Tuesday, October 31, 2006

Transcript of Dana Gardner's BriefingsDirect Podcast on PC Remote Administration in the Ramp-Up to Windows Vista

Edited transcript of BriefingsDirect[TM] podcast with Dana Gardner, recorded Oct. 18, 2006.

Podcast sponsor: LogMeIn.

Listen to the podcast here.

For an instant trial of LogMeIn Rescue, the solution Rent-A-Geek relies on for its highly successful remote support business, visit www.LogMeInRescue.com/podcast. Within five minutes of signing up, you can conduct your first remote support session. And, through this special link, you’ll receive an automatic three-week trial (a full week longer than the standard trial). Get your trial going at www.LogMeInRescue.com/podcast.

Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you're listening to a sponsored BriefingsDirect podcast. Today, a discussion about PC remediation remote service, using the Internet with some very powerful new tools that allow people to get into PCs and fix them, keep them well-maintained, and, of course, also gain remote access business opportunities.

To help us understand the burgeoning market opportunity for such remote remediation, we are joined today by Keith Schiehl. Keith is president of Rent-A-Geek in British Colombia, Canada. Thanks for coming along Keith.

Keith Schiehl: It’s pleasure to be here, Dana. Thank you for having us.

Gardner: Keith, tell us a little bit about what has been going on with remote PC tech remediation. It seems like it has gone from a high-touch, retail, and local business to suddenly a global software-as-a-service capability.

Schiehl: Absolutely. And the remote aspect has been around for years, with programs like Remotely Anywhere, PCAnywhere, etc. But what’s really happened here in just the last few years are the remote technologies that don't require software on the end-user’s side. All it requires is that the end user enter a certain pin code or go to a Web site and download a Java applet.

Now, we are able to help anyone, anywhere in the world, as long as they have an Internet connection. Whereas before -- with the other products -- it required that you install the client product, that you open up port forwarding on their routers and firewalls. This works right through the network, and that’s what makes it so widely available now -- that anyone out there can get support.

Gardner: Interesting. Now tell us about Rent-A-Geek -- of course that kind of sums it all up in the three words. But tell us of the story of Rent-A-Geek. How did you start, and where do you expect to be going on in the next couple of years?

Schiehl: I’m in British Colombia, Canada. I came up here in late 1998 from New Orleans. And my background in New Orleans was doing data warehousing. I had worked at the university level, at the government level, did my graduate studies in information systems. When I came up here, I came camping and decided that I didn’t want really to leave. I made my home here.

But Canada was in a recession at that time, so there wasn’t job availability in my expertise area. So I did what I have always done, which was work at the PC level -- fixing PCs. It just started as a one-man shop, and in the next two years it grew and grew to the point where we went from just myself to having seven technicians full-time.

Then, we took on the remote aspect of our business -- where we are no longer focusing on our little valley here, but now we are using LogMeIn products. We’ve reached out from our little valley and now we have clients on four continents.

Gardner: And how far do you reach?

Schiehl: Our customers are in every state in the U.S. and every province in Canada, so North America. We have got Australia. We’ve got a little community in China, where it's all U.S. executives. They have their own little community over there to do business. So we have several clients there. And then also in Europe: in England and in Germany.

Gardner: Okay, so in the olden days -- and we're really talking just a few years ago -- somebody would have a problem with their PC. They’d probably look in the Yellow Pages and they’d see "Rent-A-Geek," and give you a call. And you’d probably have to go to see them, or have them schlep their PCs to you. Tell us of what kind of problems you deal with on that level?

Schiehl: Sure. We have the brick-and-mortar store, and we do on-site as well as in our valley -- and that’s how customers still find us. Originally, very few of our customers even understood that we did the remote thing. Many of our international clients who call have called because they had heard or seen a geek-type name, or they Googled for help and found us. They go to our Web site and they assume that we’re there in their neighborhood. So they call us.

Actually many of our clients call us for on-site service because that’s all that they know. Then we have to educate them and say, “Hey, you know what? We are not in Illinois, but we can fix this right now. Do you want to try this and sit back and watch?" And they go, "okay." Then, we begin and they are just blown away that we can actually do that.

Gardner: Now what if your PC is totally crashed, all you get is maybe a blue screen or some kind of a nasty message. Can you take them from that point and get a remote access to their PC?

