Agent Pioneer Greg Praske Retiring After 33-Year Run at ARG
With Greg and Steve Praske moving to board roles, Mike Shonholz and James Larsen will serve as CEO and president, respectively.
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The origin of ARG's founders makes the Virginia-based firm an anomaly among the first generation of agencies. Many agent leaders worked in sales at a carrier before getting into the channel, but ARG co-founders Greg Praske and Bill Power did not.
The pair worked for 12 years together at the National Air Transportation Association. Power served as vice president of government affairs, and Praske ran finance and administration.
When the two branched out on their own in 1991, Praske and Power initially wanted to start a fee-based business that helped trade associations – hence the original full name "Association Resource Group." They decided to focus on telecom, starting with long-distance calling services. At the same time, Bell network resellers like Allnet started offering commissions to participating agents.
But in those days, the agent world was a lonely one.
"We were trying to find our legs. We were reaching out to try to figure out who else was doing this. How do you do that? And there really wasn't anything," Greg Praske told Channel Futures.
They reached out to Virgo Publishing in search of information and in hopes of inviting other agencies to gather together. In the following years, Virgo (now owned by Informa) would go on to create Phone+ magazine, which is now the website Channel Futures today, and the Channel Partners Conference & Expo.
The Alliance Partners (then the Agent Alliance) industry consortium launched in 1997 as part of efforts from Power, Praske and other members of the fledgling market.
"Back then we were just trying to create an industry. We had the good fortune of connecting with people in the industry. And over the years we actually were were able to create this in a way where we could have businesses that could actually last," Praske said.
A 2006 article by then-editor-in-chiefKhali Henderson gave an interesting look into the halfway point of Praske's tenure.
Power vacated his role as president in 2010 to head up The Alliance. He still leads The Alliance and now works with the Technology Channel Sales Professionals (TCSP) group. In 2006, ARG merged with Steve Praske's Paladin Solutions Group.
ARG in the middle of the 1990s built a database of information about the customer life cycle. The platform started as a custom project developed with other agencies and later transitioned to Salesforce.
Greg Praske said the inspiration to build a database stemmed from his and Power's background working in associations.
"Associations charge membership dues. That's a residual income stream, and the way you sustain a residual income stream is to service that base so that they keep going," Praske said.
Larsen also pointed to Praske's background in finance as a reason the company felt the need to build a platform.
Decades later, ARG leaders say the database is playing an important role in efforts to cross-sell IT services to legacy telecom partners. Praske said his team was originally thinking more about how to maintain the customer relationship.
"It was obvious to us that success would be: Make the sales, earn the residuals and if you can maintain those and then add to them, you have a growing business. It’s not super complicated, but how do you do that? Well, in our world, we felt the key to that was to get set up on a recurring cadence with every customer. It may vary based on size, but to establish a cadence, how do you make sure you're keeping up with the cadence? You need a database," he said. "And furthermore, if you're earning residual commissions, how do you make sure you're keeping up with that? Well, you better have a database that's predicting those renewals."
Shonholz said market research has shown demand for a platform like ARG's. That includes the private-equity-backed superagencies that are consolidating numerous agent books of business.
"They've now gone out and acquired thousands of customers. And what they need to do most desperately is everything Greg just described, because you can't acquire your way past churn," Shonholz said. "So if you don't have a handle on your numbers, on the leading indicators of the health of your business, it could end up in a bad place."
ARG's customer retention ambitions are a reason for eventually pushing its headcount over 100.
While ARG initially made its first hires on the sales side, Shonholz said the company realized it needed to dedicate actual bodies to maintaining a customer account while sales sought new logos.
"Most agents become a victim of their own success. You get two really capable sales guys who go out, leverage their relationships and close that first whale. And then what happens after the contract sold? They immediately are the people that end up sitting on every cutover call, because they feel like they owe it to that CIO, who trusted them in their business," Shonholz said.
Those sales people ended up spending months working as project managers to ensure the solution deploys and bills. And that can set the company back on growth, Shonholz said.
"We want to take the most expensive, the most coveted, the hardest to hire, and keep them in their lane on the things that they're extraordinarily good a t...," he said. "And then we want to fill in the things that we can fill in with people who are focused on those non-revenue producing tasks that can draw on their time and attention."
Hiring anyone is a challenge for an agent, let alone a non-salesperson. Larsen said that's because their salary will come right out of the agent's residual commission stream.
"There are these inflection points that each of these companies has. If you're a single owner, a husband-and-wife team or just a few partners, every time you hit that inflection point where you have to make that hard decision, you’re taking that money out of your own pocket," Larsen told Channel Futures. "And you know you're 18-24 months out from seeing whether or not that investment worked. And if you're wrong, you got a lot of 'splainin' to do."
In addition to sales talent and post-sales talent, ARG has spent money recruiting solution/sales engineers. The latter help cement ARG's notion of a vendor-neutral consultant, Praske said.
Larsen said the goal is ultimately to sell "an informed business decision process."
"If we're going in as an advisor, if we pre-select a provider to walk in, we lose a lot of credibility," Praske said. "We wanted to go in with our engineers."
He said 140 providers paid commissions to ARG in 2023.
Private equity's entrance into the agent/advisor channel spelled new liquidity options for the first generation of agents. Many of these partners started in the '90s or early 2000's and built up stacks of residual commissions. With many of them nearing retirement age, selling the business often made sense. At least 50 agency owners have publicized the sale of their book of business, with many more running a transaction quietly.
