SMB Community Podcast

Recent reports highlight that Google Chrome and Anthropic’s desktop applications have introduced covert, non-optional downloads onto user devices without explicit notification or opt-out mechanisms. According to referenced analysis, Chrome has been silently installing its Gemini Nano AI model, and Anthropic’s Claude desktop app is deploying browser integrations across all Chromium-based browsers. These installations are performed without seeking user consent and, in some cases, persist even after attempted removal, raising direct concerns for device security and user privacy.

The increased risk is substantiated by internal testing from Anthropic, which found that these browser integrations increased successful cyberattack rates by 23.6% and offered minimal mitigation (11.2% reduction) even when defensive measures were taken. This unnotified software deployment expands the attack surface for user devices and can compromise operational control for IT providers managing client environments. The practice also indicates a shift in vendor behavior regarding user transparency and system sovereignty, as noted by Speaker C.

Adjacent to these developments, the episode discussed “vibe coding,” where non-technical users leverage AI tools to generate code for business tasks. This trend introduces new support and security burdens for MSPs as clients independently create potentially insecure or unsupported automation. Some MSPs are revising their Master Services Agreements (MSAs) to clarify that remediation of issues stemming from client-generated or AI-assisted code will be billed separately and are not covered under standard support contracts. The discussion also featured account of ransomware attacks on education platforms such as Canvas during critical exam periods, underscoring the importance of contingency planning and backup strategies.

The implications for MSPs and IT leaders include heightened due diligence requirements regarding vendor software behaviors, increased need for endpoint and application visibility, and updated governance around end-user-initiated automation. To reduce operational and reputational harm, MSPs are encouraged to establish explicit client policies covering AI tool usage, conduct AI readiness and risk assessments, and formally delineate the scope of managed responsibilities in client agreements. Effective communication and continuous advisory engagement are positioned as vital to maintain alignment with client priorities and mitigate emerging technology risks.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Employee recognition structures and their risk-reduction implications received primary focus in this discussion. Both Amy Babinchak and James Kernan outlined verification-based strategies, such as leveraging Microsoft Teams' Praise app and Bonusly, a peer-to-peer micro-bonus platform, as cost-neutral or low-cost starting points. They emphasized that implementing structured recognition—either verbally, digitally, or via peer-nomination systems—directly supports workforce engagement and mitigates retention risk. James Kernan described anonymized in-house recognition systems, where peer acknowledgements are aggregated and rewarded via a monthly raffle, which included prizes typically sourced from vendor swag.

Specifics included integration of recognition apps within established workflows and processes—such as Microsoft Teams for informal praise, and Bonusly for monetary or non-monetary peer-based rewards. Amy Babinchak noted that client compliments of staff are internally broadcast for transparency and morale. Both speakers advocated for public, peer-inclusive recognition in the workplace, with an explicit focus on acknowledging day-to-day contributions rather than relying solely on annual reviews or monetary raises.

Further, operational and vendor management challenges were covered: Amy Babinchak articulated concerns that help desk KPIs often measure unproductive metrics and stressed the importance of incentivizing conversational and advisory staff interactions over ticket speed. Discussions also addressed the evolving Microsoft Partner Program, noting its complexity, shifting incentive structure, and the administration required. Alternative licensing approaches—such as MSPs enabling clients to purchase directly from Microsoft or using different distributors—were analyzed for cost and administrative impact. Additionally, strategies for navigating hardware supply chain volatility, including the use of white box solutions and refurbishments, were discussed in the context of margin preservation and client-specific risk management.

The episode underscores for MSPs and IT leaders that systematic and visible employee recognition is a quantifiable retention and engagement strategy with minimal operational risk when thoughtfully implemented. Tactical decisions around help desk KPI selection, distributor choice, and hardware sourcing require ongoing evaluation to balance cost control, performance, and administrative overhead. Transparent data-driven management, especially concerning staff performance and licensing economics, can both reduce operational risk and foster a more resilient service provider organization.

