Have you ever looked at a telecom or cloud contract and thought “why even bother…”?
Matt Milhauser is the VP of Strategy and Innovation for Advantix… and he’s also a Samurai of contracts.
You’ll learn Matt’s 5 things to look for in a vendor contract and how to negotiate them so well that you’ll walk away as your company’s contract HERO!
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Transcript
Mike: Cloud Therapy Episode 30.
Hey, IT Nation. Welcome to Cloud Therapy with AeroComInc.com where you learn about the latest cloud and telecom technology that is going to take your career to the next level. I’m your host Mike Smith. Let’s do it.
Hey, IT Nation. Welcome to another great episode of Cloud Therapy. My name is Mike Smith. I’m super excited to present this episode to you today. The reason why it’s because I feel like it’s one of the best episodes we’ve ever had, even though it’s a little off the beaten path from what we typically do. So I don’t know what that’s saying about our typical content, but never mind, we’ll ignore that part. But, okay, so typically we talk about the technology side of cloud and telecom technologies that if you know a little bit more about them, can help elevate your career in IT. Well, today we’re going to talk about something else that can really elevate your career in IT, but it’s actually surrounding the vendor agreements or contracts that you have to sign when you sign up for telecom or cloud services for your company. So I don’t know if that sounds boring at first, but I can tell you that the things Matt Milhauser presents today in this podcast are going to blow your mind.
Matt is the Vice President of Strategy and Innovation for Advantix. And although that’s his title, he actually knows a ton about looking at vendor agreements and really how to break them down and figure out a way to negotiate them in a way that’s really advantageous for your company. So how this is going to help you, is that Matt’s going to give you five little secrets to evaluate in these contracts very, very quickly, even though it’s five to ten badges of a bunch of stuff, that it’s very confusing looking. Matt’s going to tell you the things to focus on that are negotiable, that nobody really knows about that you can definitely can negotiate for your company, and I can tell you your management team is going to look at you in a different light when you’re able to break down a contract like this because, you know what, they cannot do it, probably. So, you’re going to become a really valuable asset to their team if you can bring this kind of stuff to the table, not only can you figure out which technology your company should purchase, you can evaluate the contract very quickly and really, you know, do a hard negotiation with the provider on that contract. So, it’s definitely an episode you want to listen to because I guarantee you, each one of you is going to be looking at contracts within the next year, and I love these tips, these are the things that I’m going to use myself as well. So, hang on tight and make sure you check out the transcripts as well. If you go to our website, AeroComInc.com, go to the Blog section and then search for this episode, you will find the full transcript of this episode there, so just sit back and relax and enjoy the audio side of this podcast today. Don’t worry about scribbling notes. For that, just go to the transcripts on our website. They’re there for you as a resource to you.
And then, also we have a fantastic free gift for you today. So I’ve been talking about this for a while. If you haven’t heard it already, here it is. If you’re going to be purchasing a phone system for your company in the near future, number one, lucky you, right, so if this is going to be you, you know better than I do that one of the hardest things about this is that you’re trying to please everyone with this decision because there are so many different people who are going to be using this phone system on a daily basis who think this is a big deal and this is all on your shoulders to try to make all of them happy. I’m talking about your users within your company. Your management team has got a certain budget for this project, and the people calling in to your company who’ve got certain expectations of the way calls should be handled. All of that’s being thrown on you and you’re trying to please everybody. Well, I can tell you, you can please everybody. It’s very simple. All you have to do is do four things really well. And that’s, number one, get the features right. Number two, get the voice quality right. Number three, get the pricing right. And number four, get the provider right for your phone system.
And on this upcoming webinar series, that’s absolutely free to you, I will be explaining those four things in detail and helping you really make a great decision that’s going to make everybody happy. So the webinar I’m going to be doing is called the Four Cornerstones of Buying a Business VoIP System that everyone will love. And all you have to do to reserve your free spot in one of these upcoming webinars is text the word “VOIPWEBINAR” to the number 44-222, and we will text you back with the information you need to reserve your spot in one of these free upcoming webinars that I’m doing. So, if you’re buying a business VoIP system for your company or any type of phone system in the near future, make sure you join me on this webinar. I’m going to tell you some secrets that will really help you make everyone happy with your purchase.
Okay. So let’s get to it. Here is Matt Milhauser from Advantix, talking about breaking down contracts so that you can get the best contract for your company. Enjoy!
Hey, Matt! Thanks for joining us on the program.
Matt: Mike, pleasure being here. Thank you for inviting me.
Mike: Cool. Well, it’s great having you. Tell us a little bit about yourself personally and professionally so everybody gets to know you a little bit.
Matt: So, my name is Matt Milhauser. I actually have been working for my organization, Advantix, for about four years now, at various capacities, too. So, originally I came on board to redesign our consulting services program, and I spent about two years there, kind of in an ether position, like I didn’t really have a real, like, formal title for a while.
Mike: That’s always comfortable.
Matt: Yeah, it is. They can suborn you on to anything at that point, you’re pretty malleable there.
Mike: Yeah.
Matt: And then I went to a director of business development position for about a year. And currently, for the past two years I have been one of the vice presidents for the company, specifically targeting corporate strategy, as well as innovation. That’s process innovation. That’s product innovation. It’s a number of different items. Again, it’s super broad, too. So they’ve been really good at keeping me as spread thin as possible, but it’s been a lot of fun. Married for two and a half years now. We have a four-month-old son, named Maxwell.
Mike: Oh, congrats!
Matt: Thank you. He just got, like, a double ear infection yesterday.
Mike: Oh, congrats on that, too.
Matt: Oh, yeah. Yeah.
Mike: That’s good times.
Matt: So it’s our first pass at that. And of course, we had to get both ears, not just one. We had to go big on this one. And also, music is probably a pretty big thing in my life. So, as far as hobbies go, I’m pretty stretch thin. I guess I’m blatant for doing that, but throughout junior high as well as high school I’ve played drum corps. And then when I got to college, I actually started doing, like, studio drumming in studio base.
Mike: Very cool.
Matt: Yeah, we toured around in custom CDs. So it was a fun little break where we all thought we were going to be rock stars for a while and of course, the reality hit eventually, but it was a lot of fun. It was a great learning experience. On the weekends I do Aerial Media for documentaries, movies, etc. So I’ve got these big flying rigs that I strap like Red cameras to, things like that. So we can do cinematography.
Mike: That’s really cool. So, you just put like Go Pros or something on. You know, like, what do you film? Tell me more about that.
Matt: No. So I got into that on accident. My dad’s retired. And he started buying some, one of those little drones were first getting big, he started buying some of those quadcopters that DJI made, and they call them Phantoms and so that’s, like, the most popular brand. So I picked one up and when I was visiting him, and I was like, you know, there’s no way I could ever get something like this and he goes like, you know, go ahead and try it. And so I took it up, took outside and lay it on some land and I was done from there. And my wife saw in my eyes and she was like, “Oh, this is going to be a money pit.” Like, this is going to be big. So it started that way. But then we progressed to I’ve got rigs that we put, like, cinematography cameras on studio cameras. Like, these things are insane. We have to insure them. And I’ve got the big, like, hex and octa copters. I’d like eight arms, eight blades on them. But we have to insure these cameras and insure these rigs because the cameras with the lenses on it, some of them were up to a quarter of a million dollars.
Mike: Whoa!
Matt: Because they’re actual, like, studio cameras and those, we go rent those. But we’ll put, like, different types of 4K cameras on there, like Lumix cameras and things like that. So, if anyone here in the audience knows about cameras, Red is the one that we usually rent a lot, like the really high budget things.
Mike: That’s really cool. So, anything that you film that anyone out there listening might have seen, or I might have seen?
Matt: Potentially. A lot of times what happen is a studio has plans to release a documentary or they’re going to sponsor a documentary or help produce one, they’ll have like a film that’s coming out, and so they’ll request like a batch of raw footage. And we’ll do post sometimes too, but normally, it’s really vague. And so they’ll say, we need some shots of skyline, or we need to do this particular type of shot over a building or a field, or something like that, or mountains. And so we go film that. We cut it minimally and then we’ll send them this batch, and sometimes that gets incorporated into a movie or a documentary. So I can’t point to one specifically, but what I can say is anytime that you see something that looks like it was shot by a helicopter and it’s super smooth so it’s not jilting around any, that’s probably a company like ours.
Mike: That’s really cool.
Matt: Yeah. So it’s a lot more cost-effective to get someone with an aerial rep and come out there as opposed to having to go through renting a helicopter company and having them strap the camera onto a helicopter, and it’s a lot less dangerous, too.
