How AI Is Reshaping IT Services from the Inside

**Peter Doyle** (0:00)
The biggest area of impact AI has had thus far has been improving individual or small team productivity. There's trillions of dollars of software infrastructure that's been built over decades that underpins the US and the global economy. AI impacting, integrating with this whole pool of critical systems and production environments is going to take a long time and new business models to do. And those business models are debatable across different categories, but this big $250 billion plus cut of IT and security services, I just think it is a cool place to start that pursuit. We have to remember 10 to 15 years ago, your internal IT team had to be standing next to a server to do something with it. This model has improved over the last 10 to 15 years for the most obvious reasons, internet, cloud, remote work, software generally getting better. As all of these technological trends continue and evolve, this next iteration of the MSP space can just take on a new form where it's very clearly impacting how companies operate through well-built software systems.

**Joe Schmidt** (1:13)
A hundred billion dollars, that's how big the managed service provider market is. These are the companies that keep IT and security running for small and mid-sized businesses across the country. Most people in tech have never thought twice about them. The model took shape in the early 2000s, when technicians still needed to stand next to a server. The cloud and remote work changed everything else, but the average MSP still runs on 30 to 35 stitched together software tools, with technicians waiting for tickets in a reactive loop. Now AI is accelerating and the gap is only widening. The conventional fix is to sell another SaaS product into the category or run a roll-up.
Neither gets into the guts of how these businesses actually work. This episode examines a different approach. Start as a services company on day one and build software into the operation iteratively without abandoning the humans who make it work. Joe Schmidt speaks with Peter Doyle, CEO of Treeline.

**Joe Schmidt** (2:15)
Today, we're joined by Peter Doyle, the CEO of Treeline. Treeline is a modern take on the managed service provider space. And really the IT services space, which a lot of people don't realize this is a sneaky big market. It's a hundred billion dollar market. And in many respects, is the backbone of the US software economy and technology economy, bringing these solutions and software providers to the small and midsize business. But that's just the beginning of the story. Peter, why don't you tell us a little bit more about what Treeline does?

**Peter Doyle** (2:39)
Yeah, yeah. Thanks, Joe. Glad to be here with you. That was sort of the first thing that fascinated me about this market is it's probably the biggest category in technology generally, like this whole cut of IT and security and now compliance services. But it's probably the least understood, especially from the Silicon Valley perspective. And so what we're trying to set out to do is basically say, well, with modern technology, modern tools, and now AI, how can we essentially reinvent this category, not fully depart from the services model, but inject software and automation and AI that sits next to humans to fundamentally transform this market and the model of how we service and customers? And I kind of recognize that the scope and sprawl of what's within this category is rather large, and that's why it's traditionally been a services category. And so traditional managed service provider or MSP will offer employee and asset lifecycle onboarding and offboarding users, help desk support for all of your employees who need help, insider threat management, endpoint security, helping you get through compliance observation periods and maintenance periods, SOC 2, HIPAA, CMMC, ISO, FedRAMP. The scope is huge.

**Joe Schmidt** (3:54)
Every acronym you can think of.

**Peter Doyle** (3:56)
Yeah, I made sure to start out with all the acronyms.

**Joe Schmidt** (3:59)
Good idea.

**Peter Doyle** (3:59)
But basically, you can't sassify that. You have to have people in the loop, and you still have to have technicians and expertise sitting alongside software. But instead of those technicians just using a bunch of software tools, how can software fundamentally and now automation and AI be a core part of that product and how we service customers? And that's what we're setting out to build.

**Joe Schmidt** (4:21)
Yeah, it's interesting. You talked a little bit about software and SaaS. And I remember when we first talked about this company, you know, a couple years ago, we were on a run through the Presidio, and you turned to me, my heart rate was about 178, and you said, Joe, SaaS is dead, which is a really silly take for two venture capitalists on a run to be talking about. But, you know, it was interesting. You kind of talked about that. You said, hey, there's a missed framing here. You know, people are kind of throwing everything out with the bathwater, with that analysis. Talk to me a little bit about the model that you settled on and why you think it's differentiated in this moment in time versus just everything should be an AI agent.