“We get to a certain point where we’re like, ‘How are we going to get bigger?'” said Bret Hickenlooper.
Founder of technology consultancy Sumo Communications, Bret Hickenlooper, began envisioning his exit five years ago.
Hickenlooper, seated in the lobby of the Great America Hotel in Salt Lake City, appears at peace. He is smiling and excited to be reunited with colleagues and friends at the Telarus Partner Summit. It’s nice to be back in business after his brief retirement, he tells Channel Futures.
Hickenlooper founded the agency in 2002. Like many of the channel’s partners, he founded his agency after working in sales for a trucking company. And like other agents, his firm experienced a surge in growth as the consultative model rose to prominence over direct selling as the preferred way of buying technology. But the same generation now faces a crossroads as they enter the twilight of their careers.
“There are a lot of people like me in the channel who started their business 20 years ago and are now thinking, ‘What’s my exit strategy?’ Hickenlooper told Channel Futures at the summit last week.
As many agents retire, outside investors are entering the space en masse and offering a valid financial option. At the same time, many remaining affiliates are grappling with the validity of the brokerage model, concluding that they need more than recurring commissions to remain solvent. Additionally, those looking to grow their business are feeling pressure to add revenue streams and services.
“We get to a certain point where we’re like, ‘How are we going to get bigger?'” Hickenlooper said. “Scaling is really difficult. You’re just trying to beat churn and babysit your base, and no matter how much you sell each year, there’s still potential in your base that’s eroding. It really is a mystery.”
Meanwhile, the Technology Service Distribution (TSD) market is consolidating at a rapid pace. Over the past three months, PlanetOne and TCG have partnered with larger players. Executives at these combined companies envision a procurement model that surpasses direct selling and also outperforms the world’s largest systems integrators serving enterprise customers.
“That’s a lot of money for a lot of people out there,” Telarus chief product officer Patrick Oborn told Channel Futures. “We’d rather take that money from Accenture and Deloitte and those people and put it in the hands of people who work with the big TSBs and in this industry.”
But will this partner model achieve this vision and what does it take to win?
A strategic partner
Jim Glackin, Nitel’s executive vice president of channel sales, echoed a remark made by executives from some larger agencies: Partners need to position themselves as strategic business advisors.
Although the agents are using more advanced technology, many of them are overly focused on transactional, product-based selling, according to Glackin. And that’s also the case with traditional VARs, he said.
“How do you help partners think broader in their meetings and not just focus on selling UCaaS or circuits?” said Glakin.
Years ago, Glackin (then working for a major trucking company) met with the CIO of a major retailer. A partner of his had already developed a close relationship with the CEO, which had resulted in a $400,000 MPLS contract. But the CIO didn’t seem to think so, Glackin said. They were scheduled to meet for an hour, but when Glackin arrived he was told it was now a 20-minute meeting. They just didn’t care about the network.
The CIO’s disinterest seemed to envelop the room in the meeting’s opening minutes. At that point, Glackin, who owned some of the retailer’s consumer products, began after…