Mike: That’s cool. Yeah. That’s awesome. You know, something I’ve never even thought about, but I can definitely relate, because as I produce content and stuff like that for our company, you know, looking for a certain picture or, you know, you kind of have your creative juices flowing, you’re like, man, I need this one thing for this part of the content that I’m creating, whether it’s a movie or, you know, whatever. And so I can imagine why they’re looking for certain things. They’re just like, you know, they’re having their mind, like, hey, I want to sort through a bunch of footage that people have recorded that we can buy to find what I’m looking for. So that makes sense.
Matt: No, absolutely. And it’s kind of like buying sounds online right now. So if you want to buy, like, a song or something like that and you need it to be royalty free, it’s not there yet, but this industry is just blowing up right now because FAA just made a lot easier to be a viable commercial company, without having to jump to too many hoops. So I’d imagine pretty soon it’s going to get to that point where so many people are producing content in that category, that you’re going to start seeing things like royalty free aerial videos, something like that. So I wouldn’t be surprised to see that in the next three to five years.
Mike: That’s cool. That’s cool. And the rewinding a second, earlier what type of band were you in in college? What genre?
Matt: So we played primarily – I’m trying to think of the right label for it – some people call it pop punk. So, like, Newfound Glory, Yellowcard, all those fans. And so it was kind of upbeat, not really rock, but upbeat, kind of, like, pop punk is what they called it.
Mike: Okay.
Matt: So it wasn’t Mohawks and stuff like that. It was more…
Mike: Blink.
Matt: Yes. Yes, absolutely.
Mike: Just tiff stuff. Yeah. Got it. Yeah, that’s cool. I, kind of, got pretty into that genre when I was in college, like blink and leg wagging in those type events. Those are awesome. Kind of like melodic punk I always call it, but it was, yeah, just they had a little bit more of a melody to their music.
Matt: Right. It was a ton of fun. That’s another sticking point with my life as I still have my touring rig, my base caps. I’ve got all these speakers and heads and bases out in our garage right now. So I guess one day I might use them, we’ll see.
Mike: You’re like, dude, we’re going to throw a killer block party.
Matt: Well, no, actually on that note one of our friends in college was having a birthday party at a pool and I think it was like a pool, like, they’re an apartment community and they work at that apartment community and it was like a college campus. So it was everyone’s already out of the pool, they’re drinking down at the pool. And he said, “Do you have anything like a speaker system we can use?” And I said, “Absolutely.” So I took that entire base rig and it’s like it’s got fifteens in it, it’s got, like, a tens in it, it’s got all these, a ton of speakers basically. And I brought the heads to power it and modified it to be an iPod dock, and so we were running an iPod through a touring rig. So it was really loud because of that call, but it was a fun time.
Mike: That’s awesome. That’s awesome. Well, very cool. Thanks for sharing all that stuff. I think it’s cool for everybody to learn a little bit about our guests. It, kind of, lets everyone know that you’re a human just like all of us, even though, you know, you’ve got certain experiences. But it kind of gives us some perspective to, you know, on the things that you talk about and where you’re coming from. So, thanks for sharing that. That’s interesting stuff.
Matt: Sure.
Mike: Cool. You know, today Matt’s going to talk to us a little bit about something that’s a little off the beaten path of what we usually talk about. Obviously, we’re always talking about cloud and telecom technology and how IT professionals can really increase their level of knowledge in order to really, you know, boost their career. But today we’re going to talk about something that’s related and can also boost their career but not necessarily the technology itself. We’re going to talk about the actual vendor agreements that you guys, meaning IT professionals have to sort through all the time. So I know that one of the things when you’re signing a telecom contract or a cloud contract with a service provider of any sort, along comes a five to ten page terms and conditions that everybody just kind of glazes over. But we all know that we’ve heard the stories of how those, you know, not really looking at those things in detail can come back to bite you, and all of a sudden your boss comes in and says, “Hey, why did you sign this?” You know? Or vice-versa, can say, “Hey, you did a great job really combing through that agreement.” But the problem is the agreement is super long, it’s all legal mumbo jumbo and none of us know what the heck we’re doing when we’re looking at it. But Matt came to me and said, hey, I’ve got a great five step or five tip or, you know, pillar process of how to go through a vendor agreement to really help you improve the way what you end up with at the end so that your boss is going to tell you that that one thing I mention of, hey, great job going through that, I would have never known that. Man, you really know your stuff when it comes to going through vendor agreement. Yeah, so I thought that was a fantastic topic. And I told Matt, let’s do it. So with that, Matt, I’ll just, kind of, turn it over to you and let you go for it and I’ll just chime in with the question now and then.
Matt: Great. I think as soon as you said contract, people’s eyes just started to glaze over, but you brought up some good points. It’s vitally important. And no one wants to do it because it’s tedious and it’s boring, but at the end of the day if you don’t watch these things you can find yourself in a world of trouble sometimes. So, really there’s a number of things that you can look at when you go through a contract and there is an almost infinite number of items that we could probably cover as it relate to contracts. But I think there’s five things that really pop up anytime that I don’t think that I’ve spoken anywhere in an industry event, or if I’m just talking to people in general, if legal comes up, that’s a component piece of my department, legal is always the thing we spend the most time on because it’s what they know the least about, and there really are five things that keep coming up. And so I just, kind of, wanted to go through them a little bit methodically in a sequential nature. But one is everything is negotiable. So that’s number one.
And when I say everything, virtually everything on a contract is negotiable. There are certain things of course you’re not going to steal their employees, stuff like that. I’ve seen that try to be negotiated. So I guess, yeah, if you talk to political leader, like Donald Trump, he’d probably tell you everything is negotiable. But it really is. It is. But there’s some key items, that there’s a lot of flexibility on typically. The most common that people look at are, like, pricing. So, anytime anyone goes through a contract, that’s what you’re most familiar with. And you might not think about it in the context of you’re negotiating an agreement, but you really are. You’re negotiating a term of an agreement whenever you negotiate pricing. And so that’s one of the things that we, kind of, do robotically inspires, but we don’t really think about, oh, okay, I’m actually engaging myself to this process. But there’s other things below that, or along with that, that we need to think about as well.
Net terms is one. A lot of vendors will try to get you at, at least, a net 30. Some telecom contracts will try to go for a net 15. Some cloud contracts would try to do the same thing. But net 30 is pretty much the standard, but we’ve had a lot of success with our clients and I’ve heard a lot of success about people going into net 60 terms, even with mobility providers, with wire line providers. But it really all comes down to how much leverage you have, right? So how many, you know, or you’re putting up thousand phones onto AT&T or you’re putting five phones on AT&T on your corporate account. And that has a lot to do with it. But at the end of the day, if I could tell you one thing that really resonates with a vendor, when you’re trying to negotiate that, because the first thing you’re going to say is we can’t do that. Actually, they can. And here’s the calculus that we use on our end. Anytime that we’ve negotiated an agreement with a client and we’re the vendor, here’s the way we look at it, like a net 60 for example, we’re going to have to wait 60 days to get our money on that first payment, but we’re billing you monthly, so after 60 days we now have cash flows every thirty days. So that net 60 really only impacts your business from a cash flow perspective for the first sixty days. After that, it’s money every month.
Mike: Right. That makes sense.
Matt: And so that’s a really good point to bring up if you’re talking to a vendor, because it really shows you’re empathizing with them, but that you understand cash flows, you understand the cash flows from a contract perspective too that, “Listen, I know you’re going to be taking a hit for first sixty days, but after that you’re getting paid every thirty days. So we’re only impacting cash flows this first sixty.” Usually, you can, kind of, weave into that conversation too, the fact that there’s an implementation process and usually you can find some flexibility around that.
Mike: Now, as far as net 60, what’s the benefit that you see, you know? Because when I think net 60, I’m thinking, okay, this company is unorganized in the way they’re paying their bills and that’s why they want net 60. But from your perspective, what have you seen? Like, why would a company want net 60 and pick one of those things as a sticking point?
Matt: A lot of it has to do with just, generally speaking, cash flows. And so, it really depends on the aggressiveness of your controller too and your leadership. It depends on if they have a big finance background. But a lot of times you’re using that money to do something else. And that something else could be paying for a raise, but more importantly or more probably is you’re parking that money in a bank account that’s collecting interest. And so the more you can minimize the cash flow impact on your company as opposed to, you know, churning out money every thirty days, now you got an extra thirty days for it to park that into a bank account, that’s thirty more days that you get to collect interest on your money. And not every company does that. It really depends on the size of your company and again, the aggressiveness of your controller, but that’s primarily why people do it. It’s so you can utilize that money for something else. Usually, park it so it can collect interest.
