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April 19, 2022 |

Datto Partners on Kaseya Acquisition: Time Will Tell

In a conversation with ChannelPro, and each other, three experienced Datto partners share their hopes and fears for the future, and explain why they’ll be sticking with the tools they use today until they see a reason to change course.

The news of Datto’s acquisition by Kaseya is scarcely more than a week old, and partners of the two companies, like their competitors, are still digesting what the giant deal portends for themselves and their industry. In this abbreviated and lightly edited roundtable, three experienced Datto partners share their initial thinking on their hopes and fears for the future.

Vince Tinnirello is CEO of Anchor Network Solutions, a Denver-based managed IT service provider who has served on Datto’s partner advisory council.

Brian J. Weiss is CEO of ITECH Solutions, an MSP in San Luis Obispo, Calif., and a current member of Datto’s partner advisory council.

Scott Beck is CEO of BeckTek, a cybersecurity and IT services firm in New Brunswick, Canada. A former Kaseya partner, he switched to Datto last summer.

ChannelPro: This story is still fresh, but based on what you know now, does this feel like good news, bad news, or something in between for Datto partners? 

Vince Tinnirello: As a partner, I always try to recognize that this is a business being acquired by another business, and our interests don’t always align. That’s just the way it is. So as a partner, I just have to accept it and hope for the best.

In terms of will this be good or bad for partners, I really just think that the jury is out … I think it’ll be really important to see if [Kaseya lets] the experts at Datto continue to be experts or if they try to steer them to the big corporate way of doing things. Fred [Voccola, Kaseya’s CEO] suggested in his interview with you that they’re going to let them continue to do what they do, but we’ll see.

Brian J. Weiss: I had a ton of people reach out to me [last week] and I didn’t have the reaction I think people were expecting me to have, and I think it’s because I looked at the big picture. I always say this when something like this happens: it’s out of your control. It is what it is. And if you look kind of bigger picture, it’s almost inevitable that this is going to happen to the space and that eventually a consolidation is going to happen. My big concern is as more and more consolidations happen naturally, you get more of an enterprise feel from your vendor and that’s really where a lot of these companies like Datto stood out. You didn’t get that big enterprise-y feel working with them.

So then the question becomes, if I’m going to get an enterprise feel working with a channel-only vendor, why don’t I just work with enterprise vendors, especially when a lot of these channel-only vendors have some serious gaps or issues with tech debt. There’s enterprise security features missing. There’s vulnerabilities that require full code rewrites. If you think about when these platforms were developed years ago, they’ve got tons of code in them that they probably wish wasn’t even in there.

So here’s the question: If you get two companies that have a bunch of tech debt together, are you also going to consolidate resources that should be working towards eliminating that tech debt? Because that means it’s going to get eliminated at a much slower rate. So what I’m hoping ultimately to see is that this injection of cash from Kaseya allows Datto to do what they do best, and if anything focus on getting rid of more tech debt.

Scott Beck: For me, I was a Datto backup partner for a long time. Last year, Kaseya had an unfortunate incident that forced many of my clients to say, ‘get that stuff off our computers or else.’ So I went, ‘well, who should I look to?’ I’ve moved to Datto because it was channel-only and I already had a relationship that made it easy. So when the announcement came out, I’m going to be honest, I got a little bit twisted up going, ‘oh, man, I’m back in that camp, without any consultation.'” It was kind of a shock.

But then I stopped and started thinking about it. Let’s take a look at the rest of the channel. ConnectWise bought Continuum, and as we take a look at how they’ve been developing, Continuum’s RMM is now the ConnectWise RMM. We take a look at [N-able], they’ve had a couple of different RMM tools as well, and they’ve kept them separate. So it’s really too early to say how this is going to play out with what Fred’s going to do.

