mindSHIFT Acquires groupSPARK

They may share a common orthography, but these two companies have complimentary businesses, one selling high touch managed services, the other selling through the channel.

by Alex Goldman ISP-Planet Managing Editor [May 1, 2008]

The internet, they say, destroys distance, and crushes the silos that separate us. In the case of the acquisition of groupSPARK by mindSHIFT, it's good to be neighbors. Both are based in the Boston area, mindSHIFT in Waltham, Ma. and groupSPARK in Burlington, Ma.

Both CEOs, Ravi Agarwal of groupSPARK and Paul Chisholm of mindSHIFT, say that the proximity of their businesses is nice, but was not critical to the decision to merge. I suspect, however, that it will make the merger more successful.

groupSPARK's services (Microsoft Exchange mailboxes plus add-ons) can be sold to anyone in the world. They resemble a widget that can be dropped into any small business environment that has a good internet connection. So in a purely technological sense, Agarwal's absolutely right when he says the company could have been bought by anyone anywhere in the world.

Deciding to sell when you're doing well
For Agarwal, selling the company makes sense because it needs to grow. He argues that business is booming so fast that he needs more money, an argument that might be counterintuitive to outsiders, but is an issue familiar to any successful ISP.

"The demand for SaaS is exploding even faster than I had imagined," Agarwal says. "I looked at the market and said, how should I best take advantage of this. We were growing organically and needed to leapfrog ahead. We needed more resources. We're not VC funded."

So groupSPARK hired an investment bank six months ago. mindSHIFT first heard about the opportunity about four months ago. mindSHIFT is in buying mode, having acquired several companies over the past few years.

This is a trend we've pointed out before (see Editorial: State of the ISP Industry): successful companies are not buying similar companies. Instead, they're making acquisitions to add to their portfolio of skills and services.

mindSHIFT was interested in groupSPARK because groupSPARK offers Microsoft Sharepoint services that mindSHIFT was eager to develop but had not begun to do. "They have what we wanted," says Chisholm. "Now we don't have to develop it ourselves."

Adding a channel to an MSP
groupSPARK will give mindSHIFT a greater geographic reach than it had in the past, which is the natural consequence of adding a channel-based business to a direct sales business.

"We're an MSP," says Chisholm. "We manage IT. We do LAN administration, backup, security, etc. We have clients in 30 states nationwide but mostly in four cities: Boston, New York, Philadelphia, and Washington, D.C."

Will you be able sell components of the MSP service through the channel? "Yes. For instance, take electronic backup of servers and PCs. We can offer that through Ravi's group now."

Other products should be adaptable to the channel, too.

groupSPARK will also allow mindSHIFT to serve larger customers. In the past, the company has focused on SMBs from 20 to 300 employees. groupSPARK has many customers in that range, but also some that are larger.

groupSPARK will become a business unit of mindSHIFT, says Chisholm, and he anticipates no major changes for groupSPARK's employees, customers, and resellers.

An opportunity
Agarwal says, "it's easier, for customers, to have it all troubleshot by the same person."

As a result, ISPs offering connectivity but not services will be left behind.

"The good news," Chisholm adds, "is that ISPs don't have to do everything themselves. They can use the channel if a product requires too much investment. There are partners will to work with them, and groupSPARK is a good example of that."

—End