ConnectWise's founder on swimming the Channel, selling up and slowing down

Arnie Bellini on why the time was right to seek ConnectWise's first outside investment

"I swam the Channel in 2013 and I said that will be the last big physical challenge I'll put myself through, and then I'll put myself through the biggest business challenge. So I have been on a five-year mission now to take ConnectWise to the next level."

These might seem like an odd couple of objectives to group together, but ConnectWise founder and former CEO Arnie Bellini can now say that he has achieved his two biggest goals.

At the end of last month, Bellini sold the business he co-founded with his brother in 1982 to Thoma Bravo. The private equity firm has taken a majority position in the business, with Bellini holding on to what he says is a "significant stake".

The move was a shock for many partners, some of whom saw ConnectWise as one of the least likely likely vendors in the channel to sell up.

But ConnectWise has never taken on any external funding and doesn't even have any debt, Bellini told CRN, explaining that the vendor needed more cash to take the next step.

"We've grown 100 per cent organically," he said. "But we wanted to accelerate our strategy and we knew we needed to find a financial partner, whether that would be a public offering in the company, venture capital, private equity or a strategic investment.

"For the last five years I have been researching all those options. We spent two years preparing for an IPO. We created our syndicate, Goldman Sachs was going to lead it in 2015, but as we got close to it we decided it probably wouldn't be the right thing for the company.

"We want to take advantage of all the opportunity we see out there, and we can't do that organically. We have grown to a very large size taking no debt or investment and it is time to accelerate our plan and take advantage of those opportunities."

Thoma Bravo did not endure an easy ride before being given the privilege of acquiring ConnectWise.

Bellini said he and his team "interviewed" a number of private equity firms with a view to selling the business.

"We interviewed eight private equity firms to find a good match for us from a cultural standpoint, but specifically we were looking for a partner that has the same passion for our partners' success as we do," Bellini explained.

"We evaluated them based on their track record, how successful they are, where they focus and how they pair with us. Thoma Bravo was the clear and obvious choice."

Passing the baton

Bellini has now stepped aside as ConnectWise's CEO, a position he has held since the vendor's inception. He has been replaced by COO Jason Magee, who joined the vendor in 2011.

However, the founder will still have an active involvement in the vendor, he said, under his new title of strategic adviser.

He explained that his ambition has always been to build a vendor that will continue to grow once he has stepped aside.

"I have been working myself out of a job," he said. "I feel like the most successful entrepreneurs are builders and innovators, but the best ones know that at the end they have to replace themselves and mentor those who will carry the vision and mission forward.

"I'm still here, I'm on the board of directors, and my passion and heart are still here, so I get to slow down a little. Jason is in the hotseat but I am there with him. My greatest hope was to do that and I feel as though I have achieved that, so I feel wonderful."

It is not all rosy, however. As expected with most private equity buyouts, Thoma Bravo expects operations to be streamlined and Bellini revealed that the vendor has cut 110 jobs this year, mostly from its domestic US business.

"We're almost a 40-year-old company and we've never had a restructure so as we sat down and co-created a five-year plan, in order to hit the goals we want to, we needed to readjust the company," he explained.

"Some skillsets were just not needed and we know what ones we need to get in, so it is really that simple."

The vendor however plans to add around 300 jobs over the next five years, many of which will be aimed at boosting ConnectWise's international presence, according to new CEO Magee.

"The realignment will not really hit our international efforts at all, because international expansion is in our growth plan," he said.

"I have been here eight years. I have been working very closely with Arnie for the last five years. We have done many acquisitions putting the pieces in place, trying to mature the company, including international expansions in the UK, Europe and Australia.

"We will continue to look at expansion both geographically and technically, and this will allow us to do it at an accelerated pace."

The UK will also help formulate these expansion plans.

"We have outgrown our UK office and we are looking for new space at the moment. Greg Lalle and his team will continue to grow that office," Magee added.

"Greg was promoted to VP of international sales last year and he will continue to expand internationally."

The challenges

Bellini said that MSPs need to clear a number of obstacles to provide a smooth service to customers, primarily that they are currently using a Frankenstein's monster-like system of various solutions all taped together.

He said that ConnectWise's aim is to bring all of these into one platform.

"The biggest challenge they have is that so many of the applications they use are disconnected, and our mission is to connect them all to the ConnectWise platform," he said. "We are busy doing that.

"How frustrating is it to do your job and have to walk to 30 different stations to get it done? What if it were connected?

"Our vision is to bring all the solutions that MSPs need to do their job into one pane of glass. That is the challenge they face and they need it brought together.

"One of the other challenges is that all managed service providers are on the hook for cybersecurity and they are not really providing it and that is dangerous.

"Imagine if their client is breached - what are they going to say? A client expects them to deal with it, so cybersecurity is the next frontier for us."