I’ve met Fred many times. I’ve heard him speak several times. When he came in, he took over a ship that was in trouble and had a lot of serious public relations issues within the channel, and I always admired the fact that he went out to events and stood there on stage and took it on the chin. I went, ‘well, that kind of sets them apart a little differently.’ Now, does it make me warm and fuzzy that this is happening? No. Does it give me hope that maybe Datto as a flavor is going to stay? I’m hopeful. That would be an amazing thing. But we’re going to have to wait and see.

And look, it’s not closing until the second half of this year. So by the time it closes and they start integrating and working out whatever magic that they have behind the scenes … it’s going to be another 12 to 18 months before we really get a clear picture of what direction they’re going to be going in.

ChannelPro: What do you hope could come from this that would be good and what do you fear might come from this that would be bad?

Weiss: I want to get more into the enterprise space. It’s not very popular among the MSP channel when they hear me saying, ‘hey, I want to sell channel-only products to the enterprise space.’ But I want to do it as the enabled MSP doing the reselling, so technically they can stay channel focused.

So what’s the writing on the wall? It’s inevitable [that Datto] went public and inevitable that there’s consolidation. Isn’t it also inevitable that at some point in time, they’re going to get to the point that Microsoft’s gotten, where they just realize MSPs are never going to sell their products fast enough? [Microsoft doesn’t] care about us as much. They see us as almost a hindrance in some cases.

So if a company grows and grows and grows and has to meet shareholder expectations and they’re in a channel that’s already consolidating that they’re telling people they’re not going to sell outside of, we have an opportunity right now to develop a channel of MSPs that are willing to sell to enterprise. And if we can develop it out well enough and sell it fast enough, hopefully we’ll get to a point in the future where they don’t turn into Microsoft feeling like MSPs are a hindrance to meet the numbers they need to meet.

That’s what I’m hoping to avoid, and that’s an opportunity I see that I want to try to get involved with Kaseya and Datto and try to seize and kind of pave the way for other MSPs to follow, because there’s a huge opportunity. One enterprise client I bring to Datto could equal one MSP’s full book of business, it’s those type of numbers. So that’s one thing that I’m hoping to get as an opportunity from this.

Tinnirello: I hope the opportunity [for Datto] to continue to develop products, especially on the PSA and RMM side, where I think there’s a lot of opportunity, I hope that will continue to happen, and maybe the acquisition and integration of some other products that we use.

In the conversation that you had with him, Fred said that he doesn’t think customers are asking MSPs about the individual products [that Kaseya makes following last summer’s ransomware incident]. I disagree because I’ve talked to them and they absolutely did ask if we had any SolarWinds products and they absolutely did ask if we used any Kaseya products. I hope that doesn’t become an issue when a prospect is considering an MSP…

My hope is that the cash infusion will just help take these products that are really important in running our business to the next level. There are some products that both Kaseya sells on their own and Datto sells on their own that I’m not as worried about. I just want to see good things come out of the investment into [RMM and PSA], because they really are the lifeblood of our business.

Beck: My fear is about, selfishly, the support aspect. I’ve gotten support from both teams. I know which one is certainly more responsive and faster to help me resolve issues for my clients, and ultimately that’s what we’re selling. We’re selling peace of mind to our clients that we’re going to help their businesses be successful and be profitable, and we expect our players that we decide to partner with to also be like-minded. And I think anyone that’s listening to me talking right now knows exactly what I’m talking about as to which team currently is much more responsive to getting things solved than the other.

So my big fear is will Datto support continue to be as superior as it’s been and will there be stability continuing on with the partner reps? I’ve heard from a few others and I know I’ve experienced it—in one house I had new reps pretty much every couple of months, and just as you were starting to get a relationship, they were gone. On the other side of the house, I’ve had the same rep since I joined them, and it’s been an amazing partnership …

So these are some of the selfish concerns that I’ve got. What’s the impact going to be to my ability to help my clients and how much change and turmoil and chaos is this acquisition going to now bring for us to have to manage?

