SADA Systems Founder Shares How Big, Risky Bets Led His Company Into The Channel Stratosphere

The Los Angeles-based consultancy’s 20-year journey took it from a small break-fix business to a leading Google channel partner. Founder and CEO Tony Safoian took some time to reflect on the lessons he learned along the way with NexGen+ 2020 attendees.

High-risk bets made over two decades have transformed a family IT maintenance business into one of Google Cloud’s largest North America resellers, SADA Systems Founder and CEO Tony Safoian told NexGen+ 2020 attendees this week.

Safoian reflected on his company’s improbable journey, one that required several pivots that at times went against the grain, and shared the lessons he’s learned along the way at the virtual conference hosted by CRN parent The Channel Company.

“What’s really exciting is the velocity we continue to be able to maintain despite being in the business for so long,” Safoian said.

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The global pandemic made SADA’s 20-year anniversary one without parties or champagne. Instead, the SADA leadership team took a moment for deep self-reflection—a process that spawned a 14-page essay, and even an audio book.

One realization is how important it is to “be on the right side of history,” Safoian said.

In 2003, it became clear managed services would cannibalize the small company’s break-fix business. Adopting that new model had the benefit of replacing unpredictable revenue with recurring revenue.

A few years later, SADA would cannibalize its managed services business for a cloud-focused one, moving the servers it charged clients to manage to Google and Microsoft.

A lot of much bigger competitors at the time could have made the same transformations, but they didn’t, Safoian said. That left room for an upstart like SADA to scale into a market powerhouse.

But becoming an early cloud-native solution provider was just the start of the journey that has brought SADA to the heights of the channel.

“The compound effect of recurring revenue is an immensely powerful reinvestment vehicle,” he said.

The cloud economic model of winning new customers every year, without losing existing ones, made it possible for SADA to self-fund growth, while always experimenting, safely, with its practice.

The company “took calculated risks, but never put all the chips on the table,” he said. “You can become the best in the world at something you’ve never done. You have to believe that if you’re going to pivot and innovate.”

The investment strategy focused on adjacent capabilities—developing expertise in areas around the existing practice by listening to customers.

Experimentation leads to being highly specialized, he said, and “niches are powerful because fewer competitors are better than many.”

“You can’t be the biggest, you can’t be the cheapest. So what’s the play? Become unique. Create yourself into a category of one,” Safoian advised NexGen+ attendees.

That philosophy led SADA to make its biggest bet of all about a year-and-a-half ago: going all-in on Google.

While the Los Angeles-based company’s Microsoft practice was thriving, Safoian and his team saw the pitfalls of growing two siloed business units. It was clear that the Microsoft ecosystem was bigger, and a lot more challenging, with a larger set of competitors—a business it would be hard to scale without acquisitions.

And it was the Google ecosystem pulling SADA upmarket.

As SADA approached ever-larger customers with Google, Microsoft wasn’t always pleased—a dynamic made evident by one angry text from a senior Microsoft representative that convinced Safoian playing in both camps was unsustainable.

“Going all in with Google was the biggest statement we could make as far as finding a niche,” he said.

SADA picked a lane, selling its Microsoft practice to Core BTS.

Now SADA, for two years in a row Google Cloud’s reseller of the year, is committing $500 million to that practice over the next three years.

The Google relationship offers another example of a key lesson he’s learned: “Deliberate incentive alignment creates indestructible virtuous cycles.”

In short, for SADA to win, customers must win, and Google must win.

Safoian said he believes in the mantra presented in Simon Sinek’s book ‘The Infinite Game’.

An infinite game is one that continues whether you’re playing or not. With no scoreboard, no way to win, what motivates effort in a business context is the desire to continually improve the capabilities of the people and the organization.

In other words, “working to be incrementally one percent better every day,” Safoian said.