Partnerships Unraveled
The weekly podcast where we unravel the mysteries of partnerships and channel to help you become more successful.
Partnerships Unraveled
Michael DePalma - How OpenText Empowers MSP Growth
Live from Pax8 Beyond with OpenText Michael DePalma on Trust, Verticalization, and the Three Million Ceiling
In this candid and energetic live session, Michael DePalma, VP of Business Development at OpenText, joins us to dive deep into what really drives MSP growth and why relationships, not contracts, are the ultimate differentiator.
Michael shares what makes OpenText's channel approach unique, from its month-to-month product model to its focus on hiring real MSP-experienced talent. We unpack the critical shift from working in the business to on the business, and how peer groups, vertical specialization, and defined product stacks are helping MSPs smash through the all-too-familiar $3M growth ceiling.
In this episode, we explore:
- Why OpenText doesn’t chase IPOs and how that gives partners more freedom and flexibility
- How to build high-leverage channel strategies through verticalization and deep community integration
- What every MSP should know about building scalable operations and achieving sustainable growth
If you're serious about scaling beyond lifestyle revenue and into high-impact channel success, this is the episode to tune into.
Connect with Michael: https://www.linkedin.com/in/michaeldepalma1/
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Welcome back to Partnerships Unraveled, the podcast where we unravel the mystery about partnerships, and channel on a weekly basis. My name is Alex Whitford, I'm the VP of Revenue here at Chanext and this week I'm very excited to welcome our special guest, michael. How are you doing? Good? Thanks for having me. Yeah, excited to have you on. We've been dancing around each other for a few weeks to get this session, but now we're live at PAX 8 Beyond, so it's good to see you face-to-face and excited to be here, absolutely. Maybe for the uninitiated, you could give us a little bit of an introduction about who you are and what you do.
Speaker 1:Yeah, so I'm Mike DeBalma, VP of Business Development at OpenText, just been here about three months Prior to this and then to the acquisition Kaseya. So I made the move in March so I oversee the channel strategy and channel ecosystems for OpenText. So OpenText we're a large publicly traded company about 25,000 employees and we run the cybersecurity division, which is that channel-only division.
Speaker 2:And so OpenText is a bit of a funny company because I think it's one of the world's biggest companies but also doesn't have some of that brand recognition. You've described it as a bit of a startup, but also with 25,000 people. How does that happen?
Speaker 1:Yeah, it's actually one of the attractive things that kind of brought me over here. So, yeah, it's this big, massive company. But even when I moved, so many people were reaching out Like, congratulations, what does OpenTech do? And then you start to look at it. And then you start to look at it. It's a big, like I said, enterprise company, and a lot of the products that we have on the cybersecurity side are products that people know WebRoot, carbonite, zix, appriver, pillar and so the main objective in the last three months has been coming to these shows and trying to change the tide. Where people aren't asking me what does OpenText do?
Speaker 2:At least they'll know what we do and then kind of dive into the technology. And so you're now. We talk a lot on this podcast about the three Ps of channel, product, program, personnel, and so from a product perspective, opentext has acquired really well, from what I understand, and now it's about knitting that story together. How do you go about doing that to partners to get them excited? So right.
Speaker 1:I think we really have to hammer home the same messaging over and over and at some points it kind of sounds like a broken record doing it. But MSPs, they get their information in a lot of different places Podcasts now are very large, even social media, facebook groups, these events so we're just trying to do an all-out blitz just to get that name recognition there and personnel-wise. One of the other really attractive pieces was that sales team themselves. Opentext really takes pride in hiring people with real MSP sales experience over 10 years on average. So we've got a lot of actual former Datto people there and so you know these are people that get it. So they understand the value in investing in those folks with that type of experience, because it's a really niche skill set to have selling within the channel. It's not the smile and dial type sales thing. A lot of sales people think it's, uh, you know, understanding business, understanding the channel challenges they're facing and all that.
