Acquisitions (Part 1) | Episode 003

Part one of our series on partner acquisitions dives into one of the biggest shifts happening across the channel right now.

Joined by leaders from CSG and 5G Store, we explore how partnerships and acquisitions are reshaping the landscape…what’s driving the activity, where opportunities are emerging, and how partners can position themselves for what’s next.

From evolving business models to the growing importance of strategic alignment, this conversation pulls back the curtain on what these changes really mean for the channel.

Enjoy the episode. 🎙️

Transcript

SPEAKER_02 0:00

Welcome back to Inside the Channel. This is episode three and part one of our series on partner acquisitions. Today we're joined by two of our incredible partners and true industry champions from CSG and 5G Store. To kick things off, I'll hand it over to our CMO, Tara Bastilich.

SPEAKER_03 0:22

Hey guys, thanks for joining us on Inside the Channel again. We are live from Las Vegas again, part of the big channel partners event. We're really excited to kick off our session and series on acquisitions. In our last podcast and session and episode that we went through, some of the things that we see as impacts in the channel today, one of the largest themes that we're seeing is acquisition. And we're really excited to have two guests with us that are probably the most recent in our channel community with a very strategic acquisition. So we're going to get some behind the scenes and understanding of what that means for them as well as what that means for the rest of us in the channel. So I'm going to let my guests introduce themselves and uh we'll we'll kick this off.

SPEAKER_00 1:09

Yeah, thanks. Uh super excited to be here. Uh super excited to talk to you guys. And obviously, we're we're very excited about uh working with Mike and uh joining forces with him. So this will be a fun discussion. I'm I'm Michael Pittman, I'm the CEO and founder of Connected Solutions Group, uh, who, you know, recently uh after a lot of uh you know discussion and and strategy strategy sessions and Mike and I uh really identifying a lot of of where we complement each other, um, you know, actually made it happen uh in February this year. So uh we're we're super excited about it.

SPEAKER_01 1:45

Hi everybody, uh Michael Ginsberg uh with 5G store. I would I was gonna say CEO and founder, but now I have to go with president and founder. Um no longer the CEO, but uh pretty much um very excited to to uh have joined forces with CSG and Michael Pittman. And uh it's it's been a journey for a long time. He actually about five years ago said to me, wouldn't it be cool if we merged companies? And we've been in touch ever since, and uh it's it's a really good fit, and we're really excited to see where it all goes.

SPEAKER_03 2:20

Well, I mean, I think everybody's excited to see where it goes. I mean, it's been uh it was quite the news break, but I can see you know these synergies and good people that come together. That's what we see. So, one of the first things we always do on Inside the Channel is we want to get to know all the people in the channel. It's a big part of it. We believe that this community of people is helping grow because of the people that are in the channel. I would say you two have known both of you a long time in this industry. Two of my favorite people, I would say two of the most collaborative people, people that want the best for the industry. I can't say everybody's always in it for everybody. Um, so what I want to do is just kick it over to you really quick. Tell me how you started and anything that was meaningful to you, like as you've come through this journey, because obviously not everybody starts. We didn't all start at a C level title. We started somewhere, somewhere in the middle. Or tell me your story, Mike.

