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Kaseya CEO explains the move for Datto

Following the recently announced acquisition, the boss at MSP specialist Kaseya speaks to MicroScope about the context for the deal and why it was attracted to its rival Datto

The managed service world is still absorbing the announcement that Kaseya is acquiring Datto for $6.2bn, but even before the deal closes, the firm’s CEO has shared the motivation behind the move and his excitement for the deal.

It will be a few more weeks before the acquisition is completed. Datto is still currently an independent business, and so Fred Voccola, CEO of Kaseya, has to be careful with his comments.

But even with those restrictions, it is clear that this move has been driven by a desire to be the most complete provider of tools and services for the managed service provider (MSP) channel community.

The context

Before any specific conversation about the Datto deal can start, Voccola puts the move into context and reasserts his belief that managed services is the route to the small and medium-sized enterprise (SME) market, adding that it has a bright future.

“Our view of the world is pretty simple – we have a view that small to mid-sized businesses around the world are spending more and a larger percentage of their revenues on IT and security every year,” he says.

“The rate of growth of the IT and security spend of SMEs is growing about six times that of global GDP. Most small to mid-sized businesses get their technology from MSPs, so the MSP sector is exploding. It’s probably the best place to invest.

“Our mission as a company is to provide a platform [and] software kit that allows Kaseya MSPs to be the fastest growing and the most profitable MSPs in the world,” he adds.

The complete platform approach has been one that Kaseya has been pursuing for the past few years, having previously made acquisitions to support that aim. Voccola lists the benefits as being able to offer a single source of technology that reduces complexity and vendor fatigue, as well as its integration at a workflow level, which is not always an approach taken elsewhere in the market.

“By [making] workflow integrated, we make the technician so much more efficient. If you think about an MSP, the more efficient a technician, the more profitable the MSP by default. It’s like the number one thing – the better the service, the better the MSP.”

He adds that a final attraction of its approach is that it is often 30-50% cheaper than competitors.

Why Datto?

Having painted a picture of the MSP market and where is sits, the natural question is to look closer at the plans around Datto to understand what it will add to the mix.

“So, why Datto? First off, Datto is a kick-ass company; it’s synonymous with ‘MSP’. It has a great culture, a great brand, great technology, great products and great people,” says Voccola.

Understandably, competitors have already started to muddy the waters to try to raise customer concerns – particularly those of Datto users – that things will change after the deal, but Voccola says the strategy does not involve that happening.

“We are going to support all products of Kaseya and Datto. People say, ‘Well, you’ll have two PSAs [professional services automation] to RMMs [risk management models]’. Yes, we will!” he says.

The reason is straightforward – it is going to be more sensible running the two options than causing customer upset by forcing a change. Voccola accepts there will be costs associated with keeping engineering and product support going, but that’s a price worth paying when faced with the alternative.

“We are not planning to force people to migrate or choose one or the other. We’re not going to eliminate the choice, we’re going to give the choice because all products will be supported and all products will be integrated into IT Complete,” he says.

What can we expect?

Although it is too early to talk more specifically about plans after the deal has closed, it is possible to look at what has happened with other acquisitions that Kaseya has completed and draw some conclusions.

“In every acquisition we’ve made, we’ve done several things. One, we’ve substantially increased the investment in product and R&D [research and development] and we’ve kept the brand,” says Voccola. “We’ve kept the entire workforce – no layoffs, no mass firings, no office shutdowns. In every case, the executive team of the company we’ve acquired has joined the executive team of Kaseya.

“[In] every single company we bought, we’ve made their products more affordable [after we bought them] – we’ve kept licensing models and we made products more affordable literally every time,” he adds.

Market reaction

Whenever a deal of this size and importance is announced, competitors look to exploit it to sow seeds of concern among customers in an attempt to gain fresh users and partner defectors in the weeks of uncertainty before a deal closes, and the strategy becomes more public. 

Competitors have suggested that there are reasons for MSPs to question their allegiances. Voccola has seen and expected it, and he believes that his competitors are only doing what they should in the current circumstances.

“A lot of my competitors – all 250 of them – are smart, aggressive and good business people. So they’re doing what they should do, and they’re trying to sow more fear, doubt and uncertainty so they can take advantage. I don’t blame them. That’s what they’re supposed to do. If they didn’t do it, I [would wonder] what’s wrong with them,” he says.

“It’s my job and our job to get the message out. Because Datto is public, we can’t say every last little detail as to why it’s going to be awesome for Datto and Kaseya customers, and for every customer, every MSP out there.”

He adds that Kaseya would not be spending billions of dollars on a company just to screw up what made it so valuable and liked by MSPs. There is excitement about bringing on board more talent, as well as access to increased expertise and leadership qualities that can be used across the wider business.

“Our goal is to take the good and make the whole better. The next year is going to be a lot of fun. Kaseya has a culture that is customer- and employee-centric. Over 90% of our managers at Kaseya – manager, director or vice-president – have come from acquisitions and internal promotions. People really like working here,” he says.

“We’re not buying it to change and break it. I think when people initially hear about it, they go, ‘Oh my god, what are they going to change?’. [We’re not going to change] because we love Datto,” he concludes.

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