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Q&A: Building one of the world's most successful IT service providers

Recently, I hosted a special edition of our podcast series, sponsored by Autotask, where we talked to Synoptek CEO Tim Britt.

Here, we discuss how Britt and the Synoptek team built one of the world’s most successful IT service providers. Plus, we dive into the company’s organic expansion plans as well as its M&A strategy, including the recent buyout of EarthLink’s IT services business.

How many companies have you acquired at this point? How has the acquisition process worked for you?

I divide our acquisition spree into two phases. One was 2005 to 2012; during that time we did five acquisitions. All of them were relatively small, we self-funded all of them through our operational cash flow and that limited the size. Our business was still at least 50 per cent consulting for non-returned revenue so it's difficult to finance using debt or anything else. We were limited in how we could go through acquisition, but we still did five.

They got us to the $15 million a year range in a fairly short period of time. Then in 2012, we had some opportunities that we wouldn't be able to self-fund, so in 2012 we essentially secured about $30 million in funding that was a combination of debt and equity funding. This then led to four more significant acquisitions, which put us at the $50-60 million run rate and then subsequent to that, we went out and brought in a full on project responder. We were interested in the EarthLink assets and we purchased that business, which required more significant funding.

Were there certain secrets to success to getting these deals right?

We actually have a VP of M&A who has a strategy and set of criteria that we evaluate every acquisition against and it's not perfect. We've made our mistakes along the way and sometimes we try to buy value. Sometimes we look at opportunities to clean something up and get it working well and leverage some of our strengths and cooperation to deliver better value to customers. It's a win-win, but we've made our mistakes along the way. We've acquired organisations that were maybe a little distant from us from a cultural standpoint, or we found customer service problems and we had to weather through that. It's challenging but ultimately we have a pretty strong conviction on our vision and we find that we're getting traction.

Are there clues you should look for in terms of knowing whether our culture is right or wrong to tuck into your company?

There's a couple things. Firstly, it's a kind of mission, vision, values thing. Because you have to be closely aligned along that front first, so we have a huge customer-centric orientation. If we come across a business that maybe isn't so customer-centric or is more, then that business is going to be difficult to integrate. The people are not going to have the right attitudes and it might dilute our customer-centric perspective. The second consideration is that the opportune scale of this business is a standard service portfolio. Whether a customer buys those services and resides in Rochester, New York or is in San Diego, California.

Their experience, quality, and customer service are the same and therefore you have to have some operational excellence. You have to have some embedded way that you deliver that with and so that has to be somewhat aligned. A good example of that is if you have a business that's largely serving the federal government and has these really structured processes that the federal government requires and people are very driven by procedures. That might not be the best fit if your customer base is more private sector, more agile, and empowers people to do whatever it takes to serve the customer. You have to look to those subtle clues to make sure everyone's going to work well together.

How large a business is it now in terms of any metrics you can share?

We have about 500 employees throughout the world, including some employees in Europe and Asia as well. But the majority of those employees reside in North America.

Have you ever looked in the mirror and wanted to fire yourself or just walk away from it? Or do you have just this passion and an innate sense on how to run this thing?

If you're just keeping the current operations running, you are falling behind and our customers are still learning that. I think there's a lot of managed service providers that are still learning that and we believe in product development and service development; any robust R&D group that is taking technologies and process peoples and technologies. Inventing service offers that can be leveraged by multiple customers and take them forward continuously is absolutely critical. We believe in the long run that's going to have huge value in the market and so, that's how we feel on good days. But some days you have a bad day. You get a customer calling having had a bad experience and you just feel like, we've worked so hard and we still screw up and that's disappointing at times.

Let's talk about the good days. Are there particular days or moments in your career that stand out?

My family and I were living in Tokyo, and I was working for a consulting firm. I had this back problem, had to get surgery, and was in the hospital for a couple weeks. I was going crazy and I just needed some books to read, so I got online and I found this website called Amazon. I ordered a stack of books and they showed up in my hospital room in Tokyo two days later. This is like 1997, 1998 and I thought that's unbelievable, this is going to change the world, and at that moment I decided we were going to come back to the US and I was going to get in this space.

That was a big turning point. The second big turning point was really when we started getting traction at Synoptek when we bought that first manned service business. In the first 6 months, we probably talked to a hundred customers and didn't sign one contract and I said, okay. We're doing something wrong, so we went and travelled around, talked to a variety of different people in the industry, one being Derek Peka, who you may know.

If you had the chance to tap your 23 year old self on the shoulder, what advice would you give yourself?

It’s funny, I've got a daughter in college now and we're starting to have those conversations. I've got a son who’s a senior in high school and they're all so focused on the exact job that they're going to get: ‘I want to be a whatever, psychologist, and I want to do this very specific thing’. You know, it changes so fast and the world's changing so fast, I think it's more important to think about the industry you want to work in and then think about the role you want to play in that industry. If you get in the industry, because you've had the opportunity to do this very specific role you want to do but that industry's shrinking, it can have a lifelong negative effect on your career.

Are there any other big challenges you see ahead, either for your company or the industry as a whole?

Well I think there's a lot of big challenges that are going on. First of all, it's getting more complex, not less. Unfortunately we keep thinking it's going to get easier and less complex. But, you know, the technologies continue to proliferate, where you put your compute load is changing. You've got all these decisions and then what works in your industry, so there's more complexity in planning and developing a long term IT strategy rather than less. It's not getting easier and then there's some threats that I think are fundamentally threatening the industry. I would say it's equivalent to kind of the mob in the Forties and Fifties, even the Thirties, where you had organised crime that threatened legal commerce.

That's essentially what's happening on the Internet right now. You've got these cybercriminals, these bad actors that literally are threatening the viability of everything that's evolved over the last 15-20 years. In terms of what we can do, how we can collaborate, how we can do business together on the Internet, and we really as a global community have to solve this problem and stop it in its tracks.

Joe Panettieri, Content Czar of ChannelE2E, talked to Tim Britt, CEO of Synoptek

Image Credit: Ferbies / Shutterstock