- Company: Electric
- Year Founded: November 2016
- Headquartered: New York City
- Geographic Market: United States
- Top Growth Indicator: Annual Recurring Revenue
- YoY % Of Growth: 105%
- CEO And Founder: Ryan Denehy
What Are The Top Three Metrics You Use To Measure Your Business And Why?
First, we look at the rate at which our annual revenue is growing because if revenue isn’t growing, then the business itself isn’t growing. Second, we look at our gross margin. If the amount of money we’re generating is going up, that’s great, but it has to mean that the amount we’re keeping is going up too. And third, we look at retention. If our customers are happy and sticking around, that means this whole thing works. The combination of those three things is what we look at to determine we’re a healthy business. We assign a goal to each of those three things to find out what the right mix is, too. For example, we could push for 200% growth in a year, but then it’s likely our customers wouldn’t be very happy. And if we grew slower, we could probably boost our margins, but then we’d be missing out on the opportunity to win in our market. It’s all about balance.
What Is The Top Lesson You Had To Learn That Allowed You To Kick-Start Your Business Growth?
We knew we had to do something different, something that would make our customers really happy. Some people try to distinguish themselves from competitors just for the sake of being different, but for us, it was about doing something that’s truly better. So we decided to invest heavily in our own proprietary software that would enable our solution to look and feel more like customers were buying software with a nice human touch instead of just contracting with a service provider. We built a customer-facing dashboard that a more technical person can find tons of utility in but that a less-technical person can still relate to and use effectively. We gave our customers the ability to log in and see exactly what’s going on with their account at any time, and they love it.
What Would You Say Is The Single Secret To Your Success This Past Year?
We never stopped spending money on sales and marketing during the COVID-19 pandemic. In fact, we probably spent more money on them this year. In May, once we felt like the country was beginning to rebalance in certain markets, we immediately started hiring more salespeople. As a result, June was our second-biggest sales month ever. Had we done what a lot of other companies did, which was pull the plug on sales and marketing around April, we never would have reached those numbers. Instead, in that moment, we decided that no matter what happened with the country, people were still going to need good IT services. So we never took our foot off the gas.
What Was The Biggest Challenge You Had To Overcome This Past Year Related To Either Reaching That Growth, Or As A Result Of That Growth?
We’ve been growing quickly over the past 12 months, and we wanted to make sure we could continue that growth while also getting better at what we do. We wanted to build more software, partner with more companies, and deliver a wider range of services. To do that, we had to completely rethink our leadership team. It was a huge challenge because we had to hire four different senior executives in the span of six months, which seemed impossible. But we knew that if we did it, we’d be able to continue growing into a better company. If we didn’t do it, we were going to have to slow down. A year later, it’s easy to see how that process has completely changed the business for the better. Making those decisions wasn’t easy, but they were necessary to start thinking bigger.
Who Would You Say Is The Most Impactful Business Leader Or Business Thought-Leader Whose Techniques Or Leadership Style You Either Try To Emulate, You Follow, Or Are Influenced By?
Over the last eight months, I’ve been fortunate to spend time with Dick Costolo, who was the CEO of Twitter for five years. He joined them back when they were about 40 employees, and he grew them to 4,000 employees and took the company public. He invested in Electric about six months ago, and his leadership style has become very admirable to me. He’s very analytics driven, matter of fact, and even blunt at times, but this all makes him extremely productive. He always points out what’s necessary to learn about your company. He makes us think about what we’re not learning, what’s taking too long to learn, how we can find these answers, and how quickly. That degree of specificity in terms of how he thinks about growing a business is a different mindset that’s been incredible to learn from.
What Book Would You Recommend To Other MSPs Or SMBs Trying To Grow Their Business?
For MSPs, I would be remiss if I didn’t recommend “Package, Price, Profit: The Essential Guide to Packaging and Pricing Your MSP Plans” by Nigel Moore. It’s such an approachable book that you can easily read in one weekend, and it’s so clearly written, with effective ideas for how to run an MSP. For more general business reading, I recommend “High Output Management” by Andrew Grove. Contrary to my first recommendation, this one is a little more advanced and dense, but if you’re running a business and want to think bigger picture about how to run and scale that business, it’s a great resource.
Were There Any Partners Or Businesses That Helped You Along The Way?
There are so many people and companies who have helped us along the way. My good friend Leif Borden first introduced me to the MSP industry back in 2012 so that’s essentially where it all began. Major kudos to him! In terms of people directly helpful to Electric, we have a number of technology partners that are core to our service delivery and have been for some time, companies like Kaseya. Without them our job would be much harder!
In Closing, Do You Have Any Specific Advice Or Words Of Wisdom That You Would Give To Other MSPs Looking To Grow Or Build A Successful Exit For Their Business?
Start by deciding what you want and when you want it. I talk to a lot of people who own MSPs and haven’t figured out what it is they want out of it, which means they don’t know how to get to where they want to eventually be (which is usually retirement). They always say how great it would be if someone offered them a lot of money for their business, but they haven’t taken the time to think about what they need to do to make that happen. If you want to keep building your MSP slow and steady and maintain your lifestyle, that’s fantastic. But if that’s not what you want, then you need to figure out exactly what you want, when you want it, and how to get it. Then, the only thing standing between you and that exit is your willingness to learn from people who have done it before you and to build a concrete plan to get there. Be intentional about your goal.