Today, we announced a big milestone in Nerdio’s journey. We’ve raised an $8m Series A venture capital round lead by MK Capital and backed by me and Nerdio’s CRO, Joseph Landes. This capital infusion will support Nerdio’s mission of empowering managed service providers (MSPs) and IT Professionals in building successful cloud practices in Microsoft Azure and taking advantage of new exciting technologies like Azure Virtual Desktop (AVD). More on how this money will help advance our mission later. But first, I’d like to reflect on how we got here.
How Nerdio Came to be – IT Entrepreneurship
My family immigrated to the US in the early ‘90s when I was 13 from Ukraine, a country that surprisingly, everyone has heard of by now. We settled in Chicago and I started 9th grade in high school a few months after we moved. Barely speaking English when we arrived made the first several months of high school challenging, to say the least. It was in 9th or 10th grade that I recognized my passion for technology and entrepreneurship and decided to make it my career by setting my sights on a bachelor’s degree in Computer Engineering and an MBA from Kellogg — which I was fortunate to eventually achieve. Looking back, it seems somewhat naïve to not have had a safety school being so focused on such a specific major, degree, and school choice — and I’m glad it worked out — but I’m not sure that this is how I’d advise my kids to make their career decision.
I started my first “IT consulting company”, ComTech Computers, in 11th grade and got the taste for entrepreneurship, being my own boss, and making “real” money ($25/hr for a high school kid back then seemed like a lot). After school, I would go to people’s homes and help them set up their home networks and connect their Windows 95 and Windows 98 computers together to share an internet connection, files, and printers. I learned a lot about both IT and business and confirmed my desire to be a technology entrepreneur.
While in college, I started a new company called NetworKey. Early 2000s were all about the wireless internet revolution. A friend and I decided to start a company that would install wireless networks at people’s homes and businesses and on nights and weekends, we were doing site surveys, installing wireless access points, and answering the dreaded “I can’t get to the internet” or “why is it so slow?” call during class. We even hired someone to help us a few hours per week as a contractor and were introduced to the world of HR and people management.
Throughout college and while running NetworKey, I also had a full-time day job working as an IT consultant and network engineer at Solus, an MSP in Chicago. After a few years supporting about a hundred small and mid-size businesses in the Chicagoland area, I noticed that an inordinate amount of my time was being spent managing customers’ backups (tapes in those days). For a few months I pestered my bosses that we needed to come up with an alternative to tape backups and do it automatically via the internet. In early 2005, they acquiesced and the three of us each put in $5,000 (plus $100 from Bank of America for opening a business checking account) and started a new company called Level2 Storage to provide secure online backup to our SMB customers as an alternative to tapes. There were no employees in Level2 Storage, and I was responsible for sales, onboarding, and ongoing support. Every morning I would wake up very early to hundreds of email notifications indicating success or failure of our customers’ backups and would have to figure out how to fix the failed ones.
2005 was also the year when I started the part-time MBA program at Kellogg and began learning about the business side of the technology organizations I was involved with. I learned about everything business-related, including marketing, accounting, finance, organizations, decision sciences, and so much more. It was fascinating to be able to experiment in real-time in my own business with the seemingly abstract concepts I was learning at school.
The Early Days – Before the Cloud
After a couple of years running the online backup service, our customers made us realize that they wanted much more than backup to be handled by us. They wanted us to handle all their servers instead of having them sit in a closet in their office. This was long before the days of the “cloud” and even before AWS came on the scene. We ran a pilot with 3 small customers (2-5 users each) by virtualizing and hosting their servers in our data center rack and giving them access to a virtual desktop with Terminal Services. It was a great success! Two of the three customers closed their expensive offices in downtown Chicago and sent employees to work from home thanks to the newly found technological capabilities of desktop virtualization. We knew that we were onto something with this IT delivery model and decided to propose it to everyone else who needed IT services and it took off. This is how Adar IT was born. It was 2007. Don’t get me wrong, there were plenty of nay-sayers who continued to tell me that this couldn’t be done. The technology wasn’t going to work because the low VM density would make it too expensive, or that internet connectivity was too unreliable, or that user experience and performance were going to be an issue. They weren’t necessarily wrong in their specific concerns, but I’m very happy that I didn’t listen and instead persisted and worked through all the problems that came up along the way.