Schiehl: Yeah, as long as the hard drive, for example, has not completely failed, or the power supply has not completely failed. If we can get that thing powered up, we can get them through the process, no matter how quick or long it takes. We can get them bootable. And once we can get them bootable and into safe mode, then we can fix it.

Gardner: What’s the growth opportunity here? How fast are you growing now, and where do you think this can go from now, for let's say the next two or three years?

Schiehl: Well, in the last two years we have grown at an average rate of 500 percent per year. It's been phenomenal, but really that’s just been off of referrals and people in our valley referring us to family and friends all across North America.

Beyond that, the opportunities here are astounding. Our target market, the people that we really serve, are the small-office, home-office (SOHO) end users. We have a very fiercely defined target market. These are the people we work with, and there's a total market of $30 billion right now for outsourced IT support. So, how much of that and how big we can go is simply a matter of how scalable we make our operation. And that’s a whole other story. We’ve got a business model and plan in place to address that.

Gardner: So, you can scale up on the warm bodies, and you can use these technologies. But let me understand the breadth of the service here, not just for recovery. I am a small-business owner myself, and if I have a problem and I find you guys and you help me out. I think my next question would be, "Well, what can you do to help me not have to go through this again?” And what’s your typical response?

Schiehl: Prophylactic measures against viruses and spyware, after we do the clean up, is the big part of our business model. It’s about the education. It’s about putting the pieces in place, putting in a guarantee that this won’t happen again for a certain number of days. With the end users, it's all about education. And we get clients calling us for very simple problems to us. But for them, they are very intense, very stressful problems.

Gardner: All right, so how do you keep those people from losing it? How do you make their day, and what are some of the enabling technologies that you can bring in, so that this is a pleasant experience and they do want to come back for more?

Schiehl: Well, we always start with the human aspect of it. We have some very defined core values in our business, the first of which is: fun. Then, we have education, success and understanding. These are all based on interpersonal reactions, and we use something called the "Fish Philosophy," based on the Seattle Pike Place Fish Market. It's all about being present, choosing your attitude, making his or her day -- looking for that opportunity to make somebody’s day.

Our guys are actually trained to actively listen first, before they formulate a response, to ask the right questions and then look for that opportunity -- to really make someone’s day. Because if they can do that everyday, for 365 days a year, times the number of technicians, times the number of years we are in business, then we can create a massive change out there in tech support.

Gardner: So, you’re probably providing a little bit of psychotherapy. Because I know when I'm at that blue screen position, I am ready to toss the whole thing out the window. I am stressed and not in a happy situation, particularly if I am losing work and money as a result. Tell us about that personal touch in terms of what the technology can bring?

Schiehl: Okay, and really we consider ourselves as relationship counselors first, and technicians second -- and we mean that. Because the relationship between the end user and their technology can be as tenuous as any marital relationship. And that always comes down to communication, just understanding why the other person -- or computer, in this case -- is behaving that way, and that it's not personal. We can help you guys communicate better and help fix this. And sometimes it’s a case of helping to fix the user.

Gardner: You can’t afford to have technology go bad on you when you are helping somebody with his or her technology.

Schiehl: That's right. Given that somebody is already in a stressful situation, the enabling technologies of the LogMeIn Rescue product that we use for remote support makes it so easy for the end user. They are initially very stressed and they say, “Well, I am already not good at working with computers, and now you’re asking me to launch a remote support session? This is absolutely foreign to me. I'm not comfortable with that.”

And so, we simply ask them, "Can you open an email? Do you know how to do that? Do you know how to view a Web page?" Because if you can view a Web page or you can open an email, we can help you.

Gardner: Okay, so you mentioned LogMeIn. How did you settle on that? What was the process for choosing that?

Schiehl: Well, before LogMeIn Rescue came about we had for years used things like PCAnywhere. It almost required a technician on-site to set up the software, to do a remote session. But after that we used another product that came out a couple of years prior. But the problem with that one was that it was at the price of about $450 per user-license, and you’re only enabled to do one session per license at any given time.

