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Showing posts from August, 2017

Broadsoft (and Others) For Sale

Rumor has it that Broadsoft hired a banker to look at a sale (to a private equity firm most likely). This rumor has been reported by William Blair, Yahoo News, Light Reading and more.

Note reports that Broadsoft is for sale are accompanying reports that 8x8, RingCentral and others are also looking at strategic options.

There are a number of indicators that UCaaS is in trouble: Avaya in bankruptcy; Shoretel being grabbed by Mitel; Broadview to Windstream - to name but a few. There is also the big problem that keeping the sales engine going at 20+% year over year is not just hard but impossible. [In Fusion's investor presentation on the Birch acquisition, FSNN notes that organic growth is 2-4%!!!]

Most providers are not profitable. Light Reading reports, "Like 8x8 and RingCentral, BroadSoft has been growing its business but has struggled to turn that growth into operating profits. In the second quarter of this year, the company reported a 9% year-on-year growth in revenues to $…

Fusion and Birch

Every article just quoted the same paragraphs, including this very confusing one:

 "The Fusion/ Birch deal is an all-stock transaction in which Birch shareholders will receive about 73 million in common shares of Fusion valued at $3.85 per share and thus hold investments in the combined entity. That represents a premium of more than 200 percent compared to the prior trading day’s closing price. That, the release says, is five times the pro forma adjusted EBITDA of the business that is being acquired, including anticipated synergies."  [fierce]

By the numbers:

73 million shares at $2.59 is $189m in stock value... Fusion shareholders will own 25% of the combination while Birch shareholders will own 75%. (Shareholder lawsuits will happen.) FSNN has had a 52 week high of $2.59. It is at $2.21 right now.<< how is the stock valued at $3.85???  Fusion started the day with a market cap of $27.6M. FSNN is assuming Birch debt of $458M Prior to closing, Fusion will exit its Car…

4 More Channel Shows in 2017

Informa's Channel Partners Evolution is in Austin, TX on Sept. 25-28, 2017 at the convention center.Before that, partners will converge on Atlanta for One on One, the 14th Microcorp Event on September 10-11, 2017 at the Hyatt Regency. ChannelVision Magazine is an official Media Partner of The Alliance Partners’ upcoming Tech+Connect 2017 event, scheduled to take place at the La Cantera Resort in San Antonio, Texas, on November 6-8, 2017.  ChannelVision Magazine is also holding an event - CV Expo West - at the INCOMPAS Show on October 15-18, 2017 in San Francisco, CA.

Short Term Thinking as Customers Hanging Up the Phone

Business Voice has a history, and not in a good way. The non-ILECs have made voice an ordeal for business customers. It started when CLECs were selling Integrated T1s like hotcakes. LNP issues. RESPORG/ Toll-free problems. Deployment messes. [To be fair, when BellSouth launched BIS-T1, it was a disaster as well. A huge cluster of a F!] gave an interview to CRN saying that "Every business needs a voice offering, and solution providers that aren't offering VoIP to their customers today are leaving money on the table." True. But voice isn't just a copper line any more. Cellular, SIP Trunks, TDM, Hosted PBX, UC, WebRTC in apps and more are available to replace the POTS lines. This only adds to the crazy. Plus compatibility and inter-operability issues for PBXs, faxes, alarms, elevators, paging and more. Key System Emulation makes me crazy. Intermedia continues, "I've been thinking about what's stopping partners from selling voice, and th…

INC5000 on Master Agencies


CONGRATS! to everyone who made the list!

Carrier Sales  $18m almost double last year’s $10m. 
Telarus - $49m 
PlanetOne - $27m up from $23m last year; was at $19.5m two years ago.
TeleProviders which is run by  Jason Sharek, has $10.7m in revenue in 2016; up from $6m in 2011. 
ACS is at $3.4m.
Advantage Comms Gp (ACG) - $10M, doubled their revenue in two years. 
TeleQuality went from $17.7m to $23.8m. (They only deal with healthcare telecom)
Innovative Business Solutions (run by Michael Trede) up to $5.4m from $4.4m!
Mass Comm in NYC (run by Darren Mass) went from $21.6m to $25.6m.
eSquared Consulting (Josh Fulton) is at $12.8m; up from 2 years before at $7m and 55 employees. 
Global Comms Gp (GCG with Joel St.Germain)  … $7.5m – close to last year’s $7.2m
Tellennium is a TEM run by Greg Mcintyre with $37.7m in rev.
SandlerPartners   -  In 2016, Sandler Partners acquired X4. They said it would create an entity that was doing $65M in revenue. The 2016 INC5000 revenue sh…

What Do Bankers Have to do with it?

