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October 21, 2020 |

Datto Goes Public. What Comes Next?

Managed services powerhouse Datto is now a publicly traded company. In this Q&A with ChannelPro, Senior Vice President of Business Development Rob Rae (pictured) explains what it means for partners, for Datto, and for the entire managed services industry.

It’s official. Datto is now a publicly traded corporation. 

Some three months after it confidentially filed for an IPO, the RMM, PSA, BDR, and networking powerhouse sold 22 million shares at $27 each this morning on the New York Stock Exchange, raising some $594 million in fresh capital.

The important milestone comes three years after the company was acquired by private equity firm Vista Equity Partners and 13 years after its founding by Austin McChord, who was then an undergraduate at the Rochester Institute of Technology. It also arrives what could be just months before major Datto competitors follow the same path. SolarWinds is thinking seriously of spinning off its SolarWinds MSP unit as an independent, publicly-owned company next year, and Kaseya has plans for an IPO of its own in 2021.

What does today’s news mean for Datto, which now trades under the ticker symbol MSP, for Datto partners, and for the entire managed services industry? Rob Rae discussed those and other topics with ChannelPro today. Here is a lightly edited transcript of those remarks.

ChannelPro: This is obviously a huge deal for Datto, but what does it matter for partners?

Rob Rae: I think it’s a reflection upon the market for managed services. It kind of feeds into the whole MSP growth [and] managed service providers being essential to SMB. It matters because this allows us to continue to expand and develop and innovate and all those things that we can do to help MSPs deliver better services and support to their end users. So I think it matters significantly.

ChannelPro: What will be different for partners going forward?

Rae: The goal here is a couple of different things. It’s to elevate the MSP brand, to bring more awareness to the channel about the services that MSPs actually deliver, and through COVID it’s been labeled essential services that SMBs need from MSPs. So I think it helps elevate all MSPs worldwide and elevates what they do and that essential role that they’ve got. 

For us, it allows us, again, to continue to expand the service that we provide them today and get even better at that. It allows us to innovate and find new technologies that we can continue to bring to the MSP market so that they can continue to deliver better service to those SMBs.

ChannelPro: Do you have any specific plans for what you’ll be doing with the capital you’ve raised?

Rae: Obviously, the continued focus is going to be around the actual MSPs themselves, the MSPs that we’re working with, and then growth of those MSPs. Additional investment will be new technologies, new services, potential acquisitions, all again to help MSPs and find opportunities where we can to bring new technologies, new innovation to those managed service providers.

ChannelPro: How big a part of the picture do you anticipate acquisitions being?

Rae: I’m not absolutely sure…New technologies, innovating what we’ve already got, building on the services and the support that we provide, old things that MSPs can use to route to market to that SMB market, I think that’s where the focus is going to be. And that’s basically where our focus has been up until this point. We’ll just continue on that path.

ChannelPro: How soon should partners expect to see anything new materialize?

Rae: We’re continuing to strive to make MSPs better every single day…The managed services market continues to grow and Datto continues to grow, so there is some immediate impact from the perspective that we’re going to be able to continue to provide more support and continue to scale what we’re actually doing. As far as impact on new services, that’s going to come along for sure.

ChannelPro: Are there any leadership changes associated with this?

Rae: Nothing I’m aware of.

ChannelPro: Do you have any concern at all about being on a quarterly reporting cycle with Wall Street for the first time?

Rae: I don’t think so. If anything, I think what that does is it actually, again, demonstrates the strength of the MSP market. The growth that we’ve all seen in the managed services market is going to be reflected in that, and that should actually add continued strength to the offering, to what MSPs are doing in their markets, and just overall the impression of what they are doing for small, medium businesses out there.

ChannelPro: Is there anything that going public enables you to do that you couldn’t do before?

Rae: I think what it does, and we did this with the whole ticker symbol, was to be able to bring awareness that there is this channel of managed service providers out there, IT providers that SMBs need and will continue to need as technology innovates, as technology changes, as it becomes more complicated and in some cases more dangerous when you look at things like ransomware and malware and all those things that are out there. 

The digital transformation that SMBs need to go through, it was happening pre COVID. COVID has only escalated it even more. I think, again, what this all does is just raise awareness that there is a channel of people that can help. There is a channel of people that do these services, have the experience, the expertise, the support to give that peace of mind to that SMB market.

ChannelPro: When the word first went out that you were going to be doing an IPO, what kinds of questions and feedback did you get from partners?

Rae: We’ve worked with the channel for a long time now, and this is a partnership and it’s a true partnership. And I think there’s always concerns from MSPs. This is a classic example of vendors and MSPs working together. It’s like, how is it going to change? They rely on us as a vendor to provide technology and support and loyalty. And you always worry about these things as we get bigger and bigger, because they rely on our technologies to deliver their services. So there’s always that question in regards to what direction are you guys going to head in? 

I think over the years, what MSPs have found and what our partners have found is that we’ve continued to stay loyal to them, we’ve continued to help them grow their businesses, we’ve continued to innovate our technology, continued to provide better support…That is what we’re going to continue to do as time goes on, regardless of how big we get or where this all goes. We’ve always been there for the MSP and we’re going to continue to always be there for the MSP.

ChannelPro: We’ve talked about the IPO from the perspective of partners and what it means for them, but what does it mean for you personally and everyone else inside the company?

Rae: It’s an immensely exciting time for us. We’ve been having celebrations in each of our offices throughout the day today, and the overall spirit here at Datto and the overall commitment from everybody on the frontline like myself talking to and working with MSPs every day, to our back office folks, to our tech support team, everybody’s so excited about this and the fact that we can reconfirm our commitment to the channel and to managed service providers specifically. 

Myself personally…there were times where we were still fighting the good fight and trying to promote MSP everywhere and getting SMBs to outsource IT and work with managed service providers, and for it to come to fruition to this point where we have the ability to go to market and talk about and brag about the relationship that we’ve got with this channel and continue to be loyal to it as we have, that is all I ever wanted out of this. And it just confirms that even personal decisions I made back in the day to choose this channel and this community to work with have just been amazing to me, absolutely amazing to me. I’m super pumped.

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