Speaker 2:so yeah, it's funny. I I sort of laugh at the msp world because I think it's hilarious that there's all these billion dollar companies and they're relying on like a whole group of engineers to do sales work, which is like this weird sort of parallel thing. But the irony is you have to be the best solution seller to teach an MSP how to be a solution seller, and that's sort of where the secret sauce lies.
Speaker 1:A hundred percent. That's the differentiator. When I came into the channel 10 years ago, I started in sales. I was Googling what an MSP was, you know, before my interview and it was so different than anything. I'd been in sales in different capacities. It was so much different, but yeah, it was early on. I pretty much learned all right. What these MSPs really need is you know you're their point of contact if they've got tech issues, but more so, how do you go to market with this stuff? And we're seeing a lot of vendors really put investments into it, which is great, and that's why it used to be sales and marketing was the number one pain point. Year after year in our data state of the channel, it started to change and now it's competition and things like that. You know security and I think that has a lot to do with these investments that vendors have put into that.
Speaker 2:So in the MSP world, in vendor land, right, everyone's racing towards IPO. Right, that's the, that's the goal. Or, you know, they get acquired by PE, right? I had a proof point on. They were talking a lot about what their IPO strategy looks like and it's a real goal for senior leadership, right? That's typically why people want to join that rocket ship. But there is a downside, which is a downside that OpenTex doesn't have. Talk me through it.
Speaker 1:Yeah, and I've been through acquisitions, win IPO, got acquired again and all that, and I understand that. But with OpenTex we've been publicly traded for a long time, so we're not chasing that anymore. So that's why it allows us to have, you know, no contracts. We do, month to month on every single product, free trials with every product, because you know smartly. So I mean, any vendor wants those things on a contract. It's going to 10X your value for when you do go IPO or you do get acquired, 100% we don't have that, you know, driving us to do that. So for me, again, one of the most attractive things is, you know, working for a company that says, hey, we want to earn your business every month we're not trying to just lock you in and, and you know, hopefully we'll just try to cross sell some more. It's a you know, test our stuff out. We want to earn your business and and the retention rate is really high, so that fear of like oh, you can't go month to month.
Speaker 2:Our partners are very the product and the program right. Yeah, if you're able to go to a partner and say, hey look, we are so confident in our value proposition, trial it, prove it and we will win. If you're comfortable in that shootout, I imagine that breeds a lot of confidence into the channel.
Speaker 1:Oh, 100%. And it even breeds it internally. You could feel it. I mean, I'm sure there's some sales folks that are, you know, used to selling contracts and now saying oh man, I get my client, my partners can leave me at any time. But again, it comes down to you know, if you're a true partner, they're not going to want to leave you, and if you don't, you know if you you develop that partnership even if things do go wrong.
Speaker 2:You've got a tech, the contract. You're already too late, like if they're looking at how do we break out of this, the game's done. Where you need to actually be is they're coming way ahead of that discussion to be like we're concerned about this. We're challenging you here. How can we do this better? That's the level of solution and relationship selling that we want our MSPs to have. How do you sort of drive and encourage that behavior?
Speaker 1:Yeah, it is through that communication and when you're making a call to a partner that call's not hey, what kind of deals do you have for me? Hey, it's the end of the month, you got anything coming in? It really is that relationship piece and it's a funny story. The guy at data was a great account manager, but he wasn't a warm. So the next time the guy calls him up and goes, hey, matt, how's your family? Everything good. He's like yeah, I go, okay, so what kind of deals do you have? That's not what you not want to do, you know. So, yeah, I mean, there's people I don't know. I know wives, I know families, that people know my wife and you know friends on Facebook and you have that real relationship Again, like, even Like hey, I trust that you made a move that you know. Let me take a look at what they do.
Speaker 2:And so that's particularly important when you've got a broad base of products right, Because you want to break in on a singular product, singular strategy, and then you want to have the trust and the confidence to be able to sort of upsell, cross sell and build that broader value. How do you go about doing that? Because OpenTech really does have a wide array of strategies and products. How do you knit it all together?