Last year, 8x8 hired bankers to perform due diligence about a reported buy-out. 8x8 wanted $1.2B+ and the buyer (reportedly Oracle) walked away.

RingCentral just hired bankers after a reported buy-out attempt supposedly by Google and/or Amazon.

 RC and 8x8 have a lot in common - they are both publicly traded pure play UC providers. Most of the UC providers are private - Fuze, Panterra, Jive, Evolve IP, etc. They are both ready to cash out.

Both also have to spend tremendously to keep the organic growth engine of sales rolling along. It started to slow down over the last two quarters but that may be due to not spending every sixty cents made on marketing efforts.

Think about the RNG Market cap of almost $3B. With Revenue of almost $400M, how many years would the ROI be on that?

Their biggest competitor is status quo. A business who rides out the premise PBX or switches to SIP Trunks instead of a pure cloud play.

Certainly Avaya's bankruptcy, Shoretel's sale and Toshiba's ex…

What Does the Master Agency Model Look Like?

So yesterday I did the math on commissions for UcaaS for sub-agents. (See here)  Today, let's take a look at the economics of being a Master Agency.

Remember the UCaaS example? If the seat price is $20, on a 100-seat deal we are talking about $2000 per month. [ $2000 x 20% = $400  ]  That $400 is split between the partner and the master agency per the agreement.  It could be 50% to 100%.

That is correct. Some masters pass 100% through to another master in a swap. However, they lose $32.50 per transaction like this. It costs approximately $30 to collect the correct commission from a provider and about $2.50 to cut a check to the master. So on 100% pass-through, you actually lose money.

Then there is the overhead for the master agency. The physical office, the staff (that gets quotes, handles orders, tackles issues, collects commissions), the channel managers, the legal aid (to get ironclad contracts) and the events (and event planner) are all expenses that have to come out of the…

What Does the Partner Business Model Look Like?

If the seat price is closer to $20, on a 100-seat deal we are talking about a one-third revenue loss.
    $2000 x 20% = $400 - split to Partner is $320
If the split is 70/30 or 50/50, the SPIFF is the spotlight.

Even at 70/30 on a $2000 ARPU deal, $280 is a small monthly stipend.
Folks begin to wonder if it is worth the ordeal.

I am being generous with a 20% commission to the master agency.  Network is lower. UC may be higher or lower.  SPIFFs come and go; up and down.

The question is: Can a Partner live off of your product line?

If not, then your importance declines.

The Magic of UCaaS

Gartner released its latest Magic Quadrant of Unified Communications. CRN has the list but you have to click through a bunch of slides.

Cisco with Spark and its interactive virtual whiteboard (expensive) Microsoft Skype4B - except the conferencing is meh MITEL - except the hodeg-podge of Toshiba, Aastra, Shoretel, premise and cloud make it a mess  (Mitel's largest partner: Frontier) Challengers: Huawei < how is that even possible? NEC only offers UCaaS in North America?! Avaya with Zang Spaces manacled by bankruptcy UNIFY doesn't offer UCaaS - just on-premise and collab ALE (Alcatel-Lucent Enterprise) owned by China Huaxin Shoretel is on the MQ.
Get the RAD-INFO INC 2017 Hosted PBX Market Report: here.

Secrets for Channel Managers (webinar)

Are you a Channel Manager?

Are you looking for some tips on how to improve your job performance?

Then join me for Secrets for Channel Managers, a 50 minute webinar for channel managers to learn tips and tricks before the Q&A. This webinar will be August 11th at Noon Eastern time. The cost is just $25 per person. Register Here!

Secrets for Channel Managers (webinar)
Aug. 11, 2017 at Noon ET
Register Here!

Getting Attention
What's more important than Recruiting?
Are you leveraging Pareto?
Elements that Matter

Send your Questions in ahead of time so I can answer them!