SPEAKER_00 3:15

Yeah, so you know, I've I've always been a hardware guy and a secondary level hardware guy. Um, and and really how I got involved in channel uh, you know, back in 2009, 2010. We were my kind of buyback ITS at disposition company at the time was was getting a ton of retail returns, um, uh a lot of consumer grade devices. Uh, but they really were, you know, like new, a lot of true 30-day returns. And it's really how it all started with Verizon because I was getting so much Verizon product, uh, I was able to then, you know, kind of push it back into the B2B channel because it was heavily discounted and it was really like new, and we could attach a warranty to it, and it was dramatically cheaper than uh really you could get brand new. Uh, so uh it started there, and then because we were bidding on so much Verizon product, even Verizon sales leaders realized that, oh, hey, this guy Mike Pittman has these devices cheaper. We've got this opportunity where the customer, you know, just doesn't want to pay full retail for an iPad or a Samsung device or something like that. Um, so kind of organically, I was just feeding the channel with the secondary level equipment, but we were providing services around it typically. And I think it was 2014 or 15 when we realized what COSL was, and it was essentially communicated to me that uh look, we need value-added services on top of hardware. We know you're a hardware guy, but you're doing this staging, kiting, fulfilling, and things like that. Uh, you can be compensated to do that, especially if you're able to do lead sharing with the carrier. This blew my mind because we were doing it anyways. Um, and it's like, wow, this is just another layer on top of selling the hardware. Um, and we really focused on really trying to build services around the equipment and in October of 15. To make a long story short, I I believed in it so much. And who I was working for at the time didn't see the kind of channel and co-selling as a as a tangible, long-term, um, feasible thing to build around, I guess. Um, I really felt differently because I felt the gap between the OEM, the customer, and and the carrier. They all three have kind of a different motive in the sale, and ultimately getting the device to do what the customer needs it to do and have it all function properly for the end customer. I I really felt that gap. I could feel that with the with the customers directly. So I had a different idea that there is a sustainable business model here. And even as the the programs and the compensations might ebb and flow, that need is still gonna be there. You know, which is uh how how the money shakes out is is what you've got to be on your toes about, but but the need is still gonna be there. Uh so you know, I came home one day, told my wife, but we had babies at home, uh, and I said, I I think I can do this better. I think I can really focus on this little niche um that I'm being told otherwise is is not one to build around, and I want to build around it. And that was my introduction to channel, and and obviously it's been a been a wild ride in the 10 and a half years since.

SPEAKER_03 6:36

I'd say, yeah. I mean, a lot of evolution, a lot of change. Absolutely. Absolutely. Why don't you tell us your story?

SPEAKER_01 6:43

So I actually started off as a software developer, uh, writing software for small businesses, um, and accounting, invoicing, yeah, kind of boring stuff. And then um decided I wanted to this for about 15 years. And I decided I didn't want to write a thousand programs for a thousand customers. I wanted to write one program and sell it a thousand times. So I got into some commercial program, I created some commercial programs, one-man shop, working out of the house. Um, and the third one that I created was an e-commerce program in the late 1990s. Uh, so I've always had a passion for e-commerce. I I wrote one from scratch and uh kind of it would do what it what they do now, you know, shopping cards, publish a Google checkout, credit card, like looked a lot different back then. And so um that led to a conversation in um I don't know, it was like 2004. Ver Verizon had just come out with this EVDO card and um PC5220 if you really want to age yourself. Remember it. The orange the orange card. And then um it when it came out, it only worked on Windows, and I've always been a Mac guy. And since I had some technical expertise, I figured out how to make it work on a Mac. And so what I did is I just published it on the internet, on the web, created a website called Ev D O Info. If you're if you I remember it, I do remember it actively. And I just put out directions, follow these directions, you can get this thing working on a Mac. And it got so much publicity, and one thing led to another. And we got uh uh Kia Sarah was coming out with a router called the KR1, and uh they gave us one and we wrote about it, and we got millions of views. Back then, that was that was a lot back then, too. And when they when it came out, you can only buy it from Kia Sarah or us, and so that kind of got us on this router trajectory and reselling and started kind of growing from there and hiring people. Oh, we've got a I can't I can't do all the shipping and the sales and the support. Started hiring people in my 2005-ish and uh left the house, went to a warehouse, and I don't know, we're on our fifth warehouse now, and uh have just grown with grown with the times and and but always kind of focused on very niche, you know, data and routers. Like we don't do phones and tablets and things like that. We just kind of focus on what we're really good at. But yeah, it's been uh and and what's really fun is like the last six months have been almost like full circle because um running the business, I don't have time to develop stuff. So we have developers that I have a developer that's been with me about 15 years. And um, with some of the new AI stuff, I've gotten back to doing some of my own coding and cranking some stuff out, and so that's that's been a lot of fun.

