Smartsheet's partner value proposition extends beyond resale margins. The company strategically positions partner-led professional services (implementation, integration) as essential for its own success. These services drive customer adoption, which in turn leads to higher retention rates for Smartsheet's core software.

The traditional MSP 2.0 model of reselling software seats is no longer profitable. The next evolution, MSP 3.0 or "BSP" (Business Solutions Provider), focuses on consulting and managed services to solve core business problems, shifting the revenue source from software margins to service-based value.

When asked if AI commoditizes software, Bravo argues that durable moats aren't just code, which can be replicated. They are the deep understanding of customer processes and the ability to service them. This involves re-engineering organizations, not just deploying a product.

Managed Service Providers become indispensable to vendors like Microsoft and Google by adding $7-11 of high-value services for every dollar of product revenue they generate. This value creation gives them significant leverage and makes them a more respected and crucial part of the vendor's ecosystem.

Enterprises are comfortable buying services. Sell a service engagement first, powered by your technology on the back end, to get your foot in the door. This builds trust and bypasses procurement hurdles associated with new software. Later, you can transition them to a SaaS product model.

VCs accustomed to scalable SaaS models often view professional services as a non-recurring drag on margins. For data businesses, however, these services are crucial for embedding data into customer workflows and preventing churn, especially when the internal champion leaves.

Businesses previously considered non-venture scale due to service-based models and low margins, like Managed Service Providers (MSPs), are becoming investable. By building with an AI-first core, these companies can achieve the high margins and scalability required for venture returns, blurring the line between service and product.

Leverage the cash flow, operational playbooks, and market insights from a technology services business to fund and execute a software acquisition strategy, as demonstrated by Terum Capital's origins.

Many companies believe they are building a scalable product but are actually succeeding as a bespoke software consultancy. Recognizing this reality is critical for aligning pricing, sales, and ROI expectations correctly, rather than chasing product multiples with a service model.