So, we used that for two years, but every month when we paid for it we just sat there shaking our heads saying, “There’s got to be a better way.” And then when LogMeIn’s product came out, when Rescue came out, they were offering it as a free trial. So there was absolutely no commitment. But it was $99 per month thereafter, if you chose to keep it. Moreover, you could do up to 10 simultaneous sessions with the LogMeIn product as opposed to the one with the $450 product.

So, for us, we immediately downloaded it onto five machines in the shop and began generating revenue. And at that point there was just no turning back. In fact, we felt so bad about generating revenue on a free trial that we signed up right away.

Gardner: So, this was a benefit to your business model, but also suited your technology needs, and architecturally because this is a peer-to-peer technology, and that’s got some benefits too, right?

Schiehl: You bet! They’ve got 256-bit security, end-to-end so it’s absolutely encrypted for the data, for transfers that are taking a place. The end user doesn't have to install software. It's just phenomenal, and makes this so easy for the client; they don’t have to have any technical knowledge to make this work.

Gardner: How has the type of problems that people are coming to you with changed over time? Now you're servicing four continents, you’ve got people remote – are you facing the same types of problems? And could you also explain what PCs you are mostly working with? It's Microsoft Windows XP and Windows 2000, is that right?

Schiehl: Yes, XP, 2000 -- and also Windows 98 and Windows 95 are still out there, and we still work with them. But the problems are pretty well universal, whether it's just a software issue with Outlook Express, for example, not downloading messages, not able to send things; whether it's a firewall or something blocking it.

Of course, there's the huge, huge problem of malware, spyware, and viruses that are coming in today without the user even having to open an email. All they have to do is view a Web page that’s infected, where the malformed image or whatever the exploit of the day is, and they are getting infected without any interaction.

Gardner: This is disaster remediation. More and more small businesses are getting more dependent on their PCs, and yet at the same time probably losing precious time that they need. They can’t go down, they are working on a mission-critical basis, just like large enterprises.

Tell me a little bit more about the managed-services industry. It seems like if you’re growing 500 percent year over year for two years, there's a big business opportunity and a potential $30 billion market to go after. How do you take your business and continue to grow it, and do you think that this is unique to you? Where do you see industry as a whole going?

Schiehl: I don’t see it so much as being unique to us. However, we are being very intent in the way that we are growing. We have very specific goals and landmarks that we set for ourselves, benchmarks that we set for ourselves. We’re managing our growth through a series of referrals first. Then, we have some affiliates that we set up, second. And then, in the end, when we create our new model, we’ll be dealing with more mass exposure. But, right now, we’re trying to limit our growth if anything, so that we can manage it properly.

Gardner: Okay. When you get control over someone’s PC, does that tend to flip him or her out a little bit? I guess I’d worry about privacy and security, if all of a sudden some guy in British Columbia is monkeying around with my PC. How do you keep people trustful and sort of comfortable with that?

Schiehl: Well, certainly there's apprehension initially. The first time somebody sees their mouse moving without them touching it, that tends to freak them out a little bit. So, we have to overcome some of that resistance through a dialogue.

Initially, the people say, “Well, I was really expecting to have somebody come over to my house. I am not really comfortable with you being up in Canada and I am down here in Denver, and you’re coming into my computer.” And we say, “Well, look, we’ve got this product, but you’ll always have overriding control of the mouse, of the keyboard, etc. You’ll always have the ability to end the session anytime you want. Now, we stay on the phone with you while we’re doing this, so it's like we’re there. But would you rather have a complete stranger come into your house, where he has access to everything and not just your computer?"

And they're like “Well, okay. I guess they didn’t think about that."

Gardner: And once the session ends with the technician on your end, the "geek," they can’t get back in unless the other party allows him, right?

Schiehl: That’s right, it’s a dead cookie at that point. That’s one thing we explain to them, because we give them a unique six-digit pin code, and they always want to write it down, and we say, “Well, don’t bother writing it down, because it’s no good after this session. It will never work again.” And they go, “Oh! Okay.”

Gardner: Let's get back to that situation where I’ve just suffered some malware. I am frozen, but I am able to at least have someone on the phone talk to me into safe mode, I can get this session going with you, and then my first reaction is, "I can’t go through this again. Is there some sort of a routine maintenance?"