Mike: Yeah. That makes sense, especially if you do that with almost all of your contracts, you know, if you’re taking all the money and you’re parking it for sixty days, I’m sure that adds up mathematically.
Matt: Absolutely.
Mike: Yeah.
Matt: Some other items, SLAs, SLAs are almost always negotiable. There are certain things, you know, like the 99 and then five 9s, you’re probably not going to get above that, but other SLAs, especially about response times, and that’s probably one of the more frustrating parts of a contract, is if you get this really, kind of, flexible, nebulous response time like, oh, within 0 to 48 hours we’ll respond to you, well, that’s okay as long as it’s not, like, a critical item. And so, A, you want to make sure that you’ve define your critical items, saying these are the most important things to us, don’t just give us a general SLA for response time. If it’s a VIP calling, if it’s like an outage, if it’s something like that, we need to make sure that we have a very strict well-defined timeline for not only response but resolution as well. Number one, we ETFs, or early termination fees. You can usually get those waived pretty quick, especially if you’ve got plenty of leverage and you’ve got an aggressive salesperson on the other line. ETF waivers, we get those all the time from carriers. That’s pretty simple, but any vendor for that matter that you’re going at, whether it’s, you know, a datacenter or you’re going for a cloud app, there are almost always going to have some form of ETF that you can at least reduce substantially, if not get rid of all together.
Mike: That’s pretty interesting. So on that one, is it do you typically in order to get them reduced or, you know, is it more like do you do, like, more of a performance-based or just for any reason?
Matt: You actually jumped ahead a little bit there, but yes, and in fact my next thing was penalties for nonperformance or poor performance. And so, ETFs are something that you can put in that category. Whenever you’re negotiating an agreement, put some onus on the vendor because they’re going to put onus on you to pay them for service, obviously their onus is to provide a service. But they’re supposed to be the best at doing what they’re doing, right? That’s why you’re signing an agreement with them. NTT DATA waived my fee. You’re signing an agreement because you believe they are the most proficient at what they do in their market. And so put some hit on them. Put some penalties into the agreement that if they don’t stack up, if they’re not performing based on the specifications that you have or what they sold you on, make that into an agreement, say, “Okay, well you told me you do all these fantastic things, you’re doing this well, give me that writing in the agreement. I don’t care if it’s an addendum, whatever it is. But put that into the agreement. And then let’s wrap some penalties around it in the form of SLAs.”
But ETF waivers are one of those items. So if they’re not budging, or maybe you get it, say 60% to being completely waived, and you’ve got that remaining 40% of the ETF value, maybe you could negotiate that away with some bargaining and say, “Listen, if you’re not performing to standard or if there’s a pattern of poor performance or nonperformance, then we want those ETFs completely gone.” And you can also wrap more aggressive things around that as well. So you might say that beyond just that if there’s a critical item that you’re not performing on, or what I see a lot of times is if you say you’re going to do something 80% well each month and then you dip down to 75% for one month, we might be able to overlook that, but if you do that three times within a twelve-month period at any point in time – so it doesn’t have to be, you know, consecutive months – but if you do that three times in a twelve-month period, then we’re going to deem you for it. And if it’s a critical item, that’s where you want to chain up financial penalty to it. So if it’s going to impact your business, if it’s going to impact your cash flows, make sure that it’s going to impact their cash flow too because you’ve both kind of have skin in the game.
The way to, kind of, deal with this with the vendor, because you don’t want to just come out there with a ball-peen hammer and start throwing it at them, right, so whenever you’re telling them this, one of the things you want to bring up is that, you know, you’d be willing to accept account credits, so reduce my future bill, or put it in a piggybank for me where I can reduce my bill at some point in time. So if we’re strapped for cash in a certain month or if I know that I’m going to miss it, I’m going to need to pay for it pretty soon, I can go into that piggybank and apply my credit to a future service month. And that’s a really good way to insulate that vendor from over-erosion of their cash flows because you don’t want to kill their business.
Mike: Right, right. Oh, yeah. I mean, that just makes a lot of sense. I mean, when it comes to service providers, you know, the one thing I see a lot is they’ll throw out with their SLA, you know, something where they’ll have some credits baked in, but if you look at, you know, what the actual act was versus the credit, we’re like, okay, we were down for three hours and so you get three hours of that month credited back and you’re like, well, that’s not really very much money. But you’re like, okay, how much we’re paying this person or this vendor, $5,000 a month and we were down for three hours, so, you know, if you figure how many hours in a month and you figure out what percentage three hours of that is, and then they’ll credit you back that, that’s not very much. So if you start looking deep into that, you could get a lot better than that. It’s like, okay, if we’re down for this amount of time, figure out a credit that you feel would be worthy of, like, hey, we don’t feel like we shouldn’t pay for this service for the entire month.
Matt: Right.
Mike: Because we were down during prime business hours for three hours during the middle of the day. That’s not acceptable. So we want the entire month. So that makes a lot of sense, being really specific with, you know, what they could do, you know, that what the actual thing is that that, you know, would be a detriment to your company being very specific with that, and then being really looking at the dollar amount of saying, like, okay, this is what we want in return, or, you know, out of our agreement or whatever. So it leaves very little room for interpretation if something like that happens.
Matt: And that’s a really good point. Room for interpretation. Contracts were written broad for a very specific reason. And so you can argue your point till you’re blue in the face, and it’s not necessarily any better than someone else that’s equally as proficient and articulating their argument. So it’s meant to be who’s the best salesman in the room if you got an arbitration. There are certain things that are pretty well-defined, pricing, stuff like that. But overall, contracts are written very broad just so there’s a lot of flexibility and room for interpretation. The more that you can cinch that down and you wrote that broadness and make it much more clear, and much more refined, that’s going to make your life a lot easier in a couple ways. Number one, if, God forbid, you ever have to go to arbitration or go to court, it’s going to give you a lot more specificity to point to, and it’s going to erode their ability to try to talk that away, for the lack of a better term. The other thing it’s going to do, when you eliminate that broadness or at least try to reel it in as much as you can, is it’s going to make the vendor much more aware of what they’re doing for you. It’s going to make them watch it a lot closer. So trust me, we do this with our vendors, or our clients do this to us as a vendor, as they know and we know with our vendors, that if we’ve got you in a very strict contract that’s really well-defined, that we’re going to be watching it. So they know we’re watching that contract more than other contracts. And so all contracts are not created equal, so always remember that too that if you can make this a much stricter agreement with your vendor, they’re going to produce a better service probably because they’re going to be more closely watching it and have a lot more eyes on it.
Mike: That makes sense.
Matt: Because you’re potentially a squeaky wheel at the end of the day.
Mike: Yeah. Absolutely. And I know from the sales perspective, I definitely see that of, like, okay, you know the accounts you’ve sold and what ones have basically an easy out of their agreement if the provider isn’t delivering and it makes you as a salesperson really jump down the throat of that provider and start escalating things pretty fast if you know that that account can leave at any point because they’ve just had their SLA broken.
Matt: Right. That’s right. So that’s number one. Everything is negotiable. Again, there’s a ton of other ones we can stack in here, but those are probably the most common. Another is choose your venue of law carefully. So there’s a little section, it’s typically in the general terms and conditions part of a contract, and it’s called venue and choice of law. And 99.9% of the time that venue and choice of law is going to be in favor of whoever wrote the agreement, and that’s not a knock against anyone. I mean, believe we’re trying, because that’s what everyone wants to do. Everyone wants to make sure that you’re playing on their home turf. Think about it like football, right? We have bunch of them that have home field advantage than to give the other team home field advantage. So whoever wrote the contract, it’s almost always going to have their state of incorporation or whoever they’re corporately headquartered with, whichever is most advantageous.
Mike: Right.
Matt: So always look at that. And as a customer, I mean, we live in an age where the customer is king, and that’s what the market dictates that we’re a capitalist society, so if the customer is king, we’ll leverage that right.
Mike: That makes sense, and just say, hey, we want that and in our, you know, county, not in yours. So, you know, if you breach the contract, we want to be arguing that out in our county with not having to fly somewhere to make it completely inconvenient to what just gives them one more piece of leverage, like, you know what, I don’t want to fight this as if we do, it’s going to be travel, costs, and all that, and just such a pain. Let’s just put it to bed.
