Prosum

Jan 13, 2022

‘We’ll continue to focus around cybersecurity and digital transformation, continue to offer application development, and provide IT managed services both in the traditional IT MSP space as well as the MSSP space. We’re really focusing on the recurring services we can offer mid-market to enterprise businesses,’ says Russ Reeder, CEO of Netrix. Prepping For The Managed Services Future MSPs and MSSPs are living in a world of change. They are facing unprecedented growth as business clients increasingly recognize the value of managed services, but at the same time face massive changes in the technologies clients need, particularly in security, as well as a big shortage of the kinds of skilled personnel they need to service those clients. Enter Russell Reeder. Reeder, who until recently served as CEO of Infrascale , a leading cloud-based data protection company, was Wednesday unveiled as the new CEO of Netrix, a Bannockburn, Ill.-based MSP and MSSP. Reeder is no stranger to Netrix, having served on the board of the company for the past year. So when he was offered the chance to take over Netrix after its previous CEO Rob Dang decided to step down, he jumped on it. Reeder, in an exclusive meeting with CRN, discussed not only the company, but also his vision going forward, which is based in part on acquisitions to gain new skills and help alleviate the shortage of skilled personnel needed to carry out the MSP’s mission. “On the top line revenue growth, we have organic growth through our sales team, and in-organic growth through acquisition,” he said. “Same thing for hiring: we have our organic, which is we’re building our recruiting team, as well as in-organic, which is through acquisition, you know, also called the ‘acquihires.’ And I think it’s a great way to bring on team members, but only as long as you find companies that have similar goal alignment and cultures.” For more on Netrix, its new CEO, and its place in the MSP/MSSP business, click through the slideshow. Who’s taking over the CEO position at Infrascale? I knew you were going to ask that. ... The CFO (chief financial officer) Rob Peterson has been named CEO of Infrascale. So how did you get involved with Netrix? I’ve worked with the private equity firm that acquired Netrix, OceanSound Partners. It’s a new fund. They have three founding partners that really understand the growth side of technology companies, and I love growing technology companies. I love the cloud security space. I mean, that’s the world I play in. And they asked me to come on the board after the acquisition a year ago. So I sat on the board of Netrix for a year. And when the CEO of Netrix, Rob Dang, wanted to step down, they started a CEO search, and then asked me if I wanted to throw my name in the hat. I think Netrix has a perfect opportunity to really be a leader in the MSP and MSSP (managed security service provider) space. And so I’m very excited. We may have some news coming out pretty soon here about a new acquisition. So the company is growing, but it’s all through the backing of OceanSound Partners. Which companies did Netrix acquire last year? There’s PSC [Group] in Chicago . The IT Services Business Unit of Prosum in in El Segundo, Calif., and the Managed IT Business Unit of Contegix which is called DSS (Distributed Systems Services). And they’re all around professional services and app development and MSP and MSSP. So what’s Netrix’s acquisition strategy going forward? What are things the company looks for in acquisitions? So we’re going to continue to acquire companies in the cloud business, the digital transformation space specifically around recurring revenue. So those managed services that help companies with their IT and their security infrastructure. Do potential acquisitions have to be profitable or growing? We’re looking at companies anywhere from I’d say $20 million to $150 million in top line revenue. So how big is Netrix? We are on the upper side of the scale. We’re over $120 million in net revenue, with close to 800 employees. How is Netrix doing on the employee side? Are you hiring? We are hiring like crazy. So how difficult is it to find good employees? Well, it’s very difficult. I’d say it’s good news and bad news. The good news is that a lot of people that weren’t on the [job] market before are now on the market. And so everyone’s kind of taking a step back and looking at, ‘Hey, is there a company with more growth and a better culture where I can personally grow and professionally grow and live life happier than I am right now? And so I think there’s more people on the market. And I’d say it’s harder, because there are more people on the market. And every company out there is competing. So even though the supply has increased, the demand has increased even greater than the supply has. And so that makes it difficult. For instance, I was talking to someone that we’re looking to bring in as a recruiter. And so this is a person that hires for a living, and they’re being recruited to go to a startup company. And that recruiter that was recruiting them was pitching them on how many millions of dollars the options were going to be worth when they go public two to three years from now, which is totally just un-honorable. And I told this person, ‘This is what you do for a living. You would never tell someone what their stock would be potentially worth three years from now, when they go public. That’s just not realistic.’ So I think people are lying to candidates, and they’re not being honest about really what the offer is. And when people get competitive, it’s going to be dangerous for people as they leave their secure positions and go to a new company because any change can either be good or bad. And so if they listen to the hype for a company that isn’t sustainable and doesn’t have the culture that is right for that employee, it could be a really bad move. So is acquisition a valid strategy for taking care of the hiring squeeze or not? On the top line revenue growth, we have organic growth through our sales team, and in-organic growth through acquisition. Same thing for hiring: we have our organic, which is we’re building our recruiting team, as well as in-organic, which is through acquisition, you know, also called the ‘acquihires.’ And I think it’s a great way to bring on team members, but only as long as you find companies that have similar goal alignment and cultures. If you are just merging two teams together, it doesn’t always mean that there’s going to be a better team. And so I’d say the statistics show that most acquisitions don’t meet the acquisition thesis and they’re really hard. It’s not easy to acquire companies and make them profitable and exceed what the acquisition thesis was. But when you do get it right, it can work out really well. Looking at 2022, what’s your strategic focus at Netrix? We’ll continue to focus around cybersecurity and digital transformation, continue to offer application development, and provide IT managed services both in the traditional IT MSP space as well as the MSSP space. We’re really focusing on the recurring services we can offer mid-market to enterprise businesses. And do you think you have a team that is ready to meet those challenges? Or is there anything missing? We have an amazing team, many of whom have been at Netrix quite a long time. Through the acquisitions, we have some new talent in the Netrix team. So I feel like we have a very good team to pull from. And it’s nice to be in this MSP and MSSP space where one of the services we offer is a VCISO (virtual chief information security officer) and VCTO (virtual chief technology officer) type offering. We have all these strategic advisors that we bill out to clients to help clients make strategic decisions around technology. We can have team meetings and pull in some of our team members, not to say that they’re going to be specifically taken off working with clients, but the amount of brain power that we have access to within our team is amazing.