Transcript

Mike Hanauer:  You see about 40% of small businesses use MSPs. And some crazy number, like 89% of small businesses would leave their MSP for a better cybersecurity solution and would be willing to pay up to 20% more from what they’re paying now for better cybersecurity solutions. What we’re trying to do is enable MSPs to be cybersecurity providers, so they’re not the ones that are being left, but they’re the ones that small businesses are going to.

Narrator: Welcome to the software channel partner podcast where you’ll hear leaders of partner programs talk about their greatest challenges and most successful solutions and now your host, Louis Kadima, the president of revenue and associates.

Louis Gudema:  Welcome to the software channel partner podcast where we talk with leaders in software partner programs to learn about what’s working today and if you like what you hear in the podcast, please leave a review on Apple podcasts, Google, Spotify, or whatever service you’re using to listen to it. That will help others find the podcast too.

Mike Hanauer, the Chief Revenue Officer of Skout Cybersecurity is my guest today. Before Skout. Mike held senior sales positions at several companies, including being vice president of U.S. sales at Datto. When he was hired at Skout, the press release said Hanauer will oversee Skouts channel sales strategy, focusing on driving the growth of the company through managed service providers. That sounds perfect for us. So Mike, welcome to the podcast.

Mike:  Thank you. It’s a pleasure to be here.

Louis: So Mike, after school, I noticed that you served as an electrical engineer working on the reactors on the USS enterprise. Thank you for your service. What was that like?

Mike:  Absolutely. Yeh. Happy to do it. It was more out of necessity after a failed year at college.

I needed a bit more discipline. The military helped me out a lot with that. But, yeh, it was a lot less exciting than it sounds. There was a lot of schooling and I learned how to learn. It was really cool because I knew what to do when things went wrong, but the focus was on things not going wrong.

Louis: Yeh, of course. You were successful if it was not an exciting day.

Mike:  Exactly, exactly. I knew what dial to turn when another dial moved. It was not as exciting as it sounds like I said, but it was pretty cool. And it was cool to have that trust instilled in me by the, by the U.S. government. So I was happy to serve.

Louis: Did it take you to some interesting places?

Mike:  Yeh. I went I went all over the world: Hong Kong, Singapore, Korea, France, Dubai, Bahrain, all over the place. I served about 19 months in the Arabian Gulf.

Louis: Oh, okay. Interesting. We’ll do another episode entirely on your time in the Navy, but let’s talk about the channel today. So please fill us in a bit with some more detail on your career path. It sounds like the Navy was successful in giving you the focus that you needed and the discipline. So where has your career path gone in business? And what brought you to your focus on the channel today?

Mike:  So when I got out of the military, I realized that I didn’t want to work with machines anymore. There was a lot of troubleshooting and a lot of figuring out the problem and I realized I wanted to get into sales where you can simply talk to people and find out what the problem is and get to the solution quicker. So I got into sales. I eventually ended up at a company that was doing a government CIO summit and we worked with the CIOs from the white house, the FBI, the CIA, and what they were looking for at that time. This was during the federal data center consolidation initiatives. And they were looking for new ways to back up and store their data. They were all on tape still, I’m moving to virtualize technologies and things along those lines. And I came across this cool company doing some innovative stuff called Datto and they had about 25 employees at the time and I pitched them. And they said they didn’t have the money to sponsor the event that I was doing, but they wanted me to come in to interview for a sales rep position. And, and fun fact, I did not get that sales rep position.

I ended up starting at Datto as a sales engineer in 2011 — about about 25 employees at the time — and grew from a sales engineer, moved into a sales rep position, and then managed the sales team, director of U.S. sales, and eventually the vice president of sales at Datto. And it was crazy. Over eight years we grew the company from 25 people to 1600. The revenue numbers were growing at a crazy amount. We had been through two rounds of VC funding and eventually an acquisition from Vista. And at that point I realized that I wanted to get back into the startup mode.

I’d gotten an offer for a position from a, from Aidan Kehoe who’s our CEO for Skout. And it was really interesting what Skout was doing because it felt a lot how felt like how backup was in 2011 that there were a lot of point solutions and what Datto was doing was combining all of those solutions into one and giving you a support mechanism for it and showing everybody how to use the technologies and putting them all together.