1. How do you motivate your employees –ways to reward employees

https://bonusly.com/pricing

https://learn.microsoft.com/en-us/microsoftteams/manage-praise-app

2. Helpdesk KPIs 

https://www.dropbox.com/scl/fi/84v9ri236n5ck1x8mgf2w/KERNAN-Financial-Goals-and-KPI-s.doc?rlkey=e1qugzgn8x6lzqgesfqjeawew&st=1ma7g8hq&dl=0

3. Is the Microsoft partner program worth it? And how should I buy Microsoft  licenses?

4. Supply Chain challenges and price increases – whitebox or refurbs?

5. What does an AI MSP look like?   https://www.thirdtier.net/2026/05/01/deep-thoughts-on-msps-in-the-ai-age/

Amy's preferred white box vendor: https://equuscs.com

UPCOMING CHANNEL EVENTS:

In-Person MSP and Channel Partner Events

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Compensation models for technical staff in MSPs require careful alignment with business objectives and operational capacity. Both James Kernan and Amy Babinchak emphasized that financial incentives such as commissions or bonuses can be appropriate when technicians are directly responsible for generating additional monthly recurring revenue (MRR) or securing new accounts. However, they noted that proper monitoring tools are essential to track productivity and ensure fairness—without adequate systems, variable compensation based on efficiency or project profitability can introduce operational risk and potential inequities.

Supporting this, Amy Babinchak described implementing a tiered productivity incentive where technicians received additional pay for surpassing utilization rates above 80%, but expressed concern over excessive overtime. Both speakers underscored the necessity of clear job role definitions; rewarding sales activities for technical staff may be appropriate if it aligns with broader company goals and does not compromise core technical duties. Non-monetary recognition, such as trophies or gift cards for ticket resolution or utilization, was also mentioned as an effective, low-cost incentive.

The episode expanded to analyze current challenges in industry education and vendor-driven events. Citing a survey from the "All Things MSP" group, Amy Babinchak reported that 86% of respondents believe MSP conferences are now allocating too much budget to entertainment at the expense of substantive educational content. Comments from participants indicated skepticism toward vendor-led sessions, noting that paid speaking slots are typically used for product promotion rather than useful training, raising questions about increasing conference costs and the dilution of actionable takeaways.

Key operational topics included shifting preferences among AI tools, with both speakers confirming recent moves toward Claude and Copilot, and persistent debate over MSP documentation practices—ranging from ad-hoc tools like OneNote to industry solutions. The discussion concluded with an observation about payment processing costs: James Kernan highlighted a case where $24,000 in annual credit card fees significantly reduced firm profitability, stressing the importance of passing such costs on to customers or utilizing ACH to preserve margins. MSP leaders are encouraged to assess compensation structures, conference participation ROI, and vendor relationships in order to minimize risk, align incentives, and ensure operational resilience.

 Question of the week:  Should I pay my tech commissions?

Reinvent Telecom – May 12-14th, 2026

Mastermind Event – July 30-31st,2026

                     Do you have a story from the field that you’d like to share? Or a question you’d like us to answer? Email it or send it as a voice memo or video to [email protected], and we just might use it in an upcoming show.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

A central theme of the episode is the challenge of communicating and defending pricing for managed services. Amy Babinchak and James Kernan described frequent client objections regarding cost, focusing on the importance of articulating clear value propositions. They noted that most client resistance either stems from an inadequate understanding of the provider’s value, or from attempts to negotiate lower pricing. Responding effectively requires MSPs to explain differentiators and to consciously decide whether a prospect aligns with their value-based approach.

Supporting this discussion, Amy Babinchak argued that many MSPs risk commoditization by relying on standardized, transactional service offerings. She highlighted a shift toward consultative selling, emphasizing the need to focus on unique solutions—such as AI guidance and security enhancements—instead of basic recurring services. Both speakers remarked that as automation and AI become more prevalent, differentiation and consultation will increase in relevance and provide a pathway to sustained business models.

