Chapter 1: What is the main topic discussed in this episode?
Welcome, humans, to the Neuron AI Explained. I'm Corey here with my good friend and neuron writer, Grant Harvey.
How are you, man? Doing good, Corey, as always. Today, we are stepping outside the core AI research bubble and into the real-world market where AI actually gets sold, implemented, and supported.
And we are joined by Victoria Durgan and Katie Bovoso from Channel Insider, our sister publication that covers channel sales, MSPs, and the ecosystem most businesses rely on, often without the public ever really realizing it exists. I'm in the latter camp, so I'm excited to chat. We'll define what channel even is, why it exists, and how AI is changing who wins and who is running behind.
So before we get started, if you haven't yet, take just a minute to subscribe to the channel. We really appreciate it.
Chapter 2: What is the 'channel' in the context of AI services?
Helps us continue bringing you all the movers and shakers inside the AI space and the people who are actually building the tools. But now let's get down to business. Victoria, Katie, welcome to The Neuron.
Thank you so much for having us.
Yeah, long-time listener, first-time caller. I love it.
I love it.
Well, we're so glad to have you here. Just to recap, this whole thing kind of came together because we were at a company leadership retreat, and I watched Victoria give a very passionate explanation as to what channel is, and I remembered thinking, well, people should be, you know, buying their AI this way and doing other things.
There are a variety of things where this could be really beneficial. And I thought neuron readers really ought to know this exists because I figured if I don't, surely someone else doesn't either. So while we can't do the four hour long late night explanation, I'd love if you could kind of explain channels.
Yeah, no, thanks, Corey. And you're welcome in advance to all listeners and readers who don't have to endure the four hours of whatever I blocked out and delivered at that moment. I'm actually going to flip it to Katie, I think, to start. She has a great analogy that I think is a great starting point that I use when I'm explaining it.
So I'm going to let her do it in her own words since she's here.
I love sure this is a test. All right. Thank you so much, Victoria. Yeah. I mean, first of all, Corey, don't be one of those people who suddenly get self-conscious about knowing not knowing what the channel is, because there's also so many different words for it. The I.T. channel is just a distribution channel like any other channel that gets product to customer to the consumer.
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Chapter 3: How is AI impacting the traditional distribution model?
across the world, we're just the only ones that call ourselves the channel. And many people inside this space actually don't even call it the channel. So we can have conversations with people that we literally are in the same industry as, and they're not referring to it as the channel.
So if I've already lost you, let me try to bring you back by using that simple sort of comparison that Victoria was talking about. The way that I learned it and the way that it helps for me to explain it is when you think about milk. So think about milk as you think about actual IT products, technology products, computer software. Those products are not necessarily direct to consumer at scale.
So when I want to go get milk, where do I go? I head to the grocery store. I head to a Hannaford, a ShopRite. Publix. I'm really trying to get all the regions of the country here with your grocery stores. I don't go to Hood. I don't go to Stonyfield or the actual sites in which they produce these milks and actually milk the cows. I go to a grocery store in order to purchase because if
hood and stony field and i really hope i could say these names because this is going to be a lot of bleeping if i can't uh but if all of these particular milk distributors wanted to get milk directly to me and i had to go to them it would be a mess a logistical mess for them to be able to do that so they rely well we used to have a distribution for milk it was called the milkman right Yes, yes.
Grant, the milkman was maybe the AI of his time, but we can get into that at a different point. Interesting. So in this case, and Grant, throw in the milkman strategy, and there's also going to give me a few other comparisons. But to get back to my original point, within the channel, you can consider MSPs and resellers, managed service and solution providers and resellers.
as the grocery store situation here. So we're not going as consumers directly to HPE. We're not going to Dell. We're not going directly to these vendors that are providing the software and the hardware at scale for our companies. We're going to these smaller shops who are able to provision us
From everything, from those computers that all of us need, and when I say us, I mean the employee base, to the software and cybersecurity that is built onto them.
And the reason for that is because when we go to these MSPs and resellers and other solution providers, they're able to work with the vendors at scale where it's not just one vendor they're working with, they're working with a ton of them.
