ChannelPro publisher Michael Siggins sat down with Datto founder and CEO Austin McChord at the recent DattoCon 2016 partner event in Nashville, Tenn. In Part 2 of that interview, McCord talks about what areas partners want Datto to focus on, whether BDR vendors are in for the kind of consolidation now occurring in the RMM and PSA markets, and why Datto views its new emphasis on marketing as a way to help resellers land more business. This is an edited excerpt of that conversation. Part 1 of the interview is located here.
ChannelPro-SMB: You’ve been getting great feedback from partners on your new products. What trends are ahead for their businesses?
McChord: I think our partners are looking for more help in how to grow their business. I think we’ve been really reassured that our focus is in the right areas this year. The question that I ask partners all the time is, ‘are we investing in the right stuff? Are we trying to solve the right problems? Are we solving them fast enough?’ No, it’s never fast enough. But are the areas where we’re paying attention to, are those the right areas?
My biggest fear as a CEO is that we put our attention in the wrong place and miss the market. Because it does take just a continuous drumbeat of paying attention in order to stay on top. And so it’s been reassuring that all these releases are things that they actually wanted, and that’s a good thing. I think [partners] are seeing [that] definitely adoption of the cloud is continuing to increase.
The ransomware thing is probably the single most under-reported, under-publicized IT challenge that’s facing business in America today. And it’s amazing just how bad it is. MSP providers are on the front line of this and I imagine that there has to be tens of thousands of SMBs that don’t have MSPs, that are either just paying the ransom or suffering irreparable data loss. It’s not even a fair fight for those SMBs because ransomware is not some kid; it is a corporate thing, it is a company. There is a meeting going on at some company about improving their quarterly numbers of ransom collection.
And you look at it that some of the newer issues of ransomware, they actually have a customer service chat to make it easier for you to buy bitcoin to pay the ransom. And so small businesses, it’s not an even fight. There’s no way that they can really protect themselves.
The worst part is I think that they suffer silently because it’s horrifically embarrassing to admit that you got ransomware, or worse, that you paid it. And so I just think that it goes incredibly under-reported. You look in the news, you only see it [reported when it occurs at] a hospital or a university. And the reason why you actually hear about it at all is because they have a regulatory requirement to report it. But Joe-on-the-street small business owner, you never hear it. And they’re being fleeced and it’s insane.
ChannelPro-SMB: We’re seeing a fair amount of vendor consolidation in the RMM and PSA space over the last year. Experts have been predicting that the BDR market will also go through some of this consolidation eventually, too. What are your thoughts on what’s happening out there?
McChord: I think DR might be a little different in that it’s really hard to do well. It’s one of those things that if I need to back up one computer, it’s really easy. But if I need to back up a million computers, it’s a lot harder. And especially when you start adding cloud into the mix and all the other components, that—like if I run an RMM or a PSA, like I'm in the software sales business and I don’t really have an infrastructure cost.
Whereas when you run a 200-petabyte cloud spread across nine co-lo facilities, that’s like millions of dollars a month infrastructure operational cost. And so it really changes the dynamics of the business and it means that consolidation will probably be a lot slower if it occurs.
ChannelPro-SMB: You recently hired a new CMO and seem to be putting a big emphasis on marketing and and getting the message out to your partners and getting just the world to better understand you and the threats that you are dealing with. How is that changing the way you position yourself?
McChord: It’s kind of interesting how these pieces line up. The No. 1 thing with our partners is why are they here? Because they want us to help them grow their business. And so it turns out one of the ways we can actually help them grow their business is to better market who the heck we are. Because a lot of times when a partner says, “I want to put this Datto appliance in,” customers have no idea who we are. Then it’s a much harder sale for them. And so what we’ve found is that if we are smart and strategic about getting the word out, it can become much easier for them to sell the product.
And we can generate end user leads, which we can distribute out to them. And so we think that also can bring a lot of value and help them grow their business. There’s very little direct value to Datto in having the world know who we are or what our story is, and almost all of the value is reaped by our partners in that we can help them with the sales cycle because it’s easier, because we’re now a known and trusted name, and we can provide them with leads and tools to help them grow their business.
I think just as companies get bigger, a lot of times the pace of innovation slows. I come in to work every day to ensure that will never happen at Datto. And I think that as we get bigger, you can see the mountains that we are climbing only get larger, and the rate that we’re able to deliver for our partners hopefully only gets faster.