Can I just say, “Listen, I am now comfortable with you guys coming into my PC. We have a business relationship. I know that I can turn it off as I need to, but can you come in here behind the scenes and help me so that I am clean and up and running, and I don’t have to worry about this stuff?”

Schiehl: Yes, and we have two ways of doing that. We either have the on-demand model, which requires them to call us and initiate a session. Or we have the model where we just come in and do it, and that involves another LogMeIn product, called LogMeIn IT Reach. That’s a unique and special product that we use for customers who are very comfortable with it, because what that product does is it stays active on their computer, all the time, and it monitors critical system processes.

Then it will email us, it will instant message us, whenever an event fault comes up or an XP event comes up; or if, for example, their temperature gets too high in the computer. There are certain trigger points, things that you can set to monitor that we get informed about. So, we call the customer and say, “Hey, look, this is happening to your computer. We’re thousands of miles away, but your fans are not working properly. So, you need to get that addressed immediately.”

Gardner: And LogMeIn IT Reach has the sensors in the PCs that can tell them this? Or is that your scripts and your stuff?

Schiehl: That’s IT Reach.

Gardner: So, we’ve got routine maintenance. There must be more services. What about backup? That’s another thing that I use as a small business. I am doing it myself manually, but I kind of like the idea of it being up in the cloud and automatic.

Schiehl: That’s something that we’re just starting to get into -- being able to do backups. And not only for the client at their particular site, like setting backup routines for them that will operate with their own external drives, for example, but also using a new product that LogMeIn just acquired called Hamachi. Hamachi sets up a software VPN between our computers and the client’s computer.

So, it’s just like having a VPN in your office, or in your remote offices, where you have direct access to specific folders on the hard drive, and you can map them locally. You can actually run a back-up routine on their system – from their system -- that drops the data into one of our folders on our computers, just as if our computer were on their network.

Gardner: And why would I want an encrypted VPN to do that? Why couldn’t I just do that otherwise, or would my data be vulnerable if I didn’t have a VPN going?

Schiehl: The VPN sure makes it easier to do the job, just because you are able to map the drive as a local drive. The security is just an added benefit, but certainly if you did it outside of a VPN, your security would be compromised or could be easily compromised.

Gardner: What kind of prices do you charge for this? I know what I am paying for a guy that I physically bring my PC to when I have the issues, and that I do have sort of maintenance contract with them. As a small business owner, how much am I going to be out of pocket to get an ongoing maintenance relationship on this remote basis?

Schiehl: We price ourselves for our market, the small office, home-office market. We are not always the cheapest, but we have a lot of value on top of it. We have per-hour pricing that is $65 per hour, very reasonable for that market. We have fixed-price products such as our branded PC Oil Change, which is a complete system tune up, clean up, and virus scan, ensuring all your updates are in there. That’s a fixed price product at $100.

Gardner: So, that’s like a Jiffy Lube for my PC.

Schiehl: Well, that’s exactly what it is. The thing is that we draw off from different industries to create our own business models. We draw off from very successful businesses to create a same business model for the computer world.

Gardner: Yes, so you are doing psychotherapy and car-like computer maintenance. That’s pretty good.

Schiehl: That’s right.

Gardner: So, I get all this for $100 a year?

Schiehl: No, that’s for one of the particular PC Oil Changes. We recommend a couple of those a year. So, we have a fixed product package, called the one-year security guarantee that we offer at $225. For that we will install anti virus software, we will install anti-malware software, specifically Spyware Doctor.

Then we will monitor your system for one year and guarantee that no malware gets into it, no viruses get into it, plus we’ll do two of these cleanups per year. So, for one year you have peace of mind that if anything happens we are going to come in there, and fix it for free.

Gardner: And that means that I don’t have to go out and get my own anti-virus malware programs. You are going to include that software within that price?

Schiehl: That’s right.

Gardner: Wow. Well, I've got to tell you, that’s like half what I'm paying now and I'm paying for the software on top of that.

Schiehl: Right, and we are picking up what we feel is better software -- more compatible for the users' needs.

Gardner: Okay, so this is a no-brainer for me. And what's really enabling this is your ability to scale with this remote connectivity benefit?