Matt: And that’s a really good point. You subdivided from state all the way down to county and that’s very important. So, a lot of times people do a full stop after the state, say, well, you know, it was in Washington State, we’re in California, now it’s in California, but now you’ve got all these counties, so that’s a very good point. Let’s say, for example, though that maybe the contract is really good and you start, kind of, doing a pros and cons list and you say, you know what, we don’t really think we’re really going to be suing these folks, they’ve got a good track record. We’ve got a good track record. We don’t think they’re going to try to take us to court. We’re going to trust them here. Let’s just go ahead and leave venue and choice of law, we’ll leave it as is. I wouldn’t do that. I would look at a neutral location. And typically a vendor is going to agree to a neutral location because neither one of you is taking home court advantage at that point. If you happen to be a company that’s one of two things: incorporated in or corporately headquartered in Delaware, always go with Delaware. They have something really cool that your eyes are about glaze out when I say this, it’s Title 10, Chapter 58 of the legal code and it’s called the Delaware Rapid Arbitration Act. It caps arbitration at a one hundred eighty day maximum on all arbitrations so they can’t protract it beyond that. There has to be a resolution in that time period.
Mike: Wow! That’s great.
Matt: Yeah. But again, if you’re not incorporated in Delaware and you don’t have the corporate headquarters there, you know, you can’t use that. But if you do, absolutely always go for Delaware. You know, that’s going to be seen as home court advantage but again, you’re the client, you’re the customer. Exercise that right. And be very clear on the contract language. And I’m just going to go and back up in preferences real quick. Just choosing your venue and choice of law is awesome, but then you need to be very clear about your preference in resolving legal disputes. A lot of times this is more like an employee contract, but you’ll see, like, a waiver of your right to a jury trial. Usually companies want to go to arbitration, so just make sure it’s very clear how you would handle a dispute if one ever arose, otherwise it’s very nebulous. You’re going to get this question. And if I ask you right now, you probably wouldn’t know what to say, and that is, okay, that’s great, you’ve got your venue and choice of law, you’re going to sue them, what next? You’re going to have to call lawyers and they’re going to ask you what next, so how do you want to handle the dispute. Are you going to arbitration? How are you selecting the arbiters? You’ve got to have all of that pictured out in as much specificity as you can have around that. It’s really time consuming, but it’s very important. So if you ever have to exercise that right, you know exactly what you’re going to be doing.
Mike: That makes a lot of sense. Yeah, I don’t know what I would do. I’m thinking, oh, I’d probably do arbitration and we each, you know, get a say in choosing the arbiters, you know, because I’m like, ah, you don’t want to go to a jury trial for a business thing, typically. But I had just off the top of my head, but yeah, it’s true, I’ve seen a lot of agreements and it does say different stuff every time.
Matt: Right. And yeah, you’ll see some common language across them, but then you get people’s fingerprints from time to time. Certain people do contracts a little bit differently. Some things catch on in the market, other things do not. But this is a general theme that we’re starting to see and that is be as specific as you possibly can, especially in those critical areas.
Mike: Yeah, great advice.
Mike: So, number three, insulate yourself from discontinued or modified products and services. You’re buying cloud software, you’re buying an application, you’re buying something technology-related, even if it’s a service for that matter. If it’s in the technology industry, it changes every day. We know this, right? Like, half my guys just got the new iPhone 7. I don’t, unfortunately. But it’s thrown back until December apparently.
Mike: Me neither. I was like thinking, oh, we’ll just go and get some iPhone or the new 7 here pretty soon, but if they’re on back order that will save me a car trip.
Matt: Well, especially the black one. Everyone is going after the black iPhone. And apparently, there’s two different versions of the black one. There’s, like, a jet black and then, like, a matte black. I don’t know, but people freaked out and just lost their minds whenever Apple released a new color phone. So.
Mike: Matte black is probably back order, I think.
Matt: Yeah. No, it is until December 15th, I think. But at any rate things come out, things changed, and products and services change. We’ve been hit a lot on our IoT side actually, so we’ve got contracts with folks like IBM, like, with their Watson platform, and that thing’s changing so fundamentally all the time. They’re adding modules. They’re deleting modules because they’re test labbing. They’re seeing what’s working, what’s not working. It’s costing a lot of money to keep something running and you’re the only one participating in that from a client perspective, the cash flow doesn’t make sense, they’re upside down, so they’re going to cut it off. They’re going to give you a notice saying, hey, by the way in three months or six months, whatever the contract says, that’s the important part, in this period of time you’re no longer going to have access to this service or this product anymore. And that can be very concerning to a company, especially if you’re supporting your clients, whether that’s an internal client or an external client. If you’re using that system, that software, that application to support them, that can be very concerning. And so you always want to make sure that there’s a migration path. So, get a commitment from the provider, from the vendor. What is the migration path, establish a migration path. You’ll probably have to work with them on it, but it’s much easier to do this on the front end than to worry about what are we going to do now that we don’t have this mission critical application anymore in the next sixty days, right? It’s a much easier conversation on the front end.
Mike: Yeah, that’s a good point.
Matt: When you do that, try to get at least the same level of service quality and capabilities in that migration path, so you lost X, make sure whatever Y is that there’s a way to get to it fairly easily. If they can go ahead and incorporate in the contract, that’s fine. It would be more of a shell since they may not know what it is, but make sure that you’re getting charged the same price and it’s the same service quality, that there’s a big assessor, if possible, but always fight for that and the capabilities as well. So what exactly is it doing for your company, what is this application facilitating and then again, if possible, make sure that that migration path includes something that is of, I’ll use a standard term, equal or lesser value, right, in terms of capability and in terms of pricing.
Mike: I like it.
Matt: But that saved us with IBM, actually, That’s a really good real world example that we just got hit with thirty days ago. So we got an end-of-life notification for one of our modules that we were using to support clients and luckily, at the beginning of that contract we had asked the question, what is migration path, and they sent us documentation, they sent us a formal letter letting us know that here’s exactly what the transition is going to look like, here’s the overlap to make sure there’s not a gap in service availability. And so we’re going to be ramping one up and ramping one down and so they were able to be very detailed about it because we’ve requested that in the agreement. And now we don’t have to worry about what’s our new cash flow situation, so what are we going to be charged now versus what we were charged before. And more importantly, we’re not having to worry about our client not receiving the service that they’re paying us for now.
Mike: Right. Yeah, that makes sense. That makes sense. It’s something that I never even thought about, but that’s very true.
Matt: And, I mean, as we get more and more into the cloud as we get more and more applications in our lives and into business, in the enterprise, that’s going to become more and more important because those things are going to change faster and faster and faster, especially for early adopters. So, number four, hard-code a periodic pricing benchmark into the agreement. No one thinks about this. Mike, do I still have you?
Mike: Yep.
Matt: Oh, perfect. Okay, my screen went black, so I thought maybe it went to sleep. So, always hard-code a periodic pricing benchmark into the agreement, virtually no one thinks of this. I’ve only been hit maybe a couple of times from our clients on doing it, but essentially what this is, is you sign a thirty-six-month agreement, you sign a twenty-four-month agreement, that’s more and more common. Ultimately, what I’d like to do is get you to do a twelve-month agreement. That’s what you want to go for. But if this is something that’s going to be part of your infrastructure, it’s part of a long term strategy, you might have negotiated specialized pricing or even the ETF waivers that we’ve mentioned before and a number of other items in your negotiation. You might have negotiated those away in exchange for a multiyear agreement, that’s quite common.
When you do that though, you’re now locked in for thirty-six-month. And usually a vendor will try to pitch it as a good thing, right? Like, we’re locking in this price for thirty-six months. Well, there should be a number of things like efficiencies that you gain in your processes as you continue to grow. Economy is a scale as you add more clients to it and just pure competition driving down price, right? So locking in that price isn’t necessarily a good thing. It should be on a downward trajectory depending on what you’re doing. A lot of cloud computing applications, those are highly scalable so your price should be going down over time. So what I usually recommend people do is that if you look at, make at least once in every two-year term, but go and start your negotiation, do it every twelve months, once in every twelve-month interval, you should be able to renegotiate your pricing based on the data that you pull from the market. So you might see this as getting an internal or outsource resources to look at what is market price now for this service. And when you do that, you should be able to go back to this vendor once every twelve-month period and say, you are 15% higher in the market for the same services. We need you to come down on that. We like the relationship, we want to stay with you, but we need you to be competitive. And usually vendors are more than happy to do that. What you’ll typically see though, the first twelve months, they’ll lock in that price and then thereafter they’ll say, okay, once per twelve-month period after the first twelve months, we’ll allow you to come in and renegotiate pricing. But it keeps them fair too and it makes sure that you’re not overpaying for a service and you’re not stuck in a thirty-six-month agreement; you’re, in month thirteen, going, “Oh, man, we could be paying, like, 15% less now.”