Additional topics included emerging security threats related to USB drives. Amy Babinchak reported that widespread vulnerabilities, particularly in devices manufactured in China, have exposed businesses to high risks of malware via unencrypted firmware. She recommended MSPs phase out low-cost, unbranded memory sticks in favor of hardware with encrypted firmware, noting associated costs can be in the $100–200 range. The episode also addressed the responsibility for user security awareness training, with both hosts asserting that the MSP must ensure not only provision but active client engagement and outcome tracking, rather than relying solely on offering the service.

The practical implications for MSPs and IT service providers lie in proactively managing client expectations, emphasizing measurable value, and maintaining vigilance regarding hardware supply chain risk. Providers are encouraged to improve governance by reviewing service portfolios, confirming active usage of bundled offerings, and conducting regular business reviews. Regarding security, due diligence in vendor management and sound end-user education policies are highlighted as essential components of operational risk reduction.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Managed Service Providers (MSPs) face measurable hurdles when scaling businesses past certain revenue thresholds, particularly the $10 million annual mark. The episode’s primary focus is the operational and sales methodologies implemented by Brian Strong, who reported helping lead an MSP from $2.2 million to $19 million in annual revenues over five years. This growth was attributed to instituting systematic sales processes, prioritizing revenue generation, and building organizational redundancy, which Strong identified as essential for sustaining and supporting large-scale managed services operations.

Supporting this central narrative, Strong detailed specific challenges encountered, such as a company operating at a $300,000 monthly loss after an acquisition, with survival requiring accelerated sales volumes rather than cost-cutting alone. Growth strategies were based on methodical sales enablement, including tracking KPIs, transparent open-book management, and aligning hiring practices with the organization’s long-term scaling goals. Notably, Strong emphasized targeting larger accounts and developing specialized technical talent to build resilience and capabilities across departments.

The conversation also addressed industry-wide patterns, noting that many MSPs remain “stuck” below the $10 million revenue band. According to Strong and Speaker B, a key obstacle is the lack of systems and staffing that enable owners to delegate daily operations and sales functions. Both speakers noted that relying solely on owner-operators impedes scale, and emphasized the need for targeted recruitment, standardized processes, and deployment of appropriate technologies to enable sustainable growth and improved customer service delivery.

For MSPs and IT leaders, these discussions underscore the necessity of robust, replicable sales processes, transparent operational metrics, and talent strategies designed for organizational redundancy and scalability. Risks of stagnating at lower revenue levels include limited service capacity, inability to serve mid-market clients, and heightened vulnerability to market or talent disruptions. Organizations seeking to grow beyond these barriers must invest in their people, formalize their processes, and ensure leadership is accountable for both revenue generation and operational sustainability.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

NinjaOne’s reported growth and positioning within the MSP software landscape presents a notable development for service providers evaluating vendor ecosystems. According to statements reviewed by Ryan Morris and Dave Sobel, NinjaOne claims an annual recurring revenue (ARR) exceeding $500 million, a valuation above $5 billion, and a customer base of more than 35,000. This self-reported data, while not independently verified due to NinjaOne’s private ownership, places the company within the top tier of platform providers for endpoint management, alongside ConnectWise and Kaseya. The expansion and platform focus suggest material choices ahead for MSPs considering stack consolidation, endpoint management, and integration requirements.

Supporting analysis from Dave highlights trends in the categorization of platform players, noting shifts among vendors such as Enable, which is repositioning from the MSP infrastructure platform to the security domain. The discussion raises a technical consideration: the evolution from API-driven integration toward emerging orchestration standards such as MCP servers, though details from vendors remain limited. MSPs are advised to understand tier distinctions among platform providers and carefully assess how these shifts may affect integration, security posture, and operational alignment.

Adjacent topics explored by the speakers include the risk and tradeoffs involved in vendor onboarding, M&A (mergers and acquisitions) processes, and the relevance of business continuity strategies. Ryan Morris and Dave Sobel critique extended, six-month vendor evaluation pipelines as potentially eroding competitive positioning in a landscape characterized by rapidly evolving technologies, especially AI-driven tools. Additionally, the episode revisits the skill set of the IT generalist, acknowledging that while specialist expertise remains essential in domains such as security, contemporary AI adoption demands generalist capabilities for validation, interpretation, and curation of technology outputs.

