A Closer Look Inside the ConnectWise Capital Family

behind the sceens

Let’s start with the usual story rewind, for those who haven’t been tracking ConnectWise’s strategy. Generally speaking, I think it’s safe to say ConnectWise CEO Arnie Bellini is striving to build an integrated suite — somewhat akin to Microsoft Office — for VARs and MSPs to better run their businesses. At the same time, ConnectWise has vowed continued partnerships with RMM (remote monitoring and management), quoting and backup specialists that compete with LabTech, Quosal and CharTec. I realize Bellini’s investment strategy has created some animosity and friction among a few vendors, but many MSPs have benefited from the heightened software competition.

That’s the back story. Now, let’s take a look at each ConnectWise Capital investment.

CharTec: HaaS and MSP Training

alex rogers

CharTec hit a few bumps in terms of employee turnover earlier this year, but CEO Alex Rogers (pictured) is a colorful, outspoken, sales-minded professional. Sit down with Rogers for an hour or two, and you’ll walk away with a few dozen action items to help bolster your sales development, lead generation and marketing efforts. Also, CharTec has a sister company — ARRC Technology — that focuses on managed services. ARRC Technology apparently ranks among the top performing MSPs in North America, based on data points I’ve heard compared to our own MSPmentor 100 research.

But what exactly is CharTec up to? The company’s specialties include:

I believe the HaaS solutions mainly involve BDR (backup and disaster recovery) appliances tied to third-party cloud services. Key partners include Doyenz, Reflexion Networks (more on Reflexion here) and StorageCraft. CharTec’s MSPs can also leverage HaaS financial strategies to consistently refresh customers’ workstations, servers, firewalls and other IT infrastructure. CharTec has also tested some VoIP solutions as part of its HaaS efforts, but I think the VoIP strategy will likely evolve in 2012.

Meanwhile, CharTec has also focused on BDR software solution that works with customers’ and partners’ existing hardware. The BDR software is deployed using a USB thumb drive and 10-click installation process. It replicates a customer’s production infrastructure to offsite storage. Though Rogers didn’t mention Zenith Infotech by name when we spoke, I think the CharTec BDR software release targets Zenith Infotech MSPs that are seeking market alternatives while Zenith Infotech strives to navigate a bond default court case.

Generally speaking, I think CharTec has grown significantly since the ConnectWise Capital investment — though I can’t really pinpoint the growth. Rogers says CharTec now has nearly 1,000 partners, and 98 percent of the company’s BDR deployments involve HaaS engagements — impressive stats.

Overall, it sounds like CharTec has performed well for ConnectWise Capital since the initial investment. But ultimately, I think ConnectWise co-founders Arnie and David Bellini see software as the even bigger opportunities.

LabTech: Looking Back, and Ahead

matt nachtrab

No doubt: LabTech’s growth has been impressive. But the growth has also introduced some business challenges. Around Q2 of 2011, some MSPs told me LabTech needed to bolster support. All that growth, the MSPs claimed, threatened to overwhelm LabTech’s support lines. More recently, some RMM software providers say they are recruiting a few MSPs away from LabTech.

LabTech CEO: Look At the Numbers

However, LabTech CEO Matt Nachtrab (pictured above left) offers three key data points to help keep LabTech’s business and support priorities — and growth — in perspective:

At last week’s IT Nation conference, LabTech hosted its own Automation Nation gathering. I believe roughly 300 partners attended — a very strong figure. Looking ahead to 2012, LabTech will host a standalone Automation Nation conference in June 2012, while also continuing to attend the IT Nation conference in late 2012.

Standing On Its Own

Admittedly, LabTech could not have grown so quickly with ConnectWise’s funding. But LabTech has also executed CEO Matt Nachtrab’s vision. When ConnectWise Capital first invested in LabTech, I wondered if ConnectWise CEO Arnie Bellini would micro manage Nachtrab and the LabTech team. But generally speaking, I think Arnie and David Bellini have been involved in strategic and financial decisions at LabTech, while Nachtrab has been free to execute day-to-day decisions.