Schiehl: That’s correct, because now we can leverage ourselves by being able to watch and monitor thousands of computers out there. One technician can simultaneously work on up to 10 people. Typically, four is my mental maximum, before I start falling apart, losing track. But the nice thing is when I'm working on someone’s computer, I can start a scan, which is going to take 30 minutes, and then I can work on an another session at the same time, do all the work leading up to the scan -- and then move on to another system, eventually going back to the first, and then second, and then third again.

Gardner: And because your customers can be in four continents, I'm going to guess that probably your "geeks" can be on four continents too, right?

Schiehl: That’s correct, however, we are building a model that’s not going to quite work that way. We won’t go too much into it because its right now it’s in the funding phase, the venture capital phase. But, nonetheless, we are looking more for a centralized model for sure.

Gardner: Let’s look at one of the big issues in the news right now that could have an impact on all of this, I guess both positive and negative. And that’s the arrival of Microsoft’s new operating system, Windows Vista, coming into the consumer base and the business base in 2007. Does Vista have tools built into it that changes your approach, and do you expect that the people transitioning to it or buying new PCs with Vista are going to actually give you more business?

Schiehl: We think that effect, the later effect, will be big, will be huge. But we feel that it will be slow at first, as the adoption takes place with Vista and the upgrade process. Bear in mind, yes, there are tools in there, but there are also tools in XP. There's the remote desktop feature or the remote support feature in XP, but both of these products -- and we have already tested the Vista one as well -- are absolutely inferior to the one from LogMeIn, the Rescue product, because the Rescue product is made specifically for technicians to do outsourced IT. So, it is filled with features that we won’t get on the other products.

Gardner: So, the features that are in Vista are designed probably more to let people access their home PC from a browser, but not designed for a maintenance and remediation function?

Schiehl: Right, or they allow access for your IT person within your office, with the lower level of security -- and not as feature-rich.

Gardner: I see. Their approach is to say, "Listen, we sell these to large enterprises and we want to help the IT desk in that enterprise be able to reach across the LAN and do some patch and other distribution types of functions."

Schiehl: Sure. One feature, for example, in the LogMeIn product, is System Information. As soon as we are connected, there is a tab on there for system information. Without having to ask the client, I know everything about their system, every driver in there, the processor, the RAM memory, the capacity of the hard drive used. I have an advanced view of all this information without actually having to ask the client. Those aren't in the built-in products in Windows XP or Windows Vista.

Gardner: Okay, so there are some elements here that are going to make your job easier. You are going to have a big churn in the marketplace, which is going to have people get a little bit confused and needing some help. And then you’ve got a better remote product and service than what's provided internally -- and you are doing that at a competitive price point.

Schiehl: Absolutely. Again our clients, our typical clients, are small-office, home-office users. They like things to look familiar, to feel familiar. So, there is going to be some huge hand-holding needed because Vista looks different, it feels a little different. So, in that aspect, yes, we feel there will be a huge opportunity in supporting these. But at the same time we feel it won’t be one great huge impact on release. It will be a slow roll-out.

Gardner: Very interesting. Well Keith, I think that about covers it. I’ve learned a lot more about this remote managed services business. I just wish there were some companies I could invest in. To be honest, it sounds like a very good growth industry. It’s been nice speaking with you.

We've been speaking with Keith Schiehl, president of Rent-A-Geek, about remote remediation and PC administration, and the use of LogMeIn products. And we also want to thank our sponsor, LogMeIn, for making this podcast possible. Keith, thanks for joining us.

Schiehl: Thank you, and thanks to LogMeIn for a creating a great product. We always feel thrilled when they come out with an update.

Gardner: This is Dana Gardner, principal analyst at Interarbor Solutions. You’ve been listening to BriefingsDirect. Thanks very much.

For an instant trial of LogMeIn Rescue, the solution Rent-A-Geek relies on for its highly successful remote support business, visit www.LogMeInRescue.com/podcast. Within five minutes of signing up, you can conduct your first remote support session. And, through this special link, you’ll receive an automatic three-week trial (a full week longer than the standard trial). Get your trial going at www.LogMeInRescue.com/podcast.

Listen to the podcast here.

Podcast sponsor: LogMeIn, Inc.

Transcript of Dana Gardner’s BriefingsDirect podcast on PC remediation and remote access technologies. Copyright Interarbor Solutions, LLC, 2005-2006. All rights reserved.