SPEAKER_03 9:23

That is a lot of fun. I think that's I think that's the thing that we see or I see, I will call this my opinion, is that you guys have both independently in your organizations had a lot of great and like evolution and change. You've tried new things. There's been, you know, some of these businesses and channel, channel partners, resellers, integrators, they kind of take a path and it's hard to deviate, right? It's hard to make that change, it's hard to evolve. Um, I think that's one of the differences that you guys both have is you've been in different ways handled that, right? You you've been able to evolve your business and make changes. You've done some things you're probably like, yeah, that didn't work. And then there's things that do work. And then now coming together. So I want to I want to dive into that a little bit is is coming together and hear, you know, what what makes that fit come together? I mean, I think we all have kind of our assumptions or I'll have my opinions on why it would come together. And I know Kinsberg and his extreme strength and what you guys do with thought leadership and um e-com and understanding that. And there's also some logistics stuff that's extremely strong. And again, that's just what I know looking in from the outside. And again, what CSG has been doing as a literally a leading VAR in the industry, having unique products that are needed, but keeping both of you have this kind of we're gonna keep a core competency in the products that we know and we're gonna know the products. We're not gonna go too wide. So I'll I'll kick it. I'll start with you, Mike. Just tell me, what do you what how do you see that fitting together? What makes this a recipe for success?

SPEAKER_00 11:03

Well, I think one of the great things and that made this made so much sense for us is he he runs a great business today. Uh, it doesn't need a whole lot uh of of change. And I I'll I'll back up and the coolest part about this acquisition by far for us, and I mean this from the bottom of my heart, is that you know, you hear all these kind of horror stories about PE involvement and folks coming in and buying companies that that end up gutting them or or they're just looking to buy the revenue and and move things around. It was so cool to be able to show up at his facility in Crystal Lake and look these people in the eye and say, you know, all of your jobs are 100% safe. We have no interest in doing anything but growing your business. We think this is nothing but opportunity for all of you to dabble in more things and make more money down the road. Uh, this is a true partnership that is not, you know, looking to uh cause any disruption uh to what they're doing. So that was just fantastic. Um ultimately, look, what we talked about many years ago, he is unbelievable at logistics, uh, just truly impeccable record there. Um, unbelievable with his software, SEO, uh, his back end, uh, the data that it provides and what he's built there. The first time we saw it, we were blown away. Uh he's he, you know, he's just a genius at that stuff and he's built something really special over a long period of time. Um we are sales experts, you know, I would say at CSG. You know, we drive numbers and and uh we're good at at getting more out of the customers and and really pushing for uh you know multiple revenue streams. And that's the the value that that I think we bring. Obviously, we're we're we're we're we're marketers, uh, you know, we we put a lot of stuff out there. We we we try to drive as much attention as we can to our organizations. So we're a little bit more flash, uh, and he's a little bit more science, you know. And I think when you put those two together, it's it's a dangerous combination. Um, and the the last thing, and I'll be very candid about this, you know, Mike's customers are are truly organic. Everyone knows we are a huge Verizon partner at the CSG side, and that is a relationship that that I treasure uh truly. But when we are overwhelmingly being introduced, you know, to the customer, we do have somewhat limited control over what we can position. You know, if if Verizon doesn't want to lengthen their sales cycle and we really want to sell a managed service or attach something that um you know might be a service-driven component, they may push back on us or like be concerned that that we're gonna delay their sales cycle or something. And and we can't really push too hard on that. With these customers, even if I take them back to the carrier, we are bringing it organically off the street, theoretically. And because of that, we get to dictate a lot more about what we position in front of the customer. And that's a big deal to us. Like we need to be able to do more of that to grow our business the way that we want to. So, you know, I think over time, as we learn more and more about uh his customer base and and you know what they're looking for and how they want to interact, we're gonna really target, you know, how can we organically create more touches within those customers that maybe we don't have the restrictions that we do with the carrier involvement from the outset, even if we're tagging the carrier in, you know, it's it's because we brought it, they're gonna be a little bit more willing to allow us to pitch whatever we want. And that to me is uh just gonna be amazing. That's gonna be almost a little bit of a freeing feeling for us. So um, we're really excited about that. But ultimately, at the end of the day, he has such a well-oiled machine. We don't want to disrupt that. Uh, we just want to over time integrate and enhance it and uh more or less just keep his operation doing what they've been doing for a long time and doing it very successfully.