The podcast asserts several operational takeaways for MSPs and IT leaders. Prioritizing process documentation and standardization enables scalability and business value beyond the presence of individual owners, as financial professionals weigh factors such as repeatability and owner-independence in valuation. Businesses should balance rigorous stack control with responsive, customer-centric experimentation, managing the pace of change in vendor portfolios and technologies. In M&A scenarios, the speakers caution against overly formulaic approaches, emphasizing contextual evaluation of fit and motivation to mitigate post-transaction dissatisfaction. Collectively, these themes stress the need for ongoing adaptation, systematized governance, and objective risk management in MSP operations.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The episode centers on profit margins and service mix strategies for MSPs, emphasizing the importance of maintaining recurring revenue margins above 50%, preferably targeting 65–70% for long-term sustainability. Industry averages indicate recurring revenue margins as low as 35%, which Speaker B and Speaker C note presents a risk to driving profit down to the bottom line. The discussion identifies that margins tend to erode with organizational growth due to overhead but underscores the necessity of regular price adjustments built into client contracts and regular scrutiny of margin performance as core practices to avoid financial shortfalls.

Supporting these observations, Speaker C advises MSPs to gradually move from lower margin brackets to achieve at least 50% in recurring services, acknowledging this transition typically requires sustained effort over several years. For professional services, a margin range of 40–60% is considered attainable, with 50% as the practical target. Regarding income mix, respondents suggest 70% of revenue should derive from recurring services and the remaining 30% from professional or project-based work. Both speakers highlight that smaller MSPs may achieve higher margins, while competitive pressure and organizational complexity often erode these numbers.

Adjacent discussions address operational and security challenges. The show covers recent FBI public service announcements warning of increased cyber threats originating from Russian and Iranian actors, specifically targeting government, political, and journalist entities. Speaker C and Speaker B recommend that MSPs communicate only the most relevant advisories to clients to avoid information overload, framing updates as evidence of service diligence rather than sources of alarm. In addition, Microsoft’s new AI security dashboard in Microsoft 365 is reviewed, which uses Defender sensors already present in Windows 11 devices to provide visibility into AI activity and configuration security at no extra cost, provided suitable licensing for Defender is in place.

The operational implications for MSPs include the need for rigor in pricing models, clear partnership agreements, and transparent communications with clients about both technology changes and external threats. The recurring emphasis on risk management, margin preservation, and responsible client engagement reflects a harm-reduction mindset. Regular contract reviews, maintaining consultative relationships, and avoiding over-communication of security issues are presented as accountability measures that support stability and trust in MSP operations.

Question of the week: What margins should I be targeting? And what is the mix that I should be shooting for?

Amy’s class is now available for purchase at Coassemble. 

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Microsoft’s decision to increase pricing across its Microsoft 365 product suite, excluding Business Premium, is a notable development for MSPs and IT service providers managing client subscriptions and budgets. According to discussion on the SMB Community Podcast, the price hikes range from 8% to 30% across various plans and products, with only Business Premium escaping the adjustment while still adding new features. Microsoft is also expanding mailbox storage, with each mailbox now receiving an additional 50GB, raising the individual mailbox limit from 50GB to 100GB.

Additional details provided in the podcast highlight that Microsoft Business Premium continues to receive feature enhancements without a corresponding rise in cost. Upcoming functional improvements include expanded AI capabilities for Microsoft Chat, which will offer agent-based access to documents and files within the user’s tenant. The licensing distinction is important: while the unlicensed version of Chat requires manual document uploads, the licensed version allows AI features to operate securely within the organization’s environment, keeping sensitive data contained and not exposed externally.