Mike: Right, right. And then with that I’m imagining, kind of, the negotiating points and that would probably be, okay, you know, once you agree on the new pricing, do you have to, you know, restart your entire three-year agreement, or which I’m sure as the provide that’s going to be their first response, “Okay, great, we’ll renew you for another three-year agreement at that point but it should be more like at least maybe fulfill the end of your existing term.”
Matt: You know what? And they’ll do that, but generally speaking you can typically have that happen within the current confines of the agreement without extending any of the terms, the net terms, without extending any of the contract terms themselves or that length of the contract. You can normally just do that within the agreement. That’s how you want to frame it in the beginning, is we’re not looking at signing a new agreement, what we’re looking at is fairness in the agreement. We want to make sure we’re getting charged at a fair price, so whenever we do that in month, say, fifteen we find out that you’re 20% higher than market, and it might also be that – and this is another way to look at it too – they maybe bringing on clients at that point in time for 20% less than you signed the contract for, so it’s the same company, it’s just now they’re charging clients less than what they charged you. So in all fairness, it makes sense to, you know, bring us down. So, in month fifteen when you do that, you should be able to bring that cost down without extending your agreement. And I think the way you could probably address that is one of two ways. And this may be one of the negotiation points, right? You might say, if this is something that we find it in the market your competitors are charging less money for it, maybe that would entail some form of re-up of the agreement in terms of how long it’s going to be for, maybe they extends it an additional twelve months, something like that. And that probably makes the most sense if it’s an outside influence. But if it’s the same company that you sign up with, is now charging less for that service, it should not extend the agreement at all. Period. Point blank.
Mike: Right. That makes sense. And that’s really easy to define and really easy to research.
Matt: Yes.
Mike: So, like, with, what I’m thinking, people buying telecom and cloud services, like, the thing that comes to mind is internet. Internet, fiber internet, everybody is signing up for three years. That’s pretty standard, but I can tell you from experience, fiber internet at different points in the last five years has gone down up to, like, 30% a year in pricing. So, I mean, that’s a ton. So you look at the end of it, I mean, as a telecom salesperson I can tell you one of the easiest things to do is go into a customer who’s had their internet provider for three or more years and save them money, because they’re automatically paying, like, double what they should be paying for that amount of bandwidth. And a lot of times they might be happy with their provider or whatnot, but their provider is just turning a blind eye to them and not really offering them better pricing, or maybe they’ve got a horrible account manager that’s just trying to maintain the revenue, so they won’t lower their price because that dings their number. So they’ll, kind of, hang on to the bitter end trying to keep them at that high price, you know, so as a client though, as a customer, that’s something you can easily protect yourself with, with a cause like that. But on the flip side, what about, like, you know, like all the traditional TDM technology out there for voice, like, PRIs and analog lines where the price is going up all the time and the providers are saying, “Well, you know, its regulatory costs are increasing, so we have to increase.” And I’ve seen them, in some instances, increase customers’ cost mid-contract which I’m like, how is that even ethical where, you know, like, mid-contract they’re upping their contract? So providers can up it. You know, if they can raise your price, you know, darn well right you can, you know, negotiate in there that they should be able to lower it as well.
Matt: Right. Now that’s a very good point. And I think that’s part of the negotiation, right? Like, at minimum we’d want to be able to cap that, right? So, it might be a matter of you can’t raise our price, that might be one, let’s lock it in. Or number two, maybe that’s fine, you can do that. Put it on a threshold though, say if it exceeds a certain value, then you have the right to exit your contract without any ETFs. Otherwise, I mean you can get into a situation where they maybe massively increasing your price and that’s certainly, in my mind, a breach of business ethics, if it’s not being driven by something regulatory. But yeah, yeah, absolutely, incorporate in that language that says you can do this, just it can’t exceed this, otherwise we get to exit the contract, but on the flip side of the coin we get to renegotiate price and find lower pricing. Another thing that a lot of people don’t do, on that same note, is to check with your local PUC, so validate the rates with them. I mean, that’s what an auditor would do for you anyways. They would go to the local PUC and they would say – though, one of the more common things is on your bill they might tell you, well, you can’t dispute this bill after a certain period of time. Like, you have thirty days or sixty days, after that mark sorry, too bad, we’ve already charged you, you know, $3,000 and you can’t go back. If you found out that we mis-billed you or we charged you too much, it was an error. Sorry, you didn’t catch it in sixty days. That’s not true at all.
Mike: I hate that clause. I hate that clause. I argue that every time with every vendor. I’m like, that is the most ridiculous thing I’ve ever heard. I think, okay, two years I get. You know, like, beyond two years, you’re like, all right, man, hey, take a look at your bills. Like, you know, we can’t owe you money for an eternity but, you know, within sixty days, you’re like come on.
Matt: Right. And that’s an absolute shell game, it’ smoke and mirrors that they’re providing you at that point because I would encourage everyone to call the local PUC, the Public Utilities Commission, in your state and ask them the question, how far back does the law mandate that a provider has to reimburse a company that has a dispute with their bill? I can almost guarantee you, it’s multiple years. It’s usually two to three years. The only caveat to that is if you ended your contract, once you end the contract, it’s a game over for you at that point. You’d have a very difficult time. There’d be a lot of legal battles to try to get a refund for a contract that expired, right, that got terminated, that you let go off. But if you’re still in that contract, including if you renewed the contract, so if at no point in time you severed relationship with a provider, go to the local PUC and see what the letter of the law says in terms of how far back you can go, as it doesn’t matter what they print on that paper in terms of you can only go back sixty days or ninety days or whatever it is, the local PUC is always going to trump that.
Mike: That’s great. That’s some good advice for anyone regardless of what they negotiate in their contract.
Matt: Right. And we exercise that all the time. So the state of Texas is very familiar with my office at this point.
Mike: Well, that’s good. That’s why we’re having you talk about this today.
Matt: So the last item is clearly defined exit strategy. So I wanted to end on the bitter pill though, you’ve got a great relationship with your vendor, with your provider, and then something goes wrong. They get acquired, you get a new account manager and things just go to pot and maybe they just stop innovating, maybe they stop being the same great company they were because there is so much turnover and there’s new bodies in there that maybe, frankly, just don’t care as much as the people before. Whatever the reason, if you have to exit an agreement with a company, things can get messy quick and when you start looking into your agreement you can start adding up all these numbers: ETF, migration, like, off of their platform on to your new platform. There’s a lot that goes into it that just makes it a nightmare, a logistical and a financial nightmare sometimes, so always clearly define your exit strategy. And you actually want to point this out in the agreement, very point-blank, I mean, boldface type that this is our exit strategy, in the event that we terminate this agreement don’t just say that, oh, we’ve terminated for convenience or for cause and you don’t have an ETF, we don’t have an ETF, going back to original conversation a second ago, try to negotiate that EFT away anyways. But they’re going to very broadly define what happens when you terminate an agreement, for whatever reason, but clearly define that exit strategy. Agree how the relationship is going to be dismantled prior to the signing of that contract. And it can be difficult, but it’s going to save a great deal of headache if it ever needs to be exercised.
And also, include in that that if the product service is discontinued, make sure you can exit that agreement. I think I mentioned this before. Make sure you can exit without ETFs or other penalties, that if they come back to you and say there is no migration path or that the cost of the service is going to be fundamentally different from a functionality perspective, so you’re not going to be able to do the same thing, you could with your current software, your current department, or if they say that it’s going to cost more money, you should be able to say at that point in time, okay, well we need to terminate the agreement then. And it needs to be written in the agreement that if that happens, if there is no migration path, that’s mutually beneficial, that you should be able to leave the agreement. Also, systems are going to be tied together. If you’ve got someone that’s helping you out with your infrastructure, like, for example, we have a company that actually assist us with our infrastructure, and so it’s opposed to having someone internal do it, well you can outsource it. They do a phenomenal job. But they’re very intimately tied into our processes and what we do from a backend perspective. So, if that’s going to be the case, now you’ve got someone that’s serving you in a critical capacity, you need to negotiate a turndown services that includes assistance in migrating to a new vendor or migrating to your internal team. So, in that example, if we were to get rid of this company, they’re doing a bad job or whatever it is, but we need to sever the relationship since they’re so critically tied into our systems and our tools, our infrastructure, then we certainly want to make sure that they’re going to provide us assistance in a turndown perspective. So what I mean by that is it’s not just going to be, okay, we terminated the agreement, shake hands, sorry to see you go, and then we end it there, wash our hands. No, there should be some form of burn-down period where they give you assistance since they’re the experts in what they do, and you haven’t been doing it. They should give you some assistance in migrating to a new vendor or handing that over, like, or transition over to your team.