SPEAKER_03 15:11

Yeah, well, tell us your side of the story. Ditto. Disagree, disagree, please.

SPEAKER_01 15:17

I'm just gonna you know, um I'll I'll circle back to what he said because I agree with most of it. Is but the thing that really is perfect from our point of view are two things culture, and like we thought we were the only ones in the industry who did customer service. Um like that's that drives everything. Customer service is the one thing that's all that matters, we don't care about anything else. And they value and do it the same way. So it's very rewarding once you kind of peel back the onion and go, well, what do they do? How do they do things? And it's all about treating the customer right, building that relationship. You know, we I have a slide during orientation for new employees, and it says it's not about the transaction, it's about the relationship. And many in the industry, it's about the transaction. Like, what can I give you, what can I oversell you on, or what can I get more, you know, give me bigger cart size or whatever. So uh that those are two things that were really important to us. And um, what what a lot of people don't know is about four years ago, we went through this exercise almost getting acquired by another company in the industry, not gonna mention names right now, big company. And um, it was the culture wasn't there, right? And we we found out that they pretty much uh everybody's gonna probably lose their job in 90 days or get or quit or get fired or whatever. And we were all about well, what's gonna happen to the employees? Like, like when you have a small, we're a small company. When you have a small company, yeah, they're family. Like I've had an employee with me 18 years, another one like 16 years, 15 years, 13, they've been around forever. So you want to make sure they're taken care of as well. And so I think that's where it's been a really good fit. But to what uh Mike said, there's things like we're 100% inbound, 100% organic. We don't have an outside sales team. We don't go get new business. But once we get them, once they find us, there's 70% of it is like repeat business every month. But what's exciting for me is what they're amazing at the you know, marketing and sales stuff. We we tap on that a little bit and to grow our business. And then some of the stuff that we're really good at, logistics and content creation, SEO, and kind of you know, help helping on that side, that's where it's like uh an amazingly great marriage. It's like it's very complimentary.

SPEAKER_03 17:33

It seems like it. I mean, I think that's super important. I mean, we we're similar in the way that Gat Wireless looks at our business, our employees. We've been through a part of an acquisition, same thing where you entertain and you look and you go, guys, like what would this mean to our business? What would this mean, though, to the employees? What would that mean? Is it not the right cultural fit? Is it's the are they gonna take us apart and sell us for pieces? Like that kind of stuff. So, I mean, you look at this, it's it's exciting for me. I think it's, I think you guys have two of the greatest personalities in this industry, both very strong, bold, influential personalities, but coming together, I think this shows the community too that we are a community. We all hang out, we know each other, we trust each other. We're okay to have, even if you consider competitors at one point, you there's there's been three acquisitions in the last six months for six of our partners, right? That work with us. And it's like a lot. We we would say, even some of them, we know that we made some of those introductions. They may have shared a beer at channel partners, they may have sat at our partner summit in a pool and and had a cocktail together or was in a meeting together. Um, maybe we're asked to participate in something together. It's it's an interesting dynamic that we're seeing in the community. And we think it's it shows the health of the community. And I think you guys are a poster child of that that says, like, hey, we can get along, right? There's not a lot of like negativity in that way when you're seeing this kind of happen. Um, I guess my next question for you though is what does this mean as again, two very strong business leaders? What do you think this means for the rest of the channel? What would you say to other channel leaders that are saying, well, I'm looking at acquisition, I'm looking at acquiring, I'm looking at being acquired, I need a path, I need a transition strategy. I'm trying to evolve, but I don't know how. Like, what's your advice to them?