Mike:  And that’s what Skout’s doing. Skout’s aggregating multiple technologies to enable MSPs to become cyber security company. So it lined up really well with what my expertise was and I was super excited to join the team.

Louis: Oh, that’s great. It sounds like a quite a rocket that you got on there at Datto.

Mike:  Yeh. Yeh, it was. It was a lot of fun.

Louis: Yeh.

Mike:  And I hope to do it again

Louis: And you weren’t just riding the rocket, you were helping get the rocket up there. What about why don’t you tell people what Skout Cybersecurity does and provides and who do you sell to?

Mike:  So Skout is 100% focused on the MSP channel. But what Skout does is we offer log monitoring, network monitoring, email protection, and endpoint protection. And we back that all up with our analytics platform and 24/7 SOC two type two SOC. I don’t think the big thing right now is necessarily the technology that’s being used. I don’t think technology is the problem. Endpoint protection, email protection, monitoring: all of these technologies have been available for a really long time. What the challenge is is having an expert and everything and, and what we’re trying to do is, is not necessarily solve the problem with technology, but solve the problem with packaging. So what’s the problem that we’re trying to solve? If you look at things like HIPAA compliance or FINRA or any of these compliances, what we want to do is package solutions that are solving problems.

So if you’re looking at — for HIPAA for example — you need log storage for seven years, 10 years for pediatrics. Even if you look at veterinarians, veterinarians actually need to obey to some HIPAA standards. If they’re giving a prescription for, say, like painkillers for a dog, the human owner actually needs to adhere to, they need to adhere to the HIPAA standards for that. So what we want to do is put together packages that have all the solutions that somebody is going to need to meet those compliance standards. So again, I don’t think there’s a technology challenge. The technologies have been available for years. It’s just a matter of putting them together in a way that solves the problem people are looking for. We feel that all managed service providers are going to need to become cybersecurity companies if they’re going to survive.

Mike:  I mean, I don’t know if you’ve seen the Continuum, I think it was called Underserved and it was a study that continuum did that it was different than all the studies I’ve seen because they actually focused on the SMB is not on the MSPs. And what they found was that you see about 40% of small businesses use MSPs and some crazy number, like 89% of small businesses would leave their MSP for a better cybersecurity solution. And would be willing to pay up to 20% more from what they’re paying now for better cybersecurity solutions. What we’re trying to do is enable MSPs to be cybersecurity providers. So they’re not the ones that are being left, but they’re the ones that small businesses are going to.

Louis: Okay. And for people who are listening to this, if you one to find Skout online, it’s spelled with a K — S K O U T. So your partners are MSPs, not MSSPs, not managed security service providers.

Mike:  Correct. And Skout actually started as an MSSP, selling to direct customers. And we actually found that the biggest challenge MSPs are having is selling and packaging. And so we have that experience selling direct to end customer. So that’s where we’re really seeing a lot of our values.

Louis: And this is for the SMB market, not the enterprise market. Right. And you’re 100% channel?

Mike:  We are 100% channel now. Yes.

Louis: Okay. So can I ask you, I don’t know if this is something you can talk about on the podcast or not, but how many partners you have today and what your goal is for a year from now.

Mike:  So I would rather not talk about how many partners we have, but our channel presence tripled in the second half of this year. We were focused on end customers for a very long time. So the end customers were continuing to flow in. But when I when I started at Skout in June of this year, it was a hard stop on pursuing end customers. Saw there was a — I don’t know if you did see — but there was a rebrand in June. Iit was actually my first day I approved the new website. And it was entirely focused on MSPs that we’re protecting small and medium businesses through MSP. So our entire focus for the second half of the year was on, was on selling to MSPs. And I’m happy that we tripled our revenue from the channel and we tripled the number of partners that we had selling our solution in Q3.

Louis:  So at Datto you worked with Rob Ray. Rob is a real force in the channel world. He was the 2018 Channel Partners Influencer of the Year. And I was fortunate enough to have Rob as the first guest on this podcast. And if you’re listening to this and haven’t heard that interview, I strongly recommend that you do. Rob is a passionate proponent of being 100% channel also. What do you think you learned from Rob about the channel while being at Datto?