Speaker 1:Yeah, so our SVP of sales, who actually was the one that I had a relationship back at Datto, he restructured the sales team. It used to be there was a sales rep for Carbonite products, there was one for Zix, and so there's no real cross-selling and there's also it's confusing for a partner who do I call. So he really revamped it over the last six to nine months where now those account managers are trained. We have specialists If you've got questions that those reps can't answer. But now they understand their portfolio. The partners know they've got that one point of contact. If something new is coming out, they could say, hey, teach me a little bit more about EDR, whatever's coming out. And I think that structure I mean that's how we did it with Datto and it was very successful and he's kind of replicated in the playbook.
Speaker 2:And so obviously, yeah, I can absolutely understand why you need to realign that organization, because there's actually no benefit to then acquiring those other companies If you have completely separated business units and salespeople and comp structures, actually, you should never have made the acquisition in the first place, right? So, tying it all together and narrating that story, how do you prevent yourself becoming sort of mile-wide inch-deep, where you're selling one license to this and one license to this and you're actually generating depth and value with your partners?
Speaker 1:Yeah, I mean, I think what we try to say with all our products is the deep integrations that we have, not only with our internal products that are RIP, but with everybody else. And so you're looking at it. We have it two different ways. You can go a la carte, but we now have bundles that are being released. It's like, all right, here's your email security stack and we're actually looking to expand that based on feedback we've gotten. We're looking to do vertical specific bundles as well. So it's like, all right, here's a bundle for all your law firms because this is what they need. Here's a bundle. And so now the cross-sell is there because we could bundle together. But we're open. So if you only want to buy email archiving, sure We'll talk about down the road what else we could do.
Speaker 2:And so a large part of working with MSPs is encouraging MSPs to not work in the business but on the business. One of the biggest mistakes that I hear and when I speak to MSPs I see is they're not truly defining who their ICP are. And so you talk about verticalization there. To me, I would rather hear that. If I'm talking about England, I'd rather hear that you're targeting every lawyer in England than I'm just going after every business in my town, because that's actually a much, much more complicated route to market. Do you sort of try and encourage that behavior from your MSPs and then wrap the products and the marketing around that?
Speaker 1:Yeah, that's been one of those age-old debates at every single bar we've been to in 10 years is whether you should be vertical, specific or not, or completely agnostic. What I've seen the folks that really do well, maybe you're not just specifically only law firms, but you have a go-to-market strategy for that and you can have multiple silos. But your point I mean the biggest thing I've learned you can talk to any MSP that kind of broke through is when they took their tech hat off and put their business owner hat on. It's a universal and they'll all say that and it's different. This is your baby. You were the one boots on the ground, starting it up, going out to client sites. But if you want to grow, those are the conversations you have and those are the fun ones to have. And we're seeing I mean I've seen the maturity of the market grow exponentially in the 10 years I've been here and that's the tipping point, once you decide I'm a business owner.
Speaker 2:Yeah, so often I hear about this 3 million cap and it changes region to region and country to country. But, yeah, lots of MSPs stagnate and they hit this sort of ceiling and can't hit that escape velocity. From your experience, what are the things that if you could just tell MSPs here's what you should be doing to hit that escape velocity? Where would you get them prioritizing?
Speaker 1:I would say the first thing I'd do if I was starting an MSP or I was at that part and somebody plugged me in as a CEO is join one of the peer groups and learn from everybody else. That 3 million is pretty consistent. You see, people do very well, they want to pass the $1 million and then that next phase is the hardest part. You see a lot of them Now look $3 million MSP. It's a very comfortable lifestyle but I think a lot of people. And then you'll see the hockey stick. Once they get past it, then all of a sudden it's $10 million, $15 million and, but most of the time all these vendors. We all try to do our best, but there's nothing better than having an accountability group that's all gone through those same problems. They understand where their profitability is coming from. A lot of times folks are not realizing what their actual profitability is until the end of the month, like I'm selling all this stuff.
