First off, why are they called Technology Solutions Distributors? They don’t distribute anything but commission checks. They don’t do logistics, handle inventory or anything like distributors. They are Brokers. Commission brokers.
And this has been pointed out plainly by the press release announcing “a new kind of TSD” by two former Telarus execs.
TSDs have only 3 incomes streams and two come from the vendors. They have commission splits and MDF/sponsorship monies. The third one is to take a partner’s base to cross-sell and upsell at a lower split to the partner.
The new broker is XCV. “The company is offering four levels of commission split, ranging from 85/15% to 95/5%.” How will you pay more than the 90/10 split that many brokers find themselves forced to pay? You cannot run a back office on 5-15%.
They aren’t building a platform, so no devops. No parties, dinners, tool development or Sales Engineers. They will rely on the vendor for SEs. That isn’t very customer centric, but okay.
You are doing Lead Gen, so how will you pay your marketing person, your management, your channel managers, your commission people and your ordering staff? Or does all that fall on the agency and XCV really just holds the paper on 40 vendors?
They make it sound like the top producing and self-sufficient agencies they they want to corral are somehow at a disadvantage. These agencies most certainly get 90/10 split.
XCV will be sharing MDF – so how will you pay your staff? This is a business plan that this rife with problems. The top producing are already able to share in MDF.
James Anderson did a great job probing this. XCV Partners exists under Caliber Solutions Holdings. Any partner who considers this scheme, please call Neil first!
“Top-producing partners of XCV will be rewarded with a path toward participation in future valuation of the company.” Always the TNCI carrot of the possible payoff. This is like stock or equity in a startup with no financing and no revenue.
For all purposes, this is a way for these two guys to get paid while other people sell. They literally tell you that they are providing nothing but the contracts. If XCV can get a Lumen or RNG contract with no commitments or revenue, so can an actual selling agency!
Our industry is built on Arbitrage and this is a perfect example of it.
