Opinion: When to let go of 20,000 customers

Grade A forgoes consumer market to focus on corporate clients

Allan Ghosn went into business a decade ago, determined to provide the last mile of tech service to the home and the consumer. Think Nerds on Site on steroids.

Grade A Techs – which was founded as Grade A Student and will soon be rebranded as Grade A – entered the business-to-business space in its second year when some of its consumer clients liked the service so much that they wanted the same tech support for the businesses that they owned.

By year five, it was obvious that a transition was happening in the industry. Every tech-savvy guy with a cell phone decided to enter the space. Competition was coming from everywhere. Barriers to entry were appallingly low, and Grade A’s eight franchises were all experiencing or about to experience heavy weather. Their most successful franchisee was in Australia, but it was only a matter of time before the approaching storm landed.

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But the company was servicing 20,000 unique residential clients that couldn’t simply be dropped. Instead, Grade A sold the residential business to one of the original founders, serial entrepreneur Christian Ste-Marie, who currently operates it as Choice Tech Support.

This left Mr. Ghosn and his partner, Mathew Lafrance free to focus exclusively on organizations with five to 500 employees.

In its current configuration, Grade A is profitable and halfway to seven figures in annual revenues with a staff of 40. Mr. Ghosn believes they will double its head count and do even better in terms of top line volume within two or three years. They have hired eight more staff in the last 60 days alone as demand ramps up. The company currently operates out of 8,000 square feet of sublet space on Woodward Drive.

One of the reasons behind the rebranding is to shake off the remnants of its consumer-oriented past as Grade A Techs and the earlier Grade A Student.

The business-to-business focus puts Grade A in more exclusive company, as the barriers to entry are much higher in the commercial space. The firm has clients in Toronto, Montreal, Vancouver, California and New Jersey, all of them remotely managed from Ottawa. If and when a physical on-site presence is needed, local contractors are dispatched.

Mr. Ghosn says the company’s tools are best-in-breed and sourced from platforms built by the largest tech companies on the planet. Investment to get into this space starts at a minimum of $500,000, so Grade A is not competing against every geek with a screwdriver. A huge diesel generator sits outside the Woodward Drive office so the power never goes off. Law firms and other clients that must complete urgent transactions can relocate to Grade A and function there in the event of a blackout.

I ask Mr. Ghosn about other differentiators.

“Most of our competitors are really hardware or software vendors. We don’t even have any revenue goals for firmware. We are really a consultancy and we sit on the same side of the table as our clients. We advise them on what to buy, but we never sell to them. We don’t even have a single person on staff who has the word ‘sales’ in their title.”

Revenues are 80 per cent services and just 20 per cent firmware. The company is debt-free and has been self-capitalized all the way along.

The company’s owners have received two offers to buy the firm, but they won’t even take a meeting to discuss this possibility. This gives their staff confidence that the two founders are in it for the long haul.

“At 33, this is my purpose in life and Mat’s too – to get up every day and work, (but) not to keep our clients happy.”

He chuckles before continuing.

“(It’s about) keeping our staff happy and engaged so they can keep our clients happy.”

Professor Bruce M. Firestone is entrepreneurship ambassador at the University of Ottawa’s Telfer School of Management; founder of the Ottawa Senators; executive director of Exploriem.org; and a broker at Century 21 Explorer Realty Inc. Follow him on Twitter @ProfBruce.

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