SPEAKER_00 19:34

Boy, that's that's a loaded question. Um ultimately for us, it was just so strategic. You know, we're not out there uh, you know, shopping for businesses. Uh Mike and I planted this seed many, many years ago. Um, and we just knew it's the conversations every time we had them, we were like, we kept just identifying where we were complimentary, you know, um, and it just made so much sense. And Mike was at the time where, you know, his his daughters are out of the house. And uh I think one of the coolest parts about this, and I hope you don't mind me me sharing, is that, you know, Mike is is gonna be a part of it as long as he's having a good time. Um, you know, we want his, we want him to be a part of it as long as he wants to be a part of it because he's I consider him a genius in this industry. So uh it really, in our circumstance, it was, I truly believe, an ideal fit. And that's why we went aggressively, you know, into it. Um for everybody else out there, I I think if you're if you're looking at that, uh, you know, you just need to make sure that you're you're really peeling back the layers to see that that you know it makes sense for everybody. And then the financials and the money has to has to work, and that's that's the complicated part. Uh and you know, if you can put those pieces together, you can build something pretty special by acquisition. I think everybody knows that. Um, I hope to see it. And I know in and you know, in Matt and Doug's circumstance with SIG, and that that's another one that's more organically done. You know, there's not a lot of, you know, we didn't use any outside money to do this. Uh, you know, Doug and and how he uh made his acquisition, that's I love seeing that stuff in channel. I frank, not that PE involvement and big money involvement is a problem, and that, you know, that comes with its own benefits and attractions, I would say. But in our case, in channel, it's I think it's really awesome to see some some you know non-uh PE backed companies coming together and saying, you know, let's do this a little bit more organically. Uh let's align, make this a little bit more than about just the money. Uh, think about big picture in the future. And uh I it's really exciting and I I love seeing it. I hope, I hope more fate more folks take the uh take the plunge.

SPEAKER_03 21:53

I think that's a really good point that it keeps the customer first, right? We've talked about that. That's the number one. Thing is customer service, keeping the customer first. And when you put in any sort of investor, they become somewhat of a first priority to you. And it's 100%. It's hard to balance that out sometimes. And it's in a value in this value added distribution, value added reseller, system integrator, like that. The core business is you're trying to create value for the customer. So if you're not doing that or you're taking, they become a second, a second thought.

SPEAKER_00 22:29

I think it's very well said.

SPEAKER_03 22:30

It takes it off. So I'm encouraged for anybody that is putting it, being able to come together and say, hey, we can do this together. And that's what I think some of it is that we're seeing right now is it's nobody's doing it because it's it's all about the money, but it's about how do we scale and how do we drive, keep that core like strength of what everybody believes.

SPEAKER_00 22:52

And the culture, yeah.

SPEAKER_03 22:53

Yeah, keeping it, keeping it the same. So what's your perspective?

SPEAKER_01 22:57

So I guess if somebody's in the position of, you know, starting growing a business and they're like, all right, I think it's time, or I want to sell, or I want to, you know, vacation the rest of my life, or I want to retire, like whatever it is. I think it's a matter of you gotta really do your due diligence to find the right partner. Yeah. I've heard horror stories of equity money where you sort of sell your soul. Like, I don't want to do that. And and but there's but it's just gotta be there, not just right for customers, probably even higher than that is maybe even higher than right for yourself, whoever the owners are or selling, but your employees, the ones that got you to where you are, yeah. Like that's gotta be number one. Like they got you you have to do your research, you have to know like who they're going to, what's the what are they after, and are my employees gonna be taken care of? Are they gonna, you know, uh continue the the path that they're on? So I think that's probably number one. And um, you know, you just have to research the company and know like you gotta really know the company that you're kind of having a marriage with. It's it is it is a marriage. Yeah. And you know, you want to kind of you know find out all the bad habits and things before you get married.

SPEAKER_03 24:08

Right.

SPEAKER_01 24:09

Um, but yeah, it's again, we almost went through it four years ago. Glad that we didn't. It would have been horrible for all of our employees. And um, and you know, just do your due diligence and pretend and be one of their customers and interview their customers and their vendors and like all those kinds of things to see what you're getting into so you kind of know.

