Editor’s note: MSSP Alert is profiling companies listed on the 2022 Top 250 MSSPs list. We thank them for responding to our questionnaire.
US itek, which ranks No. 239 on MSSP Alert’s 2022 Top 250 MSSPs list, is based in Buffalo, New York and led by president and founder David Stinner. The MSSP specializes in cloud, managed IT, cybersecurity and compliance solutions to manufacturers and financial firms in upstate New York.
Founded in 1999, US itek has 17 employees and, according to Stinner, is currently hiring. He explained the company’s growth trajectory:
“I started the company as a wholesaler of motherboards, parts, displays and custom-built systems. In 2001, I started up custom brands of chassis, power supplies and accessories that I had manufactured in China. In 2004, we made our first acquisition and added professional IT services. In 2007, we started the conversion from break/fix to managed services. In 2012, we opened a new building with a data center and network operations center to move aggressively into cloud services. In 2018, we started selling cybersecurity and became an MSSP by being security-first in all business decisions.”
Pandemic Helps Spur Overseas Growth
Looking back on moves during 2022, Stinner noted how the Covid-19 pandemic prompted more remote work, leading to building a team in the Philippines, while remaining cost-conscious.
He described how well his company is thriving during the current economic climate:
“Inflation is not something I complain about. It was just another business challenge to solve. With the need to rapidly expand our team to keep up with the additional labor demand of ever-increasing cybersecurity, and greatly increase wages to retain our Buffalo staff, we needed to solve the issue without excessively increasing our prices to our customers.
“This plan has been better than we ever could have imagined. Our overseas staff will be up to 8 to 10 by the end of the year, including not just technical resources, but office support staff, pre-sales support and an entire marketing team that we always dreamed of having. We now have a chief marketing officer building out an entire marketing team. He previously launched marketing for one of the largest MVNO Mobile Carriers in the Philippines before joining our team. How many MSSPs have a CMO and marketing team?”
Stinner noted other business milestones include building a deep relationship during 2021-2022 with a “strategic client who provides software to a very focused market.” As he explained:
“Together we are adding new customers rapidly at an all-in-seat-price of $325 per user with a full managed service plus managed security and professional services offering. How is that compared to the low operational maturity out there? When we were looking at some acquisitions with average seat prices under $100, under $90, even individual customers under $40, we knew it would be a tough battle with the high EBITDA (earnings before interest, taxes, depreciation, and amortization) multiplies asking prices.”
Stinner acknowledges there have been bumps along the way. He detailed what was not exactly misstep, but a great learning experience:
“Our chief operating officer and I invested hundreds of hours and weeks of travel to review over 15 MSPs for acquisitions in 2022. We dove deep, traveling across the county to multiple locations, but we were either out bid or backed out of deals due to unrealistic pricing or low operational maturity. We have decided to pause acquisitions for now and focus on the marketing.
“Buying an MSP at a low price and then upselling their customers up to our MSSP offering is a great plan, but the risk involved when the purchase price is high and the work to upsell the clients is the same as converting new prospects is not a winning business model. I attribute this overpriced marketplace due to massive amounts of PE money moving into hard assets, like real property and businesses. As both stocks and bonds are down simultaneously for the first time in my lifetime, and with and the contraction of globalization, there is much less foreign investment.”
What the Future Holds
Looking ahead to 2023, Stinner is focused on” getting the company’s local marketing engine roaring,” and then duplicating the effort to other geographies and enhance customer acquisition.
Stinner said he is “extremely optimistic” about 2023 and beyond:
“I don’t think we will have a recession in cybersecurity because we are essential to keeping the world running. After solving the talent acquisition and pricing issues, I feel that we are unstoppable. Our staff in Buffalo and Manila will continue to grow, and we will continue to help our customer become more profitable, secure and productive.”