Why Your Partner Webinar Attendance May be Down

I have been on over a twenty webinars for partners this year so far with master agencies and providers.  Here are some reasons why attendance may be down.

1. The presentations Suck!
2. There isn't really a point or a solid take-away.
3. It's cloud all day until you want to puke.

I wrote about the poor presentation performance before. In that post, I also mentioned having a Goal to the webinar. What will the number 1 take away be for the attendee?

The constant barrage of cloud noise is not helping. It is Cloud day and night. That would be fine IF the presenters could be specific but they aren't.

I'm not even certain that the providers know the difference between hosting and cloud. (Hint: built-in redundancy.)

They act like Hybrid is a brand new strategy. It's not. It has always been Hybrid - meaning there have always been elements of the computing infrastructure borrowed/rented, hosted and owned. The presentations lack specifics. By that I mean, who buys it; specifi…

It's 5 Percent!

It's just 5% of your partners who bring in 80% or more of your revenue. So why are you chasing down every former mortgage broker and dude who can spell cloud to sign your partner agreement?

It's like you don't even have a Channel STRATEGY. It's like you don't even understand how the channel works.

Do you have a profile?

Do you know how many master agencies that a partner works with?

Do you understand about pass through and cooperation due to egregious quotas and compressing pricing?

Alignment is part of Recruiting

On-Boarding should include a profile

Fast 90

More is never better; neither is bigger. Focused is better.

Secrets of Channel Management - paperback, Kindle and webinar HERE

How to Move the Channel Forward

How to move the channel forward was originally published on LinkedIn as Pushing the Channel to Cloud

 The headline diagram is the technology adoption curve. In the channel, cloud is still in the Early Adopter phase. Despite 10+ years of shouting and begging, the channel has not fully embraced cloud services (UCaaS included).

 In the PBX space, on-premise may have seen the bankruptcy of Avaya; the exit of Toshiba; and the acquisition of Shoretel, but the hardware guys are still there taking in revenue and waving their flag. Ask Digium. They released new on-premise Switchvox models this week.

 Partners are struggling with one thing: Business Model.

I spoke with a Shoretel partner at ChannelCon who was able to transition to cloud sales. He points out the significance of having a revenue stream that would allow him to spend the two years needed to build up a cloud practice.

 A number of partners have been disrupted by Avaya, Shoretel and Toshiba, but also by broadband and price compressio…

Broadsoft and the UCaaS Sector Today

On an analysis call about Broadsoft and Broadcloud today, no mention of Broadsoft selling direct to end-users via the channel. Yet I have it confirmed that channel partners CAN sell BroadCloud seats putting the deals through Ingram or Telarus to get paid commissions.
Now BSFT is like every other vendor: competing directly with their clients.
There is a rumor that BSFT will be launching a CPaaS soon. That would make them compete against Vonage/Nexmo, twilio and their own vendor Any revenue is needed to keep that stock up.
No idea why Avaya is on a call about BSFT, except that Avaya is releasing a new firmware upgrade for its handsets to re-configure them to be compatible with Broadsoft. So that means another handset vendor that is certified for BSFT -- at a time when handset sales are flat or declining in lieu of softphones.
Slack came up in the same breath as UC-One often. FYI.. Slack has more than 5 Million daily users -- that is more seats than MITEL has (3.2 mil…

3 Things Changing the Channel Forever

There are three things happening that will change the channel forever. And cloud isn't one of them, although indirectly it is.

   One of the biggest factors affecting the channel is the Age. Partners are getting old. They are aging out. And no new blood is coming in. About one-third of the channel has already left - either retired, sold or pivoted to other things (like software). One estimate was that 700 new vendors entered the IT/telecom space in the last 3 years. At least that many. All with the expectation that channel partners will flock over and sell their stuff.

    It is more difficult today to be an Agent. When you made big bank selling T1 and LD, it was easy to transition into the Agent space. Today, notsomuch.

 If you sell a 100MB Internet pipe for $800, you make $120 per month for 3 years BUT you will likely not get paid for 180 days after the contract is inked due to process, install, build, turn up and billing.

 If you sell a 110 seat UCaaS deal at $20 per seat (a…