Everything is Relative

This isn’t me picking on Telarus. All the master agencies do this. It drives me crazy, but Telarus has been in my newsfeed all week, so…

“BullsEye benefits from 4,000 Telarus sales partners,” according to CP.  That’s like RingCentral using the number 200K sub-agents in an investor deck.  It isn’t how many inked an agreement; it is how many get a check.  In fact, how many get a substantial check?

The same day, the Telarus CEO says that 60% of the VARs will be wiped out! So does that 200K or that 4K number shrink?

Actually, we had a shift in VARs after Office365 hit the market because many Microsoft partners shifted to ISVs or selling another vendor. Dell, Xerox and HP VARs have had to shift and re-invent themselves. IBM partners have been forced to shift many times over the years. Some retire, some sell, some close, most pivot. That is how it has always been.

To keep hearing how everyone in the channel is going to die because they aren’t selling cloud is old. (We have been hearing it for 7+ years!) It is like saying a restaurant is going to close if they don’t start selling healthier food.

Those yelling this forget something: Most of the channel are old white men. They are thinking of retirement, not re-starting the business.

Also, when you say that 30-60% of the VARs are dead – “Edwards said a few years ago, the IT distributors he spoke to were projecting 30 percent of their VARs to fall off the map.” – who do you mean? Define VAR.

And if that prediction were indeed true a few years ago: the stock of Tech Data, SCanSource and Ingram would be tumbling.

On Revenue…

When the press release says 120% increase in SD-WAN, it is relative. In 2016, SD-WAN was just starting (to the tune of $5K in revenue for Telarus).

Over three-quarters of revenue still comes from Network. I’d like to see the figures from other master agencies, but my guess is that it is similar.

The one thing they didn’t talk about: that the master agency model is in peril. Surviving on a razor thin margin is tough without scale. (Maybe that is why they talk about all the agreements that have been inked = scale.) MDF is what is keeping them afloat. The masters are now more akin to Tech Data than to what they were 5 years ago.

They need more partners – but they need those partners to sell – and to sell without a whole lot of support from the master – or the partner is unprofitable.

Maybe 5 years ago, everyone chased VARs. Now everyone is chasing MSPs. Some are chasing non-traditional partners. They are all in the same boat.

The major carriers have consolidated. The CLEC sector is almost gone. Many CLECs are pivoting to the MSP model. There are many MSPs with channel programs. Because the hardest part of any business is SALES! The MSP segment is in the throes of huge M&A. There are 3 transactions per day. That isn’t very stable.

I just wish they could be honest with the numbers. And stop saying everyone is going out of business. You know who IS going out of business? FTR!

UPDATE:

Telarus responded on LinkedIn that 658 agents participate. That is 16%. Thanks, Pareto!

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