Mike:                    The biggest thing that I learned from Rob and — and first of all — I was recently asked if I’ve won, if I’ve won any awards, and my comment was that I’m friends with Rob Ray if that counts. Because he’s a god in the channel. He’s wonderful to work with. And what I learned from Rob is the, the community aspect of the MSP channel, how focused everybody is on getting other people better. You saw recently there was The Anatomy of a Breach or something that that Datto did. And Datto partnered with a bunch of competitors along with an MSP that that was breached through their using their RMM tool is a vector for ransomware. And the fact that that MSP was willing to share exactly what happened, how it happened, how it can be prevented, and the fact that Datto was willing to work with people that they compete with on a daily basis to educate the MSP community. It’s mind boggling how much people are willing to help out their competitors to better the community. It’s incredible.

Louis:                    Yeh. Now it’s interesting that you are focused on MSPs, not M SSPs. I know some people in the cybersecurity field who are somewhat skeptical if a broad range of MSPs can handle the, not in terms of intellectually, but just in terms of their background and their training and experience. Because what happens in cybersecurity, you know there’s new threats daily. And that’s not the situation in most other technology. So you know, it’s a real different mentality almost that you have in cybersecurity than in many other parts of technology.

Mike:                    Yeh, it’s interesting because it’s the only place in the MSP space I guess that there’s not only you’re, you’re dealing with the MSP, you’re dealing with the end customer, and then you’re dealing with a whole other person that’s trying to cause damage and trying to cause harm. I don’t know that that MSPs can become MSSPs, but what you’re seeing is there, there’s a lot of managed service providers that are actually starting separate companies. And I don’t know if it’s necessary to limit liability or, or why they’re doing it. But they’re, they’re starting separate companies that are serving as MSSPs that they partner with to serve as their cybersecurity branch. So it’s cool. So there’s MSPs, starting MSSPs. And then we’re in there trying to enable MSPs to become MSSPs if they want. And giving them the tools and the technology and the analytics platform and, and the people to back it up. Cause there’s such a shortage of cybersecurity talent right now that it’s tough to hire and it’s expensive to hire the right people.

Louis:                    Yeh, for sure. So Skout received a $25 million investment round in September. So your war chest as well stocked. Are we going to see some of that focused on a major expansion of the Skout partner program?

Mike:                    Yeh, so we’re planning on releasing our new partner program on February 1st. So that’s the plan there. We’re putting together some aggregate pricing. And what’s interesting with what we’re doing, what you’re not seeing in cybersecurity right now, a lot of things are priced by endpoint, by user, by active IP, by events per second. So we’re going to be bundling everything together into a per user price to align with how MSPs price. And the pricing will be based on partner. So we’re, we’re really excited about that. But the majority of that money is all going to events, channel presence, and getting out there as much as we can to show people what we’re doing.

Louis:                    That’s great. So this is, this episode will drop actually just a few days before February 1st so good timing. You mentioned a few things. What will really went into creating the new channel strategy for Skout?

Mike:                    So our our CEO eight and who’s phenomenal, if you can get ever get him on here. His focus has always been on protecting people and protecting businesses and protecting the lifeblood of the economy, which is small businesses. And what he found was that when we were out there selling direct, once you get below 500 employees, there’s usually a managed service provider in there doing some work, whether it’s fully outsourced or augmentation. And he was working a lot with MSPs and didn’t know the MSP community. And he found that the small businesses who really need the protection cause they’re getting attacked by ransomware and email threats and spam and everything. The best avenue to protect them was through managed service providers. And that’s when he came across me and I’ve, I’ve sort of helped launch that strategy.

Louis:                    Okay. So how many countries does Skout operate in?

Mike:                    So Skout operates mostly in the U S and Canada. We have an AMEA presence as well, so we’re operating in mostly in Ireland and England. We’re looking to expand globally as well. I know Australia has a huge managed service provider presence. The Netherlands is up and coming. We just went 100% channel in EMEA and January. So hoping to expand all over Europe.

Louis:                    Okay.