Speaker 2:It's because you don't really know the back end, the operational piece of it, of when you should be hiring a new tech and all that stuff. So I'm a big believer and I used to manage the and oversee the true peer, true methods, peer over at Kaseya, um. But I encourage everybody, just pick one. I've, I've heard this story. It's awesome because it is weird. It is this 3 million number and I I hated a lot of people talk that three to four is the hardest, because if you get to four, you're getting to 10, because you've you've worked out the flywheel, you now know how to scale. Why do you think so many people struggle? Are they just comfortable? Because you're making good money? If you're an MSP that's doing 3 million small team, you're making a comfortable lifestyle. Do you see that it's a lack of impetus or a lack of understanding in terms of how you get from three to 10?
Speaker 1:I think it's a bit of both, because I think there are some MSPs that don't strive to be the big one. That's fine, you know, because it does change everything. You might not want to be the CEO of some 10 million. That's a whole different skill set and a whole different lifestyle. So for the folks that are like hey, I've got a good client base, we're growing steadily, I've got a good team, I could take my Fridays off and do that. There's nothing wrong with that. And so there's that component of it where we all think that, hey, it's the american dream, everybody wants to be. Some people are very comfortable with it and not a bad life, you know, yeah, and they're trying to leave it to their kids. They don't have a exit strategy. We all assume that everybody's trying to get acquired or trying to be the acquiree. There's a good amount and that's something you've got to. You only learn from chatting with partners who are like no, I have. No, I hope this business is around for 50 years and I hope my grandkids are running it.
Speaker 2:Yeah, and and and also like fundamentally I I often have this debate around the difference between Michael Jordan and LeBron James. That's a debate for a very, but I promise you LeBron James is happier, and do you know what I mean? There is like a real sense of if I have a $3 million business, I'm playing golf every Friday, my kids are involved. Like I business, I'm playing golf every Friday, my kids are involved, I'm happy as anything. It is a very fundamental different process to hit that escape velocity and start to scale For that audience that is listening and goes no, no, I do want that 10, peer groups would be one. What other strategies, maybe tied to open text, would you be like? Here's what I'd be looking into. Here's where I'd be researching.
Speaker 1:A clearly defined stack. That is your stack and you can have different levels of it. But the folks that are kind of a la carte are changing every six months. Let me try this out. That's not going to be scalable. It's understanding your stack and having all of this stuff documented. So there's a process. So if a new tech comes in they know that playbook A new sales rep comes in. This is how we go to market and I think that's where a lot of people, a lot of the owners, don't want to give that stuff up. There's an MSP and he says he told me years ago. He said I make sure I take a month off every single year Because I want to make sure that that business is either at the same or better than it was when I left. If not, then I'm doing something wrong as a business owner. And he does it. He turns his phone off and says I've developed a team in the playbook, go run it. And he's in that $20, probably $30 million.
Speaker 2:That is one hell of a justification for taking a massive holiday.
Speaker 1:I love it.
Speaker 2:Guys, it's for your benefit. I'm leaving for a month. I'm going to Bali.
Speaker 1:But hey, you guys.
Speaker 2:So you spoke about hiring a talented team of salespeople who really understand the MSP. Why is that so fundamentally important, given the context of what we just spoke about Helping partners working on the business, not just in the business, guiding them through almost being consultants why does having that background matter?
Speaker 1:I would tell you that what MSPs value the most is the relationship. A lot of this technology and I'm a vendor and I shouldn't be saying it, but a lot of it's very similar. We do something different. We're better in this one area. Competitor catches up, so the technology's there. What they want is that relationship 100% of the time, and they don't want a new sales rep every five months. They don't want to have somebody that they can't get answers from or can't. It makes such a difference in the relationship of the vendor, that stickiness, that we don't need contracts because we trust that you know our team, we're part of your team. Any vendor, any startup, I would say that's where you make. Your investment is in your talent.
Speaker 2:And so it's awesome to hear we talk a lot on this podcast about the three Ps product, program, personnel, product and it's refreshing because so many people will be like why should we work it with with this company? Yeah, our product's amazing. I'll be brutally honest. There's lots of amazing products, right, and there's, yeah, maybe in this very one niche. This is that this is slightly better than that. But, being brutally honest, if the program and the personnel, that's where you really make that difference. You spoke about some of the sort of program advantages because you're not IPOing, what other things are you able to wrap around that really create that differentiates between open text outside of your product?
