every ConnectWise Capital investment we have made has been into a business with IT domain experience. The CharTec business is focused on a really important initiative. They are the IT solution provider lab that has opened their doors to the world and lets other IT business owners walk through and take all of their trade secrets. I don’t know of another company that has executed on this level of sharing with the IT Nation. I think it is an invaluable experience to walk the halls of another IT company.
MSPmentor: How much of the original $20 million fund is invested so far? How much more might be invested?
Todd: With the success of our investments, we still have a considerable portion of the initial investment goal remaining.
MSPmentor: If a company was interested in a potential ConnectWise Capital engagement, what's the process to begin a potential dialog?
Todd: The best place to start is at www.ConnectWise.com/ConnectWiseCapital.
MSPmentor: Might we expect more ConnectWise Capital investments in near future or are you fully focused on the existing investments?
Todd: We have the capacity to do both. We are always working on improving our operations and there is always something we are working on in the lab. Constantly delivering innovation is ingrained in our DNA.
Exit ThoughtDuring our conversations, I also asked Todd about potential exit strategies for ConnectWise and the ConnectWise Capital investments. Todd -- much like Arnie and David Bellini -- reinforced a familiar answer: ConnectWise insists that it's focused on building value for its partners. No particular exit is planned.
Meanwhile, I get the feeling that something new could be brewing with ConnectWise Capital. Another investment? I'm not sure. Perhaps some deeper stats on milestones? A definite maybe.