The conversation also explored sales strategies and portfolio management for MSPs. Both hosts endorsed a harm-reduction approach to client engagement, advocating for saying “yes” to a broad range of customer needs to protect client relationships and avoid driving clients toward competitors. They noted that even if a requested service is outside of a provider’s core competencies, partnering with another vendor or project-managing the solution maintains client trust. Discussion further addressed the operational and valuation benefits of vertical specialization, particularly as MSPs grow beyond $2 million annual revenue, given higher buyer valuations for vertically focused firms.

MSPs and senior IT leaders should review Microsoft’s pricing adjustments in detail to mitigate downstream risk for their own margins and client contracts. Decision-makers are advised to analyze service offerings and clearly communicate distinctions between licensed and unlicensed AI features to minimize operational and security risks. Adopting a client-aligned engagement model—being prepared to source or manage non-core solutions—can reduce customer churn but may also require revised processes for vendor selection, project management, and risk evaluation. Specializing in key client verticals may enhance firm value in acquisitions or exit scenarios.

Microsoft Community Days: https://www.communitydays.org/Find one coming to a city near you!

https://www.sysdrive.net/two-microsoft-365-changes-coming-in-2026-that-every-business-should-know-about/

Resources and Events for MSPs:

Third Tier’s Continuing Education Program: https://www.thirdtier.net/2026/03/20/stop-drowning-in-m365-security-changes-join-our-continuing-education-program-for-admins-and-security-pros/

Small Biz Thoughts Community for MSPs: www.smallbizthoughts.org

Engage with us at www.smbcommunitypodcast.com

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

https://www.theinformation.com/articles/iran-war-imperils-300-billion-gulf-ai-spending?utm_campaign=article_email&utm_content=article-16718&utm_medium=email&utm_source=sg

The war: The USA has bombed three data centers owned by Amazon. This is the first time I've seen data centers be targets. It won't be the last. 

The war: Middle eastern countries have promised $300 billion in AI infrastructure investment. Some in their countries and some in ours. That investment is in  jeopardy now as the bombs fall.  

Mastermind LIVE Event – San Diego March 26-27th

https://portal.kernanconsulting.com/mastermind-event

Exclusive Small Biz Thoughts Community Members Live Workshop: How AI Helps MSP Radio Production…and Where It Doesn’t Help. 

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

A significant risk area discussed is the challenge of “invisible work” in managed services due to increasing automation and the adoption of artificial intelligence (AI). Customers, according to participants, increasingly lack awareness of the work being performed on their behalf, which raises doubts about the value of services provided by MSPs. With prices for services escalating, clients are demanding higher-touch engagement and visibility into operations, creating a disconnect between automated backend activities and client expectations for tangible service.

Supporting this, hosts cited the difficulties in proving the value of proactive prevention, such as security incidents that did not occur, and noted that with further automation, particularly through AI, this challenge will intensify. Customers may question why they continue to pay elevated fees if tasks can be completed by AI or low-cost competitors, amplifying price pressure and the potential for misaligned perceptions of value. Examples included references to the current technology stack, where some tools cost more to integrate and operate—particularly with new AI workloads—than previous turnkey supplier models, often with increased operational complexity and support risks.

The episode addressed secondary risks stemming from overreliance on both small, unproven vendors and on large-scale automation. Hosts highlighted the volatility of new entrants in security and infrastructure, pointing out that many lack lifecycle support or robustness, making them unreliable partners for business-critical tasks. Recent events, such as the OpenAI boycott following its Department of Defense contract and operational disruptions at AI provider Claude, were used to illustrate instability among technology suppliers. The conversation also covered the risks of unchecked AI deployment, with examples from military and financial sectors where automation led to errors or was used to rationalize significant workforce reductions.

The practical implications for MSPs and IT service providers center on maintaining transparency with clients, reassessing vendor risk (particularly with AI and new software providers), and calibrating expectations for automation. The hosts recommended reinforcing client communication regarding the nature and value of services, conducting due diligence on technology partners, and aligning automation strategies with operational risk management frameworks. Emphasis was placed on the need for ongoing human oversight, especially where automated decisions could lead to adverse outcomes, and on approaching AI adoption as a phase for careful experimentation rather than wholesale business transformation.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.