Arnie Bellini is coming back. It’s been almost five years since this iconic industry pioneer who helped build the managed service provider industry sold the company he founded, ConnectWise, to private equity firm Thoma Bravo for an estimated $1.5 billion.
For the past five years, Bellini has kept a low profile. But on the five-year anniversary of the sale, February 28, 2024, something else will happen – Bellini’s non-compete will expire, and he’s ready to come out of retirement.
If you are looking for clues as to what Bellini might do on February 28, you could look at what he’s been up to during the last few years. For instance, his investment firm Bellini Capital actually has a few missions – cultivating talent in the Tampa Bay area, conservation and stewardship of the natural environment, cybersecurity, and practicing something called “responsible capitalism.”
Or you could read this blog post. ChannelE2E caught up with Bellini in the days before IT Nation Connect – the conference he founded and built – and he told us what he’s been up to, what’s wrong with the managed services market today, and how he plans to capitalize on the huge market opportunity to fix it. He’s taking the gloves off on Feb. 28.
Here are some of the highlights of the conversation.
What he thinks of the MSP industry right now:
“Everyone's stuck on old technology. I'm not going to name names, but it's like, wow, there's nothing new under the sun. It's just more expensive. I haven't seen any great innovation in the five years that I've been gone. I would have thought the cybersecurity problem would have been solved by now. Not even close, but it's really expensive to even try and play the game because everyone has these solutions that are really just a feature or two that they charge as if it's a full-blown application, but it's not, and it doesn't really connect to anything else. I'm just shaking my head at what I'm seeing out there. I'm not trying to be negative but I think I think the industry needs to be shaken up again, and I'm just the guy to do it.”
What he thinks of ConnectWise rival Kaseya:
“There's a lot of different labels that people put on cybersecurity products and that's probably one of the problems in the industry is there's too many point solutions and not enough affordable, comprehensive solutions that integrate broadly. That's a missing component of the cybersecurity marketplace today. You know, you see companies like Kaseya, who are simply buying popular or semi-popular titles and then just cross-selling them and not integrating them and charging too much for them.”
Is ConnectWise doing a good job?
Bellini is staying neutral on that question. He said he’s not on the board of directors anymore, although he still holds “a decent chunk of ownership.” He has let ConnectWise know that he plans to return to the industry, but he is keeping them at “arm’s length because I’m coming back.”
Here’s his plan: “How can I make a difference at the sort of magnitude that we did before?”
Bellini’s already been investing in the industry. So what exactly will change on Feburary 28, 2024?
First, Bellini told ChannelE2E that he doesn’t plan to take an operational role, although he will continue his advisory role to his investment companies. Here’s what he did say about what will change on Feb. 28: “I will be very driven to solve the problem and am putting all the investments in place to bring a suite of solutions together that will be transformative to the industry. So it's like putting a puzzle together. I got a lot of the corner pieces and I'm still building and now I've got a timeframe … I won't feel the need to stay on the sidelines. I will check myself into the game, and I will start running around more aggressively with investments and with knitting things together and integrating and making deals."
Does that mean a rollup? Bellini said no. The portfolio companies will continue to operate independently. They will integrate with each other via public APIs.
What he thinks the big opportunity is:
Arnie Bellini is looking for investments that increase the productivity of managed service provider companies by 10x. Guess what that is: Artificial intelligence. He’s already made an investment in one such company called Nine Minds (which ChannelE2E has written about here as part of our ongoing coverage of AI in the MSP market). Octavia leverages AI to help technicians on the help desk do a better, faster job of serving end customers. It’s a startup run by the former CTO of ConnectWise, Robert Isaacs.
The help desk is one of several areas that Bellini believes can be improved significantly with the application of AI. Other areas are IT operations, sales, and cybersecurity.
Speaking of cybersecurity, ConnectSecure is one of Bellini’s other portfolio companies. It’s headed by Bellini’s son, Peter Bellini, and it focuses on vulnerability management. All of Bellini Capital’s investments so far are listed on this Bellini Capital page, and you can expect more soon. Watch this space.
The goal for all Bellini’s target investment companies in the managed services market is the same – to get to a 10x increase in productivity, a 2x increase in revenue, and a 3x increase in valuations.
Bellini believes that his portfolio company Nine Minds is going to be an artificial intelligence hub for the managed services industry and that company’s approach to IT helpdesk can be applied to all the other operational pieces inside an MSP.
What else is wrong with the industry, and what Bellini plans to fix
Bellini talked about responsible capitalism and the pricing in the industry today. He provided the example of the creation of the professional services automation (PSA) platform from ConnectWise and how it ultimately provided MSPs with cost savings that more than justified its return on investment (ROI). That’s a piece of what he calls “responsible capitalism… We flipped the entire industry over to recurring revenue, which is where wealth is created… Responsible capitalism says I am replenishing the well I took from by creating more value in it. And so I just think that's a necessity. You can't extract all the value for yourself. You have to make sure that you're providing value and spreading the wealth.”