Longer term, I think LabTech will need a broadly communicated cloud strategy. The company briefly allowed TechLabCloud — a startup — to host LabTech, but that relationship fizzled sometime in mid-2011. By August 2011, Nachtrab mentioned that LabTech was developing its cloud strategy but I’m not sure where those efforts stand.

In the meantime, LabTech must work to avoid a Junior Jinx. Overall, 2010 and 2011 — the Freshman and Sophomore years — were rapid growth years for LabTech. I sense that LabTech hit some support bumps in early 2011 before sorting things out in mid- to late-2011. LabTech will need to continue scaling support as it scales MSP recruitment in 2012, and also moves into a new Tampa, Fla., headquarters with ConnectWise.

If I had to pinpoint the thing that impresses me most about LabTech: CEO Matt Nachtrab and his executive team have managed to maintain their own voice and views in the industry, without being silenced or micro managed by ConnectWise.

Still, don’t forget: Most of the rival RMM providers continue to grow. Earlier this week I spoke at length with Level Platforms CEO Peter Sandiford about his own company’s performance in 2011 and strategy for 2012. I’ll share more details from that conversation in a few days.

Here Comes Quosal

kent mcnall

The Quosal part of the story is still emerging — partly because I’m still getting up to speed on the quoting and sales proposal market, where companies and services like Quosal, QuoteWerks, CNet Channel Online and VARStreet, among others — compete. Sometimes I drive vendors crazy when I lump them all into the same market. But ultimately, those services do compete in some areas. Both Quosal and QuoteWerks were very active at IT Nation (I’ll share more QuoteWerks perspectives soon).

As one industry coach put it, Quosal may be ConnectWise Capital’s smartest investment to date. Quosal CEO and Co-Founder Kent McNall (pictured) is a soft spoken leader but he sees market opportunities that most folks are overlooking. McNall claims the market for sales oriented software could be as big as the retail POS (point of sale) market. Before you dismiss McNall’s big-time optimism, consider this: He previously built retail software applications.

Of the ConnectWise family, I think Quosal also has the most mature public cloud strategy. Available on-premise or via the Microsoft Windows Azure cloud, Quosal is also moving beyond full-blown desktop apps to browser-centric cloud access. And you’ll see a new surprise, tentatively called Quosal Web, sometime in early 2012.

Located in Bothell, Wash., Quosal doesn’t plan to move into ConnectWise’s offices. But it’s clear that Quosal will increasingly snap into the ConnectWise software strategy.

Exit Strategy?

Quite a few folks have asked me if Arnie and David Bellini have an exit strategy for ConnectWise and the ConnectWise Capital family of investments. Publicly, they’ll tell you the goal is to build and expand their companies while strengthening the channel.

When we met at IT Nation, I had never seen Arnie Bellini more relaxed. When I asked how life was treating him, Bellini said something along the lines, “When I wake up each day I can’t believe this is my life.” Bellini didn’t have an arrogant tone. Instead, he said he is focused on the right market at the right time — and he’s enjoying every moment of the journey.

So will ConnectWise and its sister companies ever launch an individual or combined IPO? Will the pieces ever be sold off or spun out? It’s impossible for me to say. But here’s an interesting tidbit: During an interview a few weeks ago with LabTech CEO Matt Nachtrab, I asked about  career goals he’d yet to achieve. Nachtrab’s first answer: “IPO.”

I asked Nachtrab if that dream could ever be realized. He smiled, paused for a second, and said yes. (Admittedly, that’s not a guarantee. Nor did Nachtrab specifically state the IPO dream was tied to LabTech.)

I don’t know how long Arnie and David Bellini intend to build and run ConnectWise as well as the ConnectWise Capital family of companies. And I certainly realize growth isn’t easy. But all signs seem to indicate that the growth continues. ConnectWise earlier today announced that its base had surpassed 60,000 users… I think that’s roughly 2X the installed base from about 2008.