Mike:                    We’ll be at — are you going to be at Dattocon in Europe?

Louis:                    No, I’m going to be at the Channel Futures event in Las Vegas in March.

Mike:                    Okay. Yeh, we’re, we’re planning on doing Dattocon and IP Nation in Europe this year. So a big thing there as well.

Louis:                    All right, great. So what technology do you think you know, as you are putting together this new strategy in the new channel program that you’re launching on February 1^st, from the point of view of channel tech, what were you looking at? What did you think was important? A portal? A PRM? Through channel marketing automation? Other technologies?

Mike:                    We’re on the full Salesforce stack. The one thing that we’re missing that I would love to have is Tableau. I think the data visualization is phenomenal. But we’re using Outreach, we’re using Salesforce, we’re using Pardot. What really, really helps in recruiting new channel partners is actually the in-person connection. We’re spending a lot of time at events and then using Outreach for followup to get in contact everybody.

Louis:                    Okay. Are there particular analytics that you use that you’re going to be focused on for measuring the success of the program?

Mike:                    So I think the most important metric that I look at is times a second sale. A first purchase is generally for internal demo use or a first customer. But the time that it takes from the first time somebody spends money with Skout to the second time is really showing the success of the channel program and how we’re working. I’m not sure as concerned with the amount of money being spent, but the, the amount of customers we’re protecting is the best metric for us.

Louis:                    Yeh, I’ve actually heard that from other people on the podcast, other channel leaders who talk about that second sale — that a lot of partners get one sale but it starts to show real commitment to the program when they get the second sale.

Mike:                    Yeh. And it’s a time to second sale and it’s the ramp up from there. Cause you’ll see there there’s a lot of MSPs that will use multiple technologies and the amount of customers you’re protecting at an individual managed service provider really shows the commitment to your technology.

Louis:                    Yeh. Okay. What about partner enablement? What, what have you been looking at there? I know Rob talks a lot — Rob Ray at Datto — talks a lot about partner enablement around sales and marketing and some of the business issues that everybody has. And yeh, we’ll take care of the technical training, but what kind of a partner enablement programs you’re looking at?

Mike:                    Yeh, so we actually just built a, a full partner toolkit that enables our partners to go out and whether they’re selling into real estate, retail, hospitality, healthcare, it actually — we can go out and build out a, a scoresheet for their sales reps to go out and get at what compliance though those specific customers need to meet, what technologies they need to put in to meet those compliance requirements. And it scores them. And what we’re seeing is we’re, we’re doing a full sort of technology overview. This is what you have, this is what you’re protected from. This is what you’re vulnerable to. Are you open to this, to those vulnerabilities? And we actually saw one customer that is taking that scoring matrix and saying, If you score below an 85, we need you to sign a waiver that we’re not liable for any security breaches. And you see the waiver being used a lot. So for example, if it, if the score is based out of a hundred, if they’re below 85, they have to sign a waiver. If they’re above 90, then they get a discount on their other services because they know there’s going to be less risk for them.

Louis:                    So these are customers who are signing the waiver?

Mike:                    Yes. The end customers of MSPs

Louis:                    Because they’re not being active enough. They’re not being aggressive enough in implementing the things that the MSP is recommending.

Mike:                    Exactly. Yeh. So they’re going in there and saying, You need to sign this waiver. Because I’ve recommended that you need to use this technology to protect yourself and you’re choosing to not do that.

Louis:                    Boy, I’ll have to try that in marketing sometime.

Mike:                    (laughs) You should.

Louis:                    I told you you wouldn’t get leads if you didn’t do this.

Mike:                    Exactly. I first saw it working in backups and, and business continuity. It works. It works. Making people sign a waiver and especially with, you’re looking at something compliance-based. For example, in a HIPAA client, if they need to maintain logs for seven years and there they’re not even monitoring their logs, having them sign a waiver is basically them signing something saying they’re not adhering to the law.

It can, it can be very effective in cyber.

Louis:                    (laughs) It focuses their attention.

Mike:                    Uh huh.

Louis:                    So you also mentioned community. Do you think that that’s the prime thing that you are focused on here in your new role at Skout or is there one thing that as you’ve been putting this program together that has been top of mind more than anything else?