Mike: That’s a great point. I mean, you know, one example comes to mind. You know, I won’t name any names of which provider this is. But there was a telecom provider at one point that we were working with that had this horrible exit strategy baked into their agreement and if somebody didn’t see it, they’re in a world of hurt because basically what I read was that you had that their contracts would not go to a month-to-month, so there was not a month-to-month option. And so when your contract was over, you had to either, you know, renew it for X amount of time or would auto-renew for another, you know, initial term of what it was. So if you signed a three-year agreement, it auto-renew for another three years. And they had a thirty-day notice window. So you had to give them notice within thirty days, you know, not sixty, thirty of when you wanted to cancel the agreement. And then, so from a telecom perspective, it takes forty-five to sixty days a lot of times to install services. So if somebody would call them thirty days before the agreement was to expire, they’d say, okay, what day would you like it cancelled? And it had to be within thirty days. And if you said, well, you know, we’re going to switch providers, you know, blah, blah, blah, and they say, well, if you extend beyond your agreement length, then you’re going to auto-renew, you know. If it takes longer, if we reach your term day, like, when you started the agreement, you’re going to auto-renew. And so we have to cancel it, like, within this thirty-day time period. So, basically I can’t switch services because we can’t give you a date because we don’t have a date from our existing provider, so basically they created an agreement that was impossible, almost impossible to break unless you did an expedite order from your new provider, you know. And then, so just an example there, really look at that exit strategy of how many days do they want you to notify them in advance, do they allow you to roll to a month-to-month agreement while you’re trying to transition to a new service provider? You know, like, all of those little things are important because those create huge snags if you’re trying to transition to another provider. That just makes a ton of sense.
Matt: And you brought up two really good points. Again, there are so many topics that we could cover within each one of these umbrellas, but that’s one of them, is there’s typically some flexibility around what your notice period is. But especially for turndown a service, as if you end up cancelling the agreement, absolutely write in there that the auto-renew is completely gone, try to negotiate that away anyways and at minimum instead of it auto-renewing for another initial term, like, the twenty-four or thirty-six-month, have it just auto-renew for a year. If that’s really going to be a sticking point, you don’t want to have to fight it too much, get it to a year. They’ll agree to that. But certainly, if you’re turning down services and they’re helping you migrate off of that, and you’re that close to the expiration of your agreement, it should roll over to a month-to-month basis.
Mike: Yeah. I have always hated that auto-renew because, to me, there’s no ethical. At least I haven’t heard of them, in terms of telecom and cloud services. I have never heard of a good reason why that is necessary from the provider’s perspective, other than them trying to guarantee their cash flow. That’s all it is, but from a customer’s perspective you’re like, hey, I’ve already fulfilled the initial term. If you gave me a certain price and I needed to stay with you for a certain amount of time in order to justify that, you know, less profit on your end, so, hey, we had to stay thirty-six months because you gave up some month by month profit. Well, you’ve already done that. So that term has been satisfied, they don’t need to lock you in for another twelve months for any reason, you know. And so it’s always been a pet peeve of mine. It’s just like, hey, let’s throw this in there and see if we can trick you into not seeing it, you know, because for them it’s great because if you’re on month-to-month, cash flow-wise if they had all their customers on month-to-month, it’s really hard for them to predict, like hey, at any point in time, where is our cash flow going to be next month or, you know, three months from now. If we have fifty customers cancelled, our cash flow is going to be a lot different and we won’t know that until, you know, thirty days beforehand. So, at any point they’re just, kind of, up in the air. But, you know what, that’s their problem. They should be go in there and actively trying to renew their accounts by offering them, you know, better pricing or an incentive to, you know, renew for another two or three years.
Matt: That’s right.
Mike: Yeah. Well, those are awesome points. You know, I have to ask you, so you and I talked about this beforehand but tell everybody, like, how did you come about, like, understanding all this stuff. I mean, are you constantly going through contracts, or how does that work?
Matt: Originally, it was not by choice and I, kind of, mentioned my background here at Advantix, but then outside of that, my former life I was in government relations. So I actually helped run a government relations – the four-letter word for it is lobbyists – office up in Washington, DC, and we were called Aegis. So we’re, kind of, one of the smaller firms up there, but I ended up getting involved in a lot of writing of different pieces of legislation, and corporate contracts are much different than their counterparts, much different than legislation but it all, kind of, resonated the same way with the leaders over at this organization, so they said, “Hey, you’ve got some experience in legal matters, why don’t you oversee the legal department?” So I said, I’ll give it a shot. And so what started out as a small trickle turned into a waterfall of paperwork that’s come through here now. So I’ve had to build up staff around it. But it was amazing, one of our first jump in we were paying an outside legal counsel to handle a lot of this for us. And in those instances you’re paying, you know, three hundred and fifty bucks, four hundred bucks an hour sometimes, maybe even more depending on the specialization of the attorney and where they went to school and how great they think they are. You’d be paying quite a bit of money. And essentially, what a lot of them are doing is whenever you ask for an agreement, like we want a manufacturing agreement or we want an employee agreement, something like that, they usually display from a template and then just scanning it real quick, like, eyeballing it just really briefly, changing some verbiage on it and then sending them over to you and charging you for a couple of hours, maybe a few hours of work. And so it’s always interesting, whenever I got in here I looked at those different agreements. And you would see things and they were really, kind of, small potatoes, it’s kind of a thing to most people. But to me, if you’re paying someone that much money per hour, they should be almost perfect. And it would be things like we put the wrong organization’s name on there once. And what I mean by that is maybe we have multiple entities and they put the wrong one in there, or they abbreviated it wrong, or didn’t they unabbreviated it. Like, it’s just really, really, like, bush league mistakes, that someone making $350, $400 now shouldn’t be making, especially if they’re charging for multiple hours to do that. And so we really started cleaning stuff up over here. And as a function they said, okay, we’ll start taking on more and more and more, and so it snowballed from there.
Mike: Yeah. Well, that’s awesome. Well, I appreciate you sharing those five tips with us today because, you know, just being able to bleed off your knowledge, just a little bit on that, I think everybody is better off from hearing those things. I know I am.
Matt: Right. Like we talked about before we started this podcast, it’s really tedious. It’s really boring. I mean, it’s not the sexiest part of someone’s job. I mean, no one wakes up and goes, I really hope I get an agreement to look at today. I mean, it’s a mind bleeder to get an agreement on your desk, and it’s no fun, but people are banking on that. Your vendor is banking on that, the fact that you don’t want to look at it. So you’ll just look at some maybe pricing on there, you might look at, like, a termination clause and ETF, but beyond that you’re just like whatever, I’m going to sign this thing. I’ve got a good price point. Let’s just call it a day.
Mike: Yeah. And I can tell you from a management perspective, from, you know – and I’m sure you can relate – as someone who’s managed people before, if I had one of our team members in charge of purchasing things, and they went through an agreement and just used those five tips right there and argued an agreement without me even being involved, I would be so impressed with that person because that never happens. That never happens. Like, the agreement comes to me, I start pointing out things because I’m worried about it because it’s my company, and then I dictate to the person, “Hey, you need to go argue this and this and this.” That’s ridiculous. We’re not signing that. Uh-uh. No, no. So then they’re kind of like just, you know, the in-between. But if, you know, the people listening, if you’re in charge of the purchasing and you can do this kind of stuff, you’re definitely going to be looked upon, you know, in a different light by your management team, your boss. You’re going to be thought of as a valuable asset to the company, which means you’re going to get more raises, you’re going to get more promotions, you’re not going to be the one who gets fired. So I think that’s so valuable for everybody to just know and, just like you said, to just do those five things. You just do those five things, I mean, you don’t have to be a legal expert to do those and just, kind of, have that as your basic, you know, five pillars you look at on every single agreement, I mean, that’s just impressive in itself.