In the meantime, Shonholz said he sees a prime opportunity for the technology advisors that remain.
"When I hear things like, 'The channel is aging out,' I'm like, 'Are you insane?'" he told Channel Futures. "If I had this opportunity when I was 22 – is there a better business to be in?"
Shonholz said he's excited for his team to work with ARG's vast customer base of 4,000 businesses to evolve their technology stack. He said ARG's top 10 sales did not involve traditional telecom; rather, they involved managed IT, managed security and cloud services, he said. ARG leaders said legacy telecom services comprised less than 50% of the company's commission revenue.
However, Shonholz said less than 5% of ARG's historical telecom customers have made the pivot to managed IT and managed security. And many of them are coming up for renewals from UCaaS offerings they bought during the pandemic.
Praske said a combination of the database, account management teams and expanded marketing resources are helping ARG engage with "hundreds" of customers each month.
"We get to aggregate all that feedback. We're very real-time. We know exactly what's top of mind for our clients," Praske said. "So then we get to package that up and put that out in front of them, and that has allowed us to keep incrementally expanding how they view us."
As other partners have noted, agents once stayed in their lane as "the telco guy." However, companies such as ARG are branding themselves as IT consultancies and technology advisors, breaking out of the voice and data lane.
But if partners want to expand their role with the end user, they may find themselves in conflict with their referral partners. For example, ARG had been exchanging leads with telephony resellers and managed service providers (MSPs), who oversaw infrastructure and strategy for end users. But the company saw an "inflection point" where it and other agencies felt they could provide more services for clients. UCaaS, for example, was a make-or-break opportunity for partners. And UCaaS preceded the rise of profitable solutions like contact center, security and managed IT that now sell through an agent model.
"I'm giving up the referral into the PRI, but now I’m going attacking all this additional white space. You have to be willing to do that," Shonholz said.
Shonholz said ARG had to approach its referral partners with "courage and integrity," to essentially break up with them. For ARG's largest referral partner, a local telephony business, the relationship seemed to end amicably. So amicably, in fact, that a decade later they reached out to ARG.
"They came back to us and said, ‘Hey, this premise-based telephony thing isn't a thing anymore. We're over here. We're doing security. We're doing Azure consulting, AWS consulting. We'd like to now use you for the UCaaS. We'd like to refer those customers,'" Shonholz said.
The reunited partner referred more business than any other partner for ARG in 2023 – 10% of of sales.
ARG has made several acquisitions over the years, including Steve Praske's Paladin Solutions and Larsen's NetGain.
Other acquisitions include Carousel's carrier sales division and Sue Messner's Global Network Service (GNS). In both cases, ARG cites strides the acquired companies made in expanded beyond connectivity sales following their deals. Praske said GNS increased its revenue by more than 30% – a record for the 30-year-old company. Moreover, 90% of the growth came from new products.
Shonholz said ARG is looking for similar grit in future acquisition targets.
"We want those that want to put their foot down harder. We're going to continue to be acquisitive. We're going to continue to grow inorganically."
ARG has made several acquisitions over the years, including Steve Praske's Paladin Solutions and Larsen's NetGain.
Other acquisitions include Carousel's carrier sales division and Sue Messner's Global Network Service (GNS). In both cases, ARG cites strides the acquired companies made in expanded beyond connectivity sales following their deals. Praske said GNS increased its revenue by more than 30% – a record for the 30-year-old company. Moreover, 90% of the growth came from new products.
Shonholz said ARG is looking for similar grit in future acquisition targets.
"We want those that want to put their foot down harder. We're going to continue to be acquisitive. We're going to continue to grow inorganically."
Brothers Greg Praske and Steve Praske are retiring from ARG as the tech advisory firm taps two new top executives.
ARG announced on Tuesday that the Praske brothers are retiring from their positions as CEO and president, respectively, and moving to ARG's board. The company has promoted chief revenue officer Mike Shonholz to CEO and chief operating officer James Larsen to president.
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ARG's Greg Praske
Greg Praske, who has helmed ARG for more than 30 years, said the move represents a handing over of the torch to "the next generation." Moreover, their appointment stands in contrast to selling the company or letting the business fade out.
ARG's Steve Praske
“Mike Shonholz is the most talented leader I’ve met in my career. He is the right person to take the reins and elevate ARG’s success now and in the future," Greg Praske said. "Working alongside James Larsen, who has successfully built and exited multiple businesses in our industry as a founder and CEO, and backed by a seasoned executive team, ARG is poised to become an even more powerful force in the industry under Mike’s leadership."
The succession plan comes after years of planning, Greg Praske said. Larsen joined ARG in 2016 after ARG bought his agency NetGain, and Shonholz joined ARG in 2018. Moreover, Larsen, Shonholz and ARG have known each other for many more years than that.
Shonholz was serving as InterCall's channel manager for ARG in 2006 when Larsen hired the 26-year-old to work at telecom expense management provider iTEMize.
Larsen and Shonholz told Channel Futures that they're excited to work together, alongside chief experience officer Heather Campbell, to accelerate the company.
"We've been given a beautiful gift of the most coveted platform in the industry, and we get to put gasoline on it," Shonholz said. "I just don't know that I could be more personally excited."
Read more about the transition, Praske's career and ARG's trajectory in the eight images above.
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