Mike:                    There’s two things. One is community. Just having people know that we’re there to help them and and protect them and that we’re not only a player in the MSP space, but we’re committed to the MSP space. And we’re gonna stay around for a long time. So I think that’s super important for us to be at as many events as we can and showing people and reminding them that we’re involved in the MSP community. And second is just listening to MSPs because the only reason that cybersecurity is a problem right now with small businesses that they don’t understand the vulnerability. And you look at an MSP and they go in and they try to sell to one of their end customers that they’ve had for 10 years and they say, Hey, we’re we’re gonna need to up your $500 a month to do X, Y, and Z. The end customer is going to say, Well, I thought you were already doing those things. You mean I haven’t been protected all of these years? And there’s a lot of education that needs to happen and a lot of awareness that needs to happen with small businesses as to how the cybersecurity landscape has changed and what their antivirus and firewalls protecting them from versus what it’s not.

Louis:                    Hmm. Interesting. So Mike, what should I have asked you about that I didn’t? What keeps you up at night?

Mike:                    Well, what keeps me up at night is the people that say no,

Louis:                    Who say no to what

Mike:                    The people who say no to Skout, to cybersecurity, to them not doing anything to solve the cybersecurity problem. Especially with MSPs. Because MSPs are now seeing from these bad actors. They’re a vector. If they’re not protecting themselves, they’re the avenue for a bad actor to get to hundreds of clients. And you saw it with Synopsys Tech, you saw it in Albany shutting down the airport out there. The MSPs are now seen as a prime target for bad actors that they can use their RMM tool. They can use any credentials that they get to access hundreds and hundreds of clients. So what keeps me up at night is, and I, I honestly, I do not even care if they’re using Skout. I just care that they are protecting themselves and protecting their own customers.

Louis:                    Great.. So you mentioned going to Dattocon. Is there a Skoutcon or will there be a Skoutcon soon?

Mike:                    I would absolutely love to do a Skout con. I think we’re gonna, we’ll probably focus on small regional shows and expand from there. But I would love to see a Skoutcon. I would love to see a, just an MSP security focus conference, whether or not that Skout, whether it’s a bunch of Skout vendors, cybersecurity vendors coming together to put together an MSP conference focused on cybersecurity. But I don’t think we’re at a place yet that we can put together a Skout conference in 2020 or 2021.

Louis:                    I used to own a marketing agency and we had a proprietary content management system. And we did an annual users conference and it was the highlight of the year for the staff. They got to interact with the customers who usually they were only emailing or on the phone with, and it was a great thing.

Mike:                    Yeh. And I remember I remember when we first started doing Dattocon. First one was in DC, on the September 11th weekend at the hotel Reagan was shot at. A Jewish holiday. So it was, it was not the best conference. It wasn’t the best conference. But yeh, the first one, we brought 200 people there and, and it was great and we grew up from there. Bbut the sense of community there and reps being able to go and even like, we would bring a hundred developers to Dattocon and their interaction with customers and finding out what they needed. And when I was at Datto, we saw the partners that came to Dattocon grew 40% faster than the partners who did not. So I absolutely understand the value of it. I don’t think we’re there yet, but I’d love to do it one day.

Louis:                    Yeh. When we did the first conference at our agency, at my agency, we did it in Boston in February, which was not a good idea. We had a snow storm. We had a blizzard that messed up everything. And so from then on we did it in April and things went much more smoothly.

Mike:                    I still do think that Dattocon and IP Nation are the must-attend events for any MSP.

Louis:                    Okay. So Mike, how can people contact you? If they want to know more about Skout. If they want to know more about your partner program?

Mike:                    So they can shoot me an email at mike at skoutsecure.com. Or shoot me a LinkedIn message. I’m, I’m easy to get in touch with.

Louis:                    All right, terrific. So thank you for joining us today, Mike.  As I do with all guests, I’ll be sending you a copy of my Bullseye Marketing book in appreciation. It was recently named one of the best marketing plan books of all time.

Mike:                    Well, I’m excited to get it then

Louis:                    And thank you for listening to the software channel partner podcast. And please subscribe and listen to future episodes.