Matt: Right. And just a couple, like, closing points on that. If you’re a smaller company, and you don’t have an internal legal counsel, which more and more companies are outsourcing that anyways, which is a little bit dangerous, but then it could be better for them in terms of cash flow [inaudible 1:02:05] as opposed to having someone on payroll. You’re now depending on them to be as proficient as you would like them to be. And you made a really good point, and that is if I play the role of Mike here, I own the company, I own AeroCom, I’m very concerned about my business and its position and what agreements we’re signing, but one of my employees, AeroCom’s not their company, you know, right? They didn’t build it, so they may not be as aggressive as I would be. So having these things, not just these five pillars, I mean, these are only five things out of a number of things. But if you take that body of knowledge that you’ve built up as a business owner of what’s worked, what hasn’t worked, where you were able to push and make some progress, make a list of those. Give that to that employee and say, look for these things, here’s where we’ve had success and here’s how we’ve gotten that success in the past. Make it easy for them. Give them a roadmap. They can start building on that.
Mike: Yeah, that’s a good point. That’s a good point.
Matt: That’s what we’ve done with our team and it’s worked out phenomenally. If you have an outside legal counsel, use these five points along with any of the other bits of knowledge that you’ve gained over the years and since maybe you’re not an expert in legalese in your business, take those and take it to your attorney and say, listen, here’s five things that I want to address or here’s ten things I want to address. Write it legalese, do whatever you need to do to make it contract worthy but make sure I’m getting this outcome out of it.
Mike: Yeah, that’s a good point. Just, you know, giving your legal counsel, you know, like, I’ve seen that a lot where an IT department says, okay, well our legal has to look this over and they’re sending it to an outsourced legal person. Next thing you know, the contract comes back, just looks like it’s bleeding all over the place, red all over it, and you’re like some of these things are just, you know, never going to get changed but, like, those five things are important. You’re like, don’t waste your time arguing these things that seem like, hey, if there’s a natural act of God and there’s outages, you’re arguing this, don’t argue that, argue these five things. Or give them some direction so that they don’t make the terms and conditions look so bloody that the provider just says, no, we don’t negotiate any of this stuff. No, no. Like, here’s what we’re going to do. Because at some point if you make too many demands, they just go, yeah, this customer’s not paying enough for this.
Matt: Right. No, and that’s right. And we have to remember, unless you’ve got them on your payroll, an outside legal counsel is going to try to maximize the amount of time that they spend on that agreement because that’s cash flow for them. That’s money they’re going to get to bill you for. So of course, I mean, when we used to send our agreement’s first pass to our legal counsel, we would get things back that were really just innocuous. It didn’t do anything to material to the contract. It would be like changing the name of a header or basically just renaming something to something else that meant the same thing. So clearly they were just going in there and saying, well, I wouldn’t really call it that, I’d call it that. Like I don’t call it a deer; I call it a bear. Like, I mean, it didn’t do anything to really benefit us; it was just costing us money. And so, as much direction as you can give them, that’s going to really bring down the amount of… well, it’s going to make them do a couple things. It’s going to make them say this is a savvy client. They know exactly what they want, so I’m going to have to be careful about trying to maybe bloat the numbers a little bit as far as my hours to them. And then number two, it’s going to help focus them so that they’re paying attention to that as opposed to paying attention to, okay, what’s the minutia that I can start looking at, to start changing.
Mike: Yeah. Good points. Good points. Well, cool. Thanks so much, Matt, that, like I said, that was some really good information. I know I’m definitely going to write that stuff down and keep it handy as a guide when I look at agreements. So let’s switch gears a little bit to something a little bit less serious. Let’s do as we always do and have you tell a story of a cool or interesting thing that you’ve experienced in the workplace. I know a lot of us, you know, hey, we spend a lot of time in an office environment, but that being said, what I’ve found, is that when you’re around that many people, some really cool things happen, some really funny things happen, and it’s really interesting to hear people’s stories of what they’ve experienced, of what they’ve witnessed out there. So if you’d indulge us for a moment, I’d really appreciate it. Tell us, kind of, a cool thing that you’ve witnessed in the workplace.
Matt: Okay. So I’ve got two brief ones. The first one is we rent the floor of a building in Richardson, Texas, right outside of Dallas. And there is no signage on the building, so it’s just this blank slate, if you will, these companies in it. So if you went inside, there’s a directory, and our COO had always dreamed of having his company name just plastered on a building. Like, that’s what he wanted. Let’s just stamp this building where everyone’ll see it. And so about two years ago we bought a sign, a really big sign to put on the side of the building. And we’re right by a highway, so it was all this fanfare and everyone’s going to see our company name and it’s going to be so cool. And it was a Saturday morning, and so I think he was the only one up here to actually witness it being craned up and put on the building because he wanted it to be a surprise to the employees. Like when they came to work they’d go, oh, look, our name’s on the building. And he had set his keys down on the letter A of Advantix on this sign, and then he stood back to, like, film it on his iPhone, to film the sign being lifted up and put onto the building. He never grabbed his keys off the A. So yeah, when he was done filming it, he was posting it. We use Salesforce, so he was posting it to Chatter on Sales or, like, look at our sign, and he made this big spiel like a video of about how this was a great moment for the company and how it’s always been his dream. And then he was filming that as he was, like, walking to his car, so it had the front camera on and you start hearing him pulling his car door and you see his face just go white. And he’s still recording and he shoots up to the left, like, looks up left at the building, and he was like, oh, man. And then the video just stopped. So we had to ask him about that, and he was like, yeah, I left my keys on the sign.
The second thing is our CEO is actually a professional quarterback trainer, so he trains folks from junior high all the way up to the NFL.
Mike: Wow!
Matt: Yeah. So his Hummer has old school quarterbacks wrapped all over it, so it’s really just an obtrusive looking vehicle with old school quarterbacks wrapped around it. And so anytime you go in his office and you want to talk business and you’re going to give him an update, he’s always got a TV on football, and he’ll stop you every now and again and he’ll rewind it back and then start breaking down the play and tell you about his hitch was off, you know, his three-step drop was bad, his five-step drop was bad, or whatever it is. A lot of it’s Greek to me. But the interesting thing about that is so he’ll have folks like Michael Urban and those guys that come to the office all the time, and they stop by.
Mike: Wow.
Matt: And so on one occasion – they’ll remain nameless – so one of his NFL buddies came by the office and was knocking on my door, and I think Brad was just like, oh, you know, let’s go. Let’s go meet Matt and, you know, meet my employees kind of a thing. And so I said not right now and then the door opened up and I heard a voice go, “Hey, Matt.” And I turned around and there was this guy like he was having to, like, duck underneath the door frame, this massive dude. I had no idea who it was. It freaked me out. But that happens all the time. We just get NFL people just coming through and you’re like, who the heck is that? Oh, that’s an Eagles guy or that’s a Cowboys guy.
Mike: That’s awesome. You’re like, dude, there’s, like, a seven-foot guy and you’re like wah.
Matt: No, it’s like I need a bouncer for my office. This is awesome. But no, no, it’s a lot of fun around here, so that’s just one of the more interesting things, and clients are always taken off-guard like when we get someone coming in here, like Urban or Michael Johnson or some athlete and they start freaking out like, wait, is this for me? Like, sure! Yeah!
Mike: That’s really cool. So what’s your CEO’s background? Was he an NFL quarterback or something?
Matt: He was actually a collegiate quarterback and then he established a lot of relationships with some, some of his buddies went onto the NFL, and so he just kept training. And he actually was in health and fitness for the longest time and he basically toured around and sold gym memberships, so he was like one of the top producers in the U.S. in terms of gym memberships. I forget what gym it was for. And then he transitioned over to Singular and started doing sales leadership over at Singular since he was knocking it out of the park in a completely different industry. I guess it didn’t matter. It was you’re good at leading a team. Go ahead and lead our team. And that’s how he got into telecomm, but he never stopped training quarterbacks. So throughout that entire process, on the weekends wherever he would rent a field, like, you know, one of the municipal fields or at one of the high schools or one of the colleges, he’d rent the field for a day and he just does camps.
Mike: That’s really cool. That’s awesome. Like, that’s actually my background, ironically. I was a college quarterback and played a year in Europe, and it’s like I’m not doing, you know, professional coaching or anything like that, but I can definitely relate to him, whereas like when you’ve learned at a high level, there’s definitely a passion for it, where you’re like, oh, I love working with kids, like, you know, with our kids, just coaching them and stuff like that. It’s so fun to, kind of, pass on that knowledge to them because you’re like, oh, a lot of this stuff is so basic that you know after a while, after you’ve done it so many times that you see kids and you’re like, oh, I could really help that kid. So that’s pretty cool, like, how he’s got, you know, the NFL guys coming to the office. So I think, kind of, that’s probably a fun thing for your guys’ company to boost morale a little bit.