SPEAKER_00 24:29

Yeah. I'll throw one more thing. I think as a as a business owner, as a leader, I this might have been the most I've learned in years going through this. I feel like a smarter business person, a smarter CEO, because we went through this process with Mike from A to Z for over a year, uh, you know, everything between lawyers and banks and and figured this out. Uh, I I truly feel like I came out of it stronger, not only because of this relationship, but because of what we learned in the process.

SPEAKER_03 25:03

I think that's the key. If I kind of, you know, dissect what you guys are seeing. And and I know as us have been through it and and have, you know, looked at some organizations and our paths, like the the thing that I tell everybody is that look for that fit, really, like you said, get to know them. It's the same thing you guys are seeing. And it's okay. I think the other thing is to say it's okay to be vulnerable because sometimes the weakness that your organization is the strength of your organization. And that's what's gonna make the marriage. Not because you guys both are gleamingly successful at everything you do. And that's what you think when you're selling your company. It's like I'm selling my company, I'm gonna tell them all of the great things that we do. Well, if I'm looking at selling and walking away, that's different than in these cases. This is a marriage and a partnership and something to come together. And the reason the deal might come together and what we've seen in some of the acquisitions that are close to us is exactly that where they go, we're good at this, but not good at that. You're good at this and not good at that. Like, and we're able to help each other. So being honest, it's it's always seems to be what has to happen in this organization, in these organizations. And I encourage people, that's the thing, get to know the people in the space, get to trust them. And if somebody trusts you, so if we go down the path and we we look at our organizations to see if there's a fit, have integrity, right? Have integrity to what you learned, to not tell somebody else that integrity, you know, follow all of the rules and guidelines set by the lawyers, but be ethical, get to know the people that you know that you can trust. Where if I open up my book of business, tell you my challenges, and we don't make a deal, we could still have integrity. And I think that's where people get nervous, is you you've got it, it all comes back to trust. And if we can trust each other, that's what we want our channel community to be able to do. Um, we trust you guys. We we love doing business with everybody. We're really excited. So, is there anything new that you want to share just as you guys wrap up here today? Anything exciting that you want to share with our listeners?

SPEAKER_00 27:10

I'm gonna take this opportunity to do my gut get wireless gushing because you guys are incredible. Um I value you tremendously as a partner. Uh BT is is uh I look up to him as a as a mentor, as something I strive to be. Uh, you know, you guys have gone through acquisition, you've had, you've had, you know, PE involvement, uh, but you've kept exactly true to who you are. Uh, you try to do right by your VARs, you try to do right by your customers. Uh you you run to issues as they arise. Um, you know, you guys being awarded VAD of the year twice, two years in a row, is the most easy layup victory compared to the other VADs out there, and I hope they're watching. Um so you guys are just uh unbelievable partners. And for us and and CSG, we're constantly innovating. Um, we we are, you know, the with the Verizon exclusivity, I think what's really amazing and what's happening with us is we're evolving inside Verizon of different ways that we can help them and their customers, and not just COSOL. Um, so COSL will always be our bread and butter, and we love that. And I will die on the hill of that program. But um, you know, people act like I'm crazy maybe in today's landscape of keeping exclusivity on that side. And um, there's just some things that are going on there and some access that we have and some seats at the table to do things outside of CoSell that to me are really, really exciting and they're customer experience focused, which I know is uh, you know, the big focus for Verizon's new CEO and the directions they're going. So we're just excited about the future. We're excited about what 5G brings to us. Uh our OEM brand catalyst is growing as well in all carrier channels. Uh, and yeah, we're just excited to keep pounding the pavement and do what doing what we do best.

SPEAKER_03 29:04

Awesome. Well, thank you. And thank you guys for being here. We're we're so grateful for you being here. And uh, we look forward to seeing you guys out on the show floor and for the rest of the year.

SPEAKER_00 29:14

Have a great show. Thank you.