Speaker 1:Yeah, I mean. So we're the only Microsoft CSP that also has our own stack of products. So it was Acquisition Wrap River. A lot of folks know them as actually the first CSP with Microsoft, and so we have the ability to kind of help you in a lot of different ways, and so there's support there too. In the personnel we hire people from Microsoft that are going to know the question. They're not going to be one page ahead of you in the book, so there's that piece of it too. So again, a lot of the conversations when I joined I was like I want to just sit and be shadow a bunch of calls. A very few of them were sales calls. They were almost always. Let me look at your, your product stack. Let me let me show you some of the things that we're doing, what you're not utilizing uh, rebates, you're not getting those type of things, and so it was very refreshing.
Speaker 2:Yeah, I, I, I just loved it. Like I I'm a business nerd at heart, like I just love the mechanics of business and I just find this industry spectacular to work in, because you spend all day talking about business to business people and so you just end up being a consultant. That's what you just get to spend all your life doing. Why does that bring you joy? Why is that such a fun thing to be a?
Speaker 1:part of. So it started in sales. I had a book of business about 80 partners I don't think more than three or five were million dollar MSPs. And now it is so cool. You'll go to these events and you'll see a partner that you onboarded 10 years ago with their face on a banner. They're sitting up on stage at an event the size of PAX 8 Beyond.
Speaker 2:Driving a really nice car and I can remember when their kids were born.
Speaker 1:To your point, I'll be honest. I have all these conversations. I wouldn't have the guts to do what these guys do.
Speaker 2:Yeah, I think it's so easy on the outside to be like, oh, those who can't do teach. But I have such enormous respect for people going no, no, but I'm good enough to build this business and work on this business and provide that value, because it's complicated out there.
Speaker 1:Yeah, I mean, one of my favorite things is trying to go do a site visit because not a lot of people go see and the pride you see in the business owner that, like I own this building now when I started I was in my kitchen, you know, and now I've got a two story building and I've got a team of 20 people and you get a lot of sense of the culture of that company in the first two minutes you walk into their office.
Speaker 2:And so we're at Pax8 Beyond and a lot of the keynotes of unsurprisingly, talking a lot about agentics, talking a lot about ai, what that's going to do to the unit economics, the velocity of growth when it comes to uh, to msps. Talk me through what you expect to see changing in the landscape. As you know, the market starts to adopt some of these practices yeah.
Speaker 1:So I think it's twofold. I think you know vendors and and the msps got to figure out what it's going to do for their business, right, what AI is going to do, what the vendors are going to do to help them run their business. But the bigger thing and I think this is where you're going to see MSPs start to separate themselves is okay, what are you doing with AI with your client and it's not just here's this tool I'm putting in. It's trying to understand. Now, all of a sudden, you're more I think it's going to be more of a consultative relationship of hey, I know we've talked about security all the time and a you know we're using AI to help that. But you know I can help you grow your business. I can help you be more efficient. I'm an integral part of your growth strategies because of that. That's where the margin is going to come in. Is in your expertise, not in the products that are using all this cool AI.
Speaker 2:Yeah, and the other bit is that's where all your stickiness is right. So I love your month-to-month approach and that's where MSP should be absolutely focused, which is hey, I'm going to earn your business every month, but, by the way, if I've designed and run and own all of your agentics, you're never leaving. Because if I just press off and your business is using agentics, the whole way through your business is going to grind to a halt, be like turning off your CRM DRM.
Speaker 2:It's just not possible, right, right. Well, we've got a visitor here. Excellent, moth agrees with my MSP content. What else do you expect to see or what else would you advise MSPs, especially as they sort of have to tackle? If they don't tackle agentics, they're going to be screwed. So where should they be prioritizing or researching?