Matt: Oh, no, it absolutely is. And he’s a character anyway, so every time he turns a new age, it’s fifty-six this year, he’ll do that number of pushups for the leadership meeting and post a video online on our chatter feed.
Mike: That’s hilarious. Hey, if you can do fifty-six pushups, man, that’s pretty impressive.
Matt: This guy, Brad’s no joke. He’s the nicest guy on the planet, but he looks like he could be a rough customer.
Mike: That’s awesome. Well, very cool. I think that’s a good segue. Tell us a little bit about Advantix and what you guys do and what’s really exciting going on over there. What you guys do really well?
Matt: So Advantix has been around since 2001. We’ve been doing expense management. We started on the mobility side, and then we integrated wire line telecommunications expense management, so auditing in management, on the global side the optimization management, and then we most recently incorporated utilities, like water, trash, gas, electric, sewage, etc., audit and expense management into our portfolio. So that’s primarily what we do. Some may call it like a dinosaur business model, but it’s worked out really well. We’ve had clients for the better part of a decade because we’re still onshore. So we don’t offshore or even outsource onshore our help desk or our analysts or anyone like that. All of our employees are badged employees and they’re actually at our Dallas office. So we’ve been able to do some pretty cool stuff around that. We have our own dev team, so we actually produce our own software that we leverage internally and we, you know, provide it to our clients but it’s our internally developed database. We have an internally developed portal for procurement and all of that good stuff, so it layers on top of our managed services. But that’s, I mean, fundamentally what we do. And I think a lot of people – at least at this stage of the game – are pretty familiar with what expense management is, but we have really those three primary categories in it. And we’ve wrapped a bunch of professional services around that to really do a comprehensive business process outsourcing as well as expense reduction system.
Most recently, the cool thing that happened and where everyone’s attention is going at right now in leadership is on the IoT side, internet things. So last year, around this time, actually, myself, my team, and the CEO, we started the process of acquiring an IoT company. And so we acquired what is now known as THINaër, which is a full-spectrum internet of things company. We do our own hardware manufacturing, so for, like, asset tags or beacons, we do BLE, Bluetooth Low Energy, and we have our own aggregators or gateways. And then we’ve developed our own cloud software to manage those assets and manage those beacons and gateways and pull data points like temperatures, humidity, shock value though an accelerometer, proximity information, so tracking assets, too, and the environmentals. We’ve got our own software platform as well as our own applications that are vertically aware that sit on top of that, so we’ve got, like, THINaër medical, THINaër manufacturing and so on. And then I gave this as an example earlier, we plugged into cognitive computing companies, like IBM for Watson, and we’ve got some others that we use, too, that are more vertically specific. There’s one called Idiom for Healthcare. And we use that to pull all these data points because there’s so much data near an IoT environment, right? You’re going to go like what am I going to do with this data and how am I going to make sense of it. We pull all that measurement data that’s really easy to understand, like the temperature, the humidity, or the ID pole or blood pump is in this room. We pull that information and we pair it up with unstructured data like maintenance logs, recall notices from the internet, patient logs in the healthcare example, pharmacy records from the healthcare example. Smash that all together to try to draw correlations between how assets are used and what kind of ROI you’re getting on your assets, or are you using them as effectively as you possibly can? And in healthcare as the example, are we getting desirable patient outcomes? So are we actually resolving the patient’s issue they came in for using these different items? So we can start refining how we address certain maladies and using certain equipment and knowing where it’s at. So some pretty cool stuff there, and that’s probably the most fun right now, that I’m having. I’m actually managing the hardware side of things, so I manage that portion of it, and I also manage the R&D division. And so we get to play with the cool, fun toys. But as that grows, that’s going to mean there’s going to be more and more contracts that I get to look at, too, so hopefully they’ll give me more staff.
Mike: Cool. Yeah, that’s cool. That sounds like you guys are, kind of, on the tip of the iceberg with that just trying to figure out like, okay, like here’s all this really cool data, and you guys are, kind of, starting to figure out how you can use it, but I think it sounds to me like you guys are just, kind of, tip of the iceberg in terms of figuring out all the different things you can use that for.
Matt: Absolutely. And really, I mean, right now the biggest challenge that we’re having is helping clients not boil the ocean because there’s so many ways that you can take and so a lot of what we’re doing right now on the front end is actually pulling clients into certification programs where they’re educational seminars to let them know here’s what IoT is, here’s what the market looks like, here’s the market potential, here’s the technologies that are out there, here’s the benefits, the pros and cons of each type of technology, and ultimately, here’s why we chose to do what we did and why we chose the technology we did and why chose to build our own platforms, so on and so forth so we, kind of, built that story.
And then we do things called saws, so when our partners come in, if they have a client that’s really serious about it, we’ll bring them into an intensive three-day process where we’ll fly down the folks from IBM, the Watson guys. We’ll pair them up with our IoT folks here and then we’ll have client leadership, so we’ll have process owners and then we’ll have, like, an executive state, usually a EDP or even a C level sometimes, and we’ll actually design and develop an IoT solution, at least one, maybe two or three that’s deployable by the end of that three-day period. So they can go back to their company, they’ll know exactly what the use case is or use cases are and then they’ll know exactly how they’re going to deploy it, what resources they’re going to need, how much it’s going to cost them, what their ROI is going to be. So it’s pretty cool. But it’s really helping people understand that because you’re right, it is very tip of the iceberg right now.
Mike: Yeah, it’s like, like you said, there are so many possibilities with it. You could almost just get frozen and then do nothing because there’s so many different ways you can use it that it’s almost paralyzing.
Matt: Exactly. It is.
Mike: Yeah. Very cool. And I think it’s very practical how you guys are doing that, like those mini sessions where they can walk out with something actionable within a few days.
Matt: Well, and we’re learning, too, in the process, so I mean, as a company, my philosophy is that voice is the customer, VOC is very important, that if you’re not designing products around what a customer needs, then you’re not really designing an effective product. So we take that very seriously here. Customer feedback is king, it’s critical. It’s really, at the end of the day, producing something that’s going to be used versus something that may or may not be used and you’re investing a lot of time and energy into.
Mike: Yeah. That’s awesome. That’s really cool. Well, it’s been great, Matt. You know that I think that this has been a fantastic podcast. It’s one of my favorites, for sure. I’ve learned a lot and, you know, learned a lot about you that was really interesting. You talked about really a ton of stuff on the legal side, which is great, and I learned a lot about your company, which is fantastic, too. So I really appreciate you taking the time and really filling this content with some good, juicy stuff.
Matt: No, absolutely. And Mike, it was a pleasure being here, so I really very much appreciate it, so thank you.
Mike: Yeah, no problem. All right, have a good day.
Matt: You as well. Take care.
Mike: All right. I hope everybody enjoyed that. That was super useful to me, so I hope it was to you as well. I’m like you guys. I look at a lot of contracts on a yearly basis, so Matt made such simple, logical points that I know it’s going to be really easy for me to follow and, kind of, search out. Like I never thought about changing the venue in all that different stuff, so I think that was really in layman’s terms and I guarantee you, if you guys just follow those five steps, your boss is going to be just in awe of your ability to break down contracts. They’re going to be like, man, this person knows what they’re doing. And if you don’t think that’s going to elevate your career, I don’t know what is.
All right. So I hope you got something out of that. Again, check out the transcripts if you want some details on it. Go to our website at AeroComInc.com, that’s A-E-R-O-C-O-M-I-N-C dot com, and go to the Blog section of our website and then search for this podcast specifically. And once you find that you’ll find the full transcript of this episode. So go ahead and take advantage of that. We put that on there for your benefit. Make sure you use it.
And then one more quick reminder about the upcoming webinars I’m going to be doing on the Four Cornerstones of Buying a Business VOIP System that everyone in your company is going to love. If you want to join me on one of these webinars, please do, all you have to do is text the word “VOIPWEBINAR” to the number 44-222 and we will let you know how to reserve your free spot in one of these webinars that’s upcoming. So make sure you do that. I really want to see you on the webinar. Promise me that you’ll join me. And in the meantime, have a great day, have a great week and we will catch you next week.
IT Nation, thank you for joining us on Cloud Therapy with AeroComInc.com. Visit us at AeroComInc.com. That’s A-E-R-O-C-O-M-I-N-C dot com, and head on over to the Blog section for notes on everything we talked about today as well as our blogs, provider reviews, and of course, the best quotes for any technology.
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