#59 – From the Trenches: Gross Margin Truths & The Future of MSPs (Mordy Hackel – KJ Technology)

In this episode of From the Trenches on the BMK Vision Podcast, Josh Peterson sits down with Mordy Hackel of KJ Technology for an operator-level conversation about a topic most MSPs underweight until it’s too late: gross margin is not a finance metric—it’s the control panel of your business. When you can’t trust gross margin, you can’t trust hiring decisions, you can’t trust service capacity, and you can’t even trust whether “growth” is helping or quietly hollowing you out. This is the kind of thinking that sits underneath the Vision operating system: leadership decisions get cleaner when the economics are visible.

Mordy’s story matters because it follows the same arc many MSP owners live through: you start by being competent, demand pulls you forward, and you accidentally build a business around heroic effort. It works—until it doesn’t. As complexity increases, the “muscle and feel” approach collapses. Suddenly, you’re making decisions a month or a quarter after the fact, drowning in reports, and realizing you can’t zoom in fast enough to find where margin is leaking. Mordy frames gross margin as the simplest reliable signal in the noise—one number that forces truth into pricing, delivery, and cost discipline.

The conversation also goes past the spreadsheet and into execution: utilization as a perishable inventory problem, the operational leverage a dispatcher creates, and why time entry is not just billing hygiene—it’s business intelligence and legal defense. If you want a practical lens on why MSPs stall at $1.5M–$3M and what changes when they push through to $5M–$10M, this episode gives you the blueprint-level thinking—and it pairs naturally with BMK’s work on accurate time entry and dispatcher-led optimization.

Why gross margin is the “truth metric” in MSP leadership

Most MSP owners treat gross margin as accounting output. Mordy treats it as operational reality. The difference matters because service businesses do not get unlimited attempts. When capacity is tight and labor is expensive, you don’t have the room to be wrong for long.

Gross margin forces three leadership behaviors that weak operators avoid:

• Pricing discipline: you stop confusing “what the client will pay” with “what the work costs.”
• Delivery discipline: you see which agreements are funded and which are quietly subsidized by heroics.
• Decision speed: you can diagnose the business before the quarter is over—while you can still correct.

The hidden reason MSPs stall at $1.5M–$3M

At small scale, the owner “knows” the business because they touched every deal, every procurement decision, and every messy client exception. At mid-scale, that tactile awareness disappears—but the owner keeps making decisions as if it’s still there.

That’s where margin becomes the diagnostic. When you can’t reliably drill into what’s driving cost and delivery, you default to stories. Stories feel true. The P&L is true.

• If margin is soft, you don’t have a growth problem—you have a funding problem.
• If margin is inconsistent, you don’t have a sales problem—you have an agreement design problem.
• If margin is “fine” but cash is always tight, you don’t have a revenue problem—you have a delivery and allocation problem.

Utilization is perishable inventory, not a “tech behavior” issue

One of the sharpest mental models in the episode is Mordy’s framing: technician hours are perishable. If you don’t bring them to market and consume them, the inventory disappears forever. That makes utilization less like a KPI and more like an existential constraint.

But the episode is equally clear that utilization can become a blunt instrument if it dehumanizes the business. The goal is not to turn technicians into hour-machines. The goal is to build a system where wasted capacity is the exception—not the default.

Why dispatch is an economic role, not an administrative role

MSPs often treat dispatch like a scheduling function. In reality, dispatch is a margin-protection role. A strong dispatcher reduces task-switching, eliminates idle gaps, and prevents the silent killer: technicians spending prime hours doing non-technical coordination work.

In practical terms, dispatch maturity does three things:

• Protects technician focus by removing prioritization decisions from the people doing the deep work.
• Improves client experience by tightening first-touch quality and reducing “repeat your story” escalations.
• Improves data quality by making time entry a natural byproduct of workflow instead of an end-of-week punishment.

Time entry is not about billing—it’s about truth, defense, and leadership clarity

The MSP industry periodically tries to declare time entry obsolete (“We’re managed services—why track time?”). The episode dismantles that myth in the only way that matters: operationally.

Time entry is what makes the rest of the business measurable:

• It validates whether agreements are properly funded.
• It turns utilization into something you can manage instead of guess.
• It creates continuity in documentation so the next technician isn’t forced to relearn history.
• It becomes a defensible record when something goes wrong and accountability matters.

The real shift: MSPs must sell outcomes, not repairs

Mordy makes an observation most owners feel but don’t articulate: “fixing” is table stakes. The industry is moving (whether owners like it or not) toward a model where strategic relevance matters more than technical competence.

As systems become more stable and users become more competent, the MSP that survives is the one that helps leadership answer higher-order questions:

• What is the risk we’re carrying, and what is the plan to reduce it?
• What are we funding next year, and what gets deferred?
• Where does technology create advantage—and where is it just cost?
• How do we translate technical complexity into executive decisions?

Episode highlights

• 00:02:32 – Mordy’s path from finance to founding an MSP in the late 1990s.
• 00:07:10 – Discovering managed services and early pricing models in the 2007 era.
• 00:21:50 – Why gross margin is the clearest signal of MSP business health.
• 00:29:24 – Utilization, time entry, and the perishable nature of technician hours.
• 00:37:50 – Dispatch ownership, client experience, and reducing operational friction.
• 00:52:44 – MSP value beyond break-fix: advisory services and strategic relevance.
• 01:02:19 – Leadership maturity, vision, and the evolving role of the MSP owner.

About the guest: Mordy Hackel

Mordy Hackel is the founder of KJ Technology, a New York–based managed services firm with decades of experience supporting complex business environments. Mordy is known for his thoughtful approach to MSP economics, gross margin discipline, cybersecurity fundamentals, and helping business leaders translate technical complexity into clear, actionable strategy.

Connect with Mordy on LinkedIn →

Frequently asked questions

Why is gross margin so important for MSPs?
Because gross margin tells you whether your agreements are actually funding delivery. Without healthy gross margin, you don’t have the capacity or budget to hire, market, improve service, or build leadership leverage.

What’s a good way to think about utilization?
Treat technician hours as perishable inventory. Every unplanned gap is margin that can’t be recovered later, which is why dispatch and workflow design matter as much as technician behavior.

Do MSPs still need time entry if they’re on fixed-fee managed services?
Yes. Time entry isn’t just for billing—it’s what allows you to validate agreement health, understand capacity, improve documentation, and create defensible records when issues escalate.

Why do MSPs struggle to scale?
Because services depend on people, and people are not infinitely scalable. The MSP that grows cleanly is the one that builds systems, visibility, and discipline that reduce reliance on heroics.

What’s changing in the MSP model right now?
“Fixing” is becoming table stakes. MSPs that remain relevant will increasingly win through advisory leadership, clearer business communication, and measurable outcomes—not just technical competence.

Want to continue the conversation?

If you’re an MSP owner who wants cleaner economics, tighter operational execution, and a leadership model that doesn’t depend on you personally, explore Vision or apply to be a guest on the podcast.

👉 Apply to be on the BMK Vision Podcast
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About the host

Josh Peterson is the CEO of Bering McKinley and host of the BMK Vision Podcast. Through the From the Trenches series, Josh leads candid conversations with MSP operators focused on financial discipline, operational clarity, and building durable businesses.

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