Speaker 1:Yeah, I think you just hit the nail on the head is the stickiness comes with the product, product not in your contracting. Like the stickiness comes because you are so embedded in that company as the msp that they can't leave you. It's not even a thought. And so your earlier point of they're looking up the contract, you're probably already lost. You know the uh, I think, uh, so understanding that, and then, and then you know being that thought leader and now you know I, one of the things that msd successful msds do is they get deep embedded in their community and they're the go-to person. You could see it that like the community comes to them because they know, okay, there's this, explain to me AI in two minutes, mr MSP, and what it does for my business. Does that mean I'm going to have to fire everybody because they're all getting replaced, or what does that mean? To be that calming voice is the differentiator.
Speaker 2:And when we were talking about verticalized playbooks. To me, this is going to be the fundamental difference. I can build a fairly good argument as to why a geographic MSP might be better than a verticalized MSP, but when we start to talk about AI, verticalization is going to win, because if you're focused on law practices and you go and sit down with the law firm and you go, hey, here's how we're going to implement an AI, here's how it's going to help you drive contract process better and here's all the value you get to take that same process and apply it to every other law firm, because AI is complexity in data. That complexity changes from lawyer to bakery, like it's not the same right. And so talk to me about how partners should therefore be thinking about ICP verticalization to really maximize.
Speaker 1:A hundred percent. You hit the nail on the head You've got to be able to speak that industry's language and that will lead to not only gaining business in that, but also referrals. You start to see the folks that are like no, this is the MSP that focuses on law firms of 50 to 100 seats or whatever. They all talk to each other and now you've got that rinse and repeat process of like I know exactly what your compliance is, I know the regulation that's another big piece and I know how AI can help drive your business. It can help keep you. You know, if the auditors come knock on your door, we've got the documentation and all the things. I think that that's 100%. I like that debate.
Speaker 2:I'll have that debate at the lobby bar any day of the week, but we sort of started on the value of peer groups. Maybe I want to end on it with one final note, which is MSP peer groups are one thing, but all of your verticals have their own peer groups. So if you become AI, famous for legal practices, those lawyers speak to each other right and so suddenly you're getting pushed into clients based on the unique value that's so specifically tied to that vertical. I imagine you've seen someone really crack that nut and be able to break into those peer groups in a really great way. Talk to me about some of the outcomes you see there.
Speaker 1:Yeah, you know, there's a really good partner of ours out in Staten Island and he was the one that I first time I met him, it was him and his wife and that was it.
Speaker 1:Now he's got a two-story building and I call him the king of Staten Island because he's embedded into all of these groups and he's doing it genuinely and it includes nonprofits. So if you're, you know um, you know it's a manufacturing, is your target market, you want to be in all those peer groups, understand it, chamber of commerce, understand that, get into the foundations and things like that, so that now you are embedded in that community and you're going to pick up, you talk about speaking their language. If you're just there and you're listening and you're not just selling your stuff, you're going to innately just pick that up and then become the go-to person in there and then the sales are not sales, they're, they're coming to you and that's that's been this guy's whole business strategy and that's been so successful. I'm like you don't have to genuinely care about this community and show that you care, Cause it's not going to be. You show up to one meeting and all of a sudden you're the savior.
Speaker 2:No, and and I have, like MBAs talk about this a lot right, where people who are able to scale a business, they build leverage, like how do I do an action once and get repeated value from that? Building sort of verticalization, understanding and building a brand within a vertical. That's high leverage because, hey, I won, this customer delivered huge value, and then they told three of their friends and then they told three of their friends and suddenly that's where we hockey stick, right.
Speaker 1:Yeah, a hundred percent. I think a lot of MSPs got to just look at their book of business now and say who are my top five customers? Maybe not even most profitable, the partners that I want, clients I want to work with, and that'll tell you your answer right there of where you should be focusing. You know and I think that's another one you start to really take a step back and look at your business and say these are the folks I want to work with. How did I get that business? And whether it was my expertise in this certain industry or wherever that is, that's another one of those things where the light bulb hockey stick moment happens Awesome.
Speaker 2:Mike, thank you so much for coming on. It's been an absolute whirlwind.
Speaker 1:Thank you, yeah, thank you so much.
Speaker 2:Man Cheers buddy, appreciate it.