That's why when you get a laptop that's maybe a Dell laptop, has an Intel Core processor on it already, thanks to another channel relationship, and you get it with maybe Bitdefender built onto it already, which is a cybersecurity software. These are all different pieces of technology that are built into one computer, and they're able to distribute them to your workforce of anywhere from 25 to 30.
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Chapter 4: Why do businesses prefer using MSPs instead of buying directly from vendors?
But that's what it is. It's a distribution method to get to the consumer in the workforce.
Okay, I'm going to ask a clarifying question just to make sure I understand this.
There is no milk involved, Grant. I'm sorry.
Okay, that's fine. That was just a metaphor. Who is the almond milk in this example? Where does the alternate milks come into play? Why don't most small businesses buy technology directly from hyperscalers? And I guess on top of that, are you saying that it's a way for the IT package providers to sell their software directly through the Dell computer? That's what I'm trying to...
I do realize that I put in a strategic relationship compared to a customer relationship in there as well. So, Victoria, I'm going to let you come in on this one because I love the question of why can't we just go to Mr. Dell? And why can't we just ask for a computer? Yeah. Victoria, please.
Yeah. So Grant, I think to answer your question, I'll actually, we'll flip the perspective here and I'll act as the vendor in the situation. And I know we're on the neurons, so maybe we'll take the AI example here too. If I'm, you know, Google Cloud or Anthropic or, you know, insert name that you're familiar with here.
I want the millions of SMBs in the US and around the world to use my technology. I don't want to service it every time it breaks. And I don't want my direct selling teams that can go sell the million dollar deals at the enterprise level to, comparatively speaking, spend their time on much smaller deals.
And so when I'm a vendor, because I mean, we're talking millions of businesses that then employ millions of people, right? Like we're talking at a wide scale here. So I want a resale channel to really go and do like 90% of the work for me. Wow.
Then on the flip side of that, right, if I'm the SMB involved, let's say I'm a law firm and I've got 20 employees, I've got a bunch of lawyers and I've got some legal assistance and things of the nature. I probably don't want to hire a five person I.T. team. I probably can't or just don't want to take that headcount on.
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Chapter 5: What are the challenges faced by MSPs in the current AI landscape?
And the one that they're, you know, approved to use responsibly and exactly.
Well, yeah, because ghost AI, that's a real thing. Yeah. Oh, go ahead. Yeah. What do you mean? Sorry, sorry. Not to interrupt. I just am just really chomping at the bit. Really excited. But to give kind of an example to back up what Victoria is talking about, there also is...
Kind of a differentiator where you've got businesses that are selling or reselling AI tools themselves and then ones that are building onto those AI tools with their own services to increase that value. So, for example, I was just speaking with the CEO of Spyglass MTG yesterday. We have a great article on our website right now by Jordan Smith if you want to go to channelinsider.com.
and check that out, about their brand new AI Navigator. So this is a great example of how to add value onto an existing product. So Spyglass is a Microsoft exclusive partner, meaning that that is only what they deal in is Microsoft products. Microsoft is a great example of showing how AI can be built into a suite and then distributed
at scale, at nauseam, honestly, because anybody that is on the suite for Microsoft, similar to how Gemini is on Google's suite, you've got the power for it. You might not know, and the worst thing that you could do as a business is be paying for all these tools that are built into a software suite and then have no idea that they're at your disposal or how to use them.
So what Spyglass has done is that they've actually built an AI navigator. So another LLM, I hesitate to use the word chatbot, but think of it like that, into their system when they offer Microsoft, the suite of Microsoft, you're able to go in and chat with the system to be like, how can I use Copilot for these use cases?
And they've actually already created prompts that are pre-made that you can select from in order to talk to the system to learn how you as the business can use Copilot.
This saves so much time and it also really extends the value of that provider who is not just managing these tools and not just doing break-fix, which is, that's a term now that you cannot just do going in and fixing things and patching things. It has to be so much more in order to get ahead in the market, because as Victoria said, it's such a crowded space.
You have to do so much more, which we'll be getting into some examples later on. But that was a great example, in my opinion, of showing how maybe they're not offering an AI tool that they came up with, but they are offering their own AI tool to be able to be built into the system as an accelerator, not a product that is standalone.
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Chapter 6: How are AI tools changing the relationship between businesses and their MSPs?