In the subsequent three years, we signed up dozens of customers, had no employees, and 80%+ gross profit margins. By 2010, I quit my job at Solus, completed my MBA, and started building Adar full-time as a leading-edge MSP with an IT delivery model that was unheard of in the market: complete, virtual desktop-centric IT environment hosted in a private cloud. In the days that most IT service providers were just learning about the recurring revenue managed services model we leap-frogged that entire phase and became a “Cloud MSP” in 2007. For a while, being the only one in the market with such a unique offering had its challenges (“What do you mean my servers won’t be in my office?”), but also many advantages (“Wow, this is really cool and I had no idea this was even possible. Where do I sign?”). We experienced exponential year-over-year growth and had a chance to optimize the service delivery model both from a technology and business process perspective. It took a lot of discipline to clearly define our mission and select 4 core metrics that were constantly monitored, and every decision was evaluated against them. We had to learn to say “no” to many great ideas — ones that would have been profitable — if they didn’t clearly contribute to our mission and improve our metrics. This discipline allowed Adar to stay hyper-focused and build a large, scalable business with metrics that are second-to-none in the industry.
Building Adar was one of the best professional experiences of my life so far and has taught me so much. The company was like a little baby that needed my attention every second of every day. Initially, I was doing everything – literally! Finding new customers, building their IT systems, providing support, billing, taking care of the office, managing vendors and eventually employees, and so much more started and ended with me. Others joined me along the way and took on much of the work bit by bit. I remember measuring my success of “raising” the company from a “baby” to an “adolescent” by how many days I could be away from the business without a significant negative impact. Initially, being unavailable even for a single day was nearly impossible. Little by little, I could take longer stretches of time to be away until the point where the entire organization became entirely self-sufficient and I could focus my attention on other opportunities.
This ability to step away from the MSP business, which was successfully humming along and growing, allowed me to realize that the model and technology we built at Adar were broadly applicable to the rest of the MSP industry and many MSPs were trying to build a cloud business like the one we built.
Nerdio Launches in 2016
This is why Nerdio was born in 2016. At Nerdio, we leveraged the knowledge and experience we gained while running a large, successful, cloud MSP and created a software automation platform to help other MSPs looking to transform their business and build a successful cloud practice in Microsoft Azure. Running a software company is very different than running an MSP but being able to see the world through our customers’ eyes, having been in their shoes for a decade, makes it very fulfilling. Nerdio’s Azure automation platform levels the playing field for MSPs who want to evolve their business to really take advantage of the cloud. It simplifies pricing, deployment, management, and cost optimization while helping to overcome the perceived challenges of the public cloud being too expensive, complex, and risky.
Nerdio Achieves $8M Series A Funding
Nerdio has experienced amazing growth in the recent years as a result of our clear mission and focus. This growth would have been impossible without the incredible team that works tirelessly to make Nerdio’s vision a reality. Our team is comprised of MSP veterans, software industry leaders, sales rockstars, and marketing gurus – all of whom are equity stake holders in the company’s success. They make Nerdio what it is and enable the company to continue its exponential growth. This $8m funding round is a testament to their talent, skill, and commitment.
I am very fortunate to be able to participate personally in this funding round led by MK Capital alongside my business partner and CRO, Joseph Landes. Joseph joined me at Nerdio 16 months ago and while I still don’t know how I was able to convince him to leave his leadership position at Microsoft after 23 years, I’m sure glad I did. In just over a year, Joseph has accomplished so much. From establishing Nerdio as the clear market leader, participating in hundreds of MSP ecosystem events, deepening our partnership with Microsoft, establishing domestic and international distribution relationships, and winning numerous channel and technology innovation awards, Joseph’s commitment to Nerdio’s mission and our partners is inspiring.
$8,000,000 is a lot of money and before raising the round, we thought long and hard about how much money we wanted to bring in at this stage of our journey and how we would deploy it. With the release of Windows Virtual Desktop (WVD) late last year and the astonishing amount of interest and demand that it has generated, to the almost universal interest in adopting Microsoft Azure by MSPs, we felt that there is a lot more we can do to increase our capabilities in helping more MSPs around the world build cloud practices in Microsoft Azure and accelerate the adoption of WVD by MSPs and IT Pros. We will make good use of this capital infusion by ramping up our products’ capabilities and increasing our presence and reach in the channel both domestically and internationally.
The last 4 years at Nerdio have been a blast and I can’t wait to see what the next 4 years will bring. Thanks to those of your who are already part of our journey and we’re looking forward to working with those of you who aren’t yet. There are many more exciting announcements coming from Nerdio in 2020, so stay tuned!