ChannelPro: Is there anything positive you can see coming from this?

Beck: [Kaseya is] going to have a bigger voice because they’re going to be a much bigger player. So I’m hoping that can play to our advantage in many areas. I know in the past when Microsoft has had some decisions overturned, that usually was because some other big players went to the table and said, ‘hey, Microsoft, what the heck?’ Will this consolidation be able to help with some of those big players? I don’t know. That would be a hope, that we’ll get a bigger voice at some of those tables.

ChannelPro: Brian, I know you’re thinking a lot about what this whole thing feels like for the people at Datto. What would you tell your fellow MSPs about that?

Weiss: I feel kind of selfish myself, because I didn’t think about that initially. I was, ‘me, me, me first’ … And it’s sad. I’ve heard stories of Datto employees crying after what they’ve read, because Datto employees love Datto … So the employees at Datto are going through the same thing MSPs are going through right now. They didn’t know about this ahead of time. This is kind of last minute, and they’re wondering the same things. What does the future look like at Datto? How are things going to change? And it’s really kind of up in the air, and we’re looking for Kaseya to take the lead and kind of show us, hopefully through action not just words, what’s going to happen.

I guess the other thing I wanted to make sure I spoke on is the last thing anyone should be doing is a knee-jerk reaction of rip and replace over this news. The sale hasn’t even happened yet, and we owe it to our employees, our clients, even other MSPs to not cause unneeded turmoil.

Beck: 100%.

Weiss: We’ve got to just let time pass and look at what they actually do.

Beck: I’m not going to name names, but I reached out to several of my contacts—lower level, upper level—at Datto, and I got the same feel back from many of them, which is that internal messaging has been very positive … They’ve been [hearing] not a lot of change to operations on a go forward basis. Things will be pretty much situation as normal. Now that sounds wonderful and I do believe that’s exactly the internal messaging that they’re getting, but I’m going to go back to your point, Brian. We’ve got to wait and see. It’s at least 12 to 18 months before we really see how this thing’s going to play out fully.

So yes, I’ve seen many threads and comments around the Internet about it’s the end of the world. I think it’s way too early to be predicting that as yet, and if the internal messaging that their employees are getting falls in line with what Fred is publicly saying, I’m not saying things aren’t going to be bad, but it’s probably not as bad as many of us immediately jumped to the conclusion of.

ChannelPro: So what’s your plan for the immediate future?

Tinnirello: No changes. The easy thing is to stay off the Internet. That’s an easy stress reliever … I’ve stayed away from all the nonsense on Reddit and here, there, and everywhere. I’ve been through this before with Autotask and Datto. I was partners of both. These things happen. It’s not unique. I lost good friends at both companies. The reality is change happens. That’s the way things go … We’re just going to keep focused on making money and doing what we do here and using good tools. And these products are great unless anything goes off the deep end, which I doubt, because the people behind them are there cranking away. So no plans to change any products at all.

Beck: For myself, it’s stay the course. Let’s see how this plays out. There’s no reason to do a knee jerk and go through the pain of having to retool all of our staff training, to push out new products to endpoints, to get clients used to new stuff again. In my opinion, it’s way too early to go through that pain of change unless something drastic forces our hand.

Weiss: I’ve vetted most of what’s out there. I like what Datto has to offer. There’s some enterprise security needs I have that I’m trying to get on the roadmap. That might be the only thing that might make me make [me reconsider]. If I don’t see this get done quick enough, I’m going to have to go a different route … And, you know, when I talk about enterprise security, this could be for an MSP that has a client with 10 users that needs enterprise security because that client services maybe the DoD. It’s all about supply chain these days, and enterprise security is needed even with the smallest of companies if they’re in the supply chain of some sort of regulatory compliance. So what I think you’re going to start seeing is some MSPs are going to start having to switch tools because of the needs of their end clients if these channel vendors can’t look toward the future and understand that that’s a need.

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