Here's how you're not using proprietary data, secure data to train those tools. Right. And I can promise that. And you're probably going to believe me when I promise you because you've worked with me for 20 years. Yeah. And so me saying that to you is a lot different than a kind of nameless, faceless AI startup saying it. And they might be just as true and correct in saying that. Right.
But at the end of the day, a lot of this comes down to relationships. And the channel is basically one big thing.
relationship and you trust people that you like and you trust people who have proven themselves to you over time which is also why I think from a business standpoint the bigger names like the Microsoft's and the Google's do you have a bit of a leg up over some of the newcomers because if I'm a business owner not a technical expert and I'm going well I've bought Microsoft for 20 years so yeah
And Windows is on nearly all of the computers.
Or the classic line was, you know, no one ever got fired for buying IBM, right? Correct.
Yeah.
So it's like, if it's tried and true, it's not like you're jeopardizing your... Well, let's stick with the legal example for a second. So imagine you're, are either of you familiar with the AI startup Harvey? That's a legal, like basically like a lawyer tool.
I think a little bit. Yeah. Is that the one that makes you a lawyer? Like gives you like a guy that comes in and he's like, I'm your lawyer now as an AI bot.
I don't think it is.
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Chapter 7: What role does verticalization play in the future of MSPs?
Right, got it, got it. When you look at a company's tech stack workflow, you see all of these different nodes that are all different tools that it's running. It's gonna run through here, it's gonna run through Kong, and then it's gonna go over here, and it's gonna run through this, and it's gonna run through that. And that's those companies all over AWS that are hacked in their marketplace, too.
It's a bunch.
There's so many startups right now. And I'm sure you're going to only see more this year.
Same. I agree.
I mean, actually, I think the AWS marketplace example is a really great example, too, of how AI is changing the channel a little bit. And maybe changing is too strong of a word. But, you know, in that marketplace example, Corey, you as an end customer, right, actually much easier than ever before could go buy it direct.
Yeah, that's a good point.
That's the example, actually, Grant, to your earlier question, like why not just do that? In some ways, that's gotten easier over the past five years. And so partners, and now this is where we get complicated, right? Because AWS doesn't want to lose its partner network because AWS can't just sell partners.
its core cloud on the marketplace in the same way, because that's a much more technical deployment integration process. So AWS has built Marketplace to also support MSP offerings. So in the way that you can go into the marketplace and buy code from an ISV to kind of keep it broad, some MSPs that we speak to also offer their services through the marketplace.
So their customer goes into AWS marketplace to provision security services. The MSP gets a cut. AWS gets a cut. Whatever ISV is involved in the middle there and making the product gets a cut. Everybody kind of wins. Yeah. Wow. I'm trying to relate this.
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Chapter 8: How can small businesses effectively adopt AI in 2026?
Yeah, I would say anything really at the broadest level, any product solution that has kind of an enterprise license component is probably fair game for a channel partner to be reselling in some capacity. That is typically because, again, MSPs and channel relationships are a B2B venture. Right. So when we talk consumers, we're talking employees and businesses.
So there needs to be kind of a business-focused tooling here. But to Katie's point, Anthropic has announced and opened quite a few partnership-facing roles. So those VP titles are joining some of the bigger AI teams.
platforms and when they hire for partner roles to you know really blow everybody's minds and confuse everybody some more because that's what channels do um those partnerships are also like integration agreements so like open ai and microsoft well that's a bad example because of the money involved but like that's a corporate problem but like uh understand topic and things like that announce you can use us and x tool together
Right. Well, yeah, Microsoft and Anthropic just had a deal like that, right? Right.
So those agreements and relationships and mutual outcomes are also indirect channel partnerships. They usually are all housed within the same system, right? So when Microsoft talks about its ecosystem of partnerships, we're talking the open AIs and the Anthropics and all the security tools that they integrate with, etc. And you're talking indirect resellers and you're talking cloud providers.
And everything available in Azure, I assume, which is essentially their AWS, you know, is AWS, but different flavor.
Microsoft WS.
I'm sure they'd love that.
Yeah, they're going to love this whole conversation. But no, to your kind of question, you can... lightly procured chat GPT specifically from an MSP, but to the kind of earlier conversations we've had, I think many of those partners are being heavily influenced by the big three hyperscalers to keep customers in-house.
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