Kaseya's MSP partners are gathering at the Connect IT Global 2022 conference this week in Las Vegas. The event is especially timely, considering Kaseya's buyout of Datto, which is expected to close sometime this summer.
So what should MSP partners expect from Kaseya CEO Fred Voccola at the Connect IT Global 2022 event and beyond? Here are some educated guesses based on our experience covering the MSP software technology company for more than a decade.
1. Kaseya Business History: To understand where Kaseya is potentially heading, it's important to understand the company's business history. The journey so far has included:
- Kaseya 1.0 - The founder years (2000-2013): Kaseya was mainly an RMM (remote monitoring and management) software company at this stage. Leaders like CEO Gerald Blackie (now retired) and peers in the c-suite eventually and successfully positioned the company as an MSP software provider that helped partners to remotely manage customer networks. Executives like Dan Shapero (now president of TeamLogic IT) pioneered the company's MSP go-to-market and engagement strategy.
- Kaseya 2.0 - The rebuild years (2013-2015): Private equity firm Insight Partners acquired Kaseya in 2013. CA Technologies veteran Yogesh Gupta arrived as president and CEO. The company attempted to push hard into corporate IT departments, but the results were mixed and some MSPs felt alienated. Fred Voccola arrived as CEO in July 2015. He immediately engaged key MSPs and vowed to stabilize the business.
- Kaseya 3.0 - The expansion years (2016-2022): Under Voccola's leadership, Kaseya returned to relevance and began to grow again -- both organically and through acquisitions. Early moves involved buying Vorex and launching a PSA price war against ConnectWise and Autotask (now owned by Datto, and soon to be owned by Kaseya in 2022). Other key acquisitions have included Graphus, ID Agent, IT Glue, RapidFire Tools, RocketCyber, Spanning Cloud Apps, Unigma. and Unitrends. Meanwhile, a major cyberattack against Kaseya VSA in mid-2021 pressured the company's brand a bit, though Voccola has stated that the business momentum recovered very rapidly.
- Kaseya 4.0 - The mega merger years (2022 and beyond): Next up, Kaseya expects to complete its $6.2 billion buyout of Datto any day now. Both companies were growing ahead of the deal. And Voccola surely has a strategic plan to continue that growth post-deal. But, some MSPs are wondering if Kaseya can successfully integrate and retain key Datto employees.
2. Datto Business History: Here's a quick timeline recapping key Datto company milestones and business eras:
- Datto 1.0 - The founder years (2006-2015): Founder Austin McChord and initial company leaders disrupted the highly fragmented BDR (backup and disaster recovery) market. The initial target included such rivals as Zenith Infotech, which later imploded under a debt default. By 2013, Rob Rae arrived to drive the channel partner program forward. By 2015, Datto had emerged as a unicorn -- privately held and valued at more than $1 billion.
- Datto 2.0 - The merger years (2015-2018): Amid continued growth, Datto positioned itself for something bigger. One move involved acquiring Open Mesh for WiFi networking gear, though that deal never fulfilled its early promise. The bigger move? Private equity firm Vista Equity Partners acquired Datto in 2017, and tucked Autotask into the business. Austin McChord initially led the combined business, which had roughly 1,400 employees at the time.
- Datto 3.0 - The IPO years (2019-2022): By 2019, Tim Weller succeeded McChord as CEO. By October 2020, Datto launched an Initial Public Offering (IPO). The company has continued to grow as a publicly held entity, but the stock never quite took off -- perhaps because Datto's growth rate didn't keep pace with the public cloud world.
- Datto 4.0 - The mega merger years (2022 and beyond): Next up, the merger with Kaseya.
3. Kaseya-Datto M&A - Closing Day?: We don't know the exact date when Kaseya will close the Datto deal, but the progress report looks promising. When the deal was initially announced in April, both parties predicted that it would close sometime in late 2022 -- though fine print in the agreement outlined potential reasons the deal close may slip to 2023. Fast forward to June 2022, and no such setbacks have materialized. A Datto SEC filing states that the M&A deal is now expected to close this summer.
Among the variables to watch:
- Talent: How much headcount will Kaseya and Datto potentially cut post-deal? Kaseya had 1,834 employees and Datto had 2,095 employees listed on LinkedIn as of June 2022. Both figures have grown a bit the M&A deal was announced in April 2022. To be clear: The merger is not designed as a cost-cutting exercise. Rather, it's designed to drive growth. Still, it's a reasonably safe bet that some overlapping positions will be eliminated.
- Cybersecurity: How will the merged business prioritize security? Although Kaseya hired a CISO after the mid-2021 cyberattack, the company hasn't said much publicly about any potential changes to its security posture or software development practices. Meanwhile, Datto has an expansive security team -- perhaps several dozen employees -- who report into CISO Ryan Weeks. Note: We're not suggesting that Datto's software is inherently more secure than Kaseya's software, but generally speaking Datto has more aggressively communicated various steps to harden its business.
4. Kaseya-Datto Product Roadmaps: Kaseya and Datto have overlapping products on multiple fronts -- including:
- RMM (remote monitoring and management)
- PSA (professional services automation)
- Data protection (backup and disaster recovery, SaaS application backup, etc).
In terms of installed base with MSPs, Kaseya is likely stronger in RMM while Datto is stronger in PSA and data protection. Generally speaking, I don't expect Kaseya or Datto to wind down or "end of life" any of the overlapping product lines listed above, though I certainly don't know that for sure. Rivals such as ConnectWise and N-able have both proven that it's possible to have multiple products in the same market serving slightly different use cases.
5. Kaseya-Datto Executive Meetings: Last I heard, Kaseya and Datto had not formed a "clean room team" to discuss joint product roadmaps. But there have been joint executive-level gatherings between the two firms. If I had to guess, Datto CEO Tim Weller will exit the business once the deal closes -- though that's purely a guess on my part based on tracking similar M&A deals over the years.
6. Connect IT Global Conference: This event, set for June 20-23 in Las Vegas, should provide a bright spotlight for CEO Fred Voccola to describe the state of the MSP technology market, along with some chest-pumping about Kaseya's own momentum, along with the imminent Datto deal close. If the deal doesn't close in time for the conference, Voccola will need to carefully manage his comments because Datto remains a publicly held company pre-deal. Also at the conference, expect plenty of point-release updates for the entire Kaseya product portfolio. The company did a solid job announcing new features and capabilities during the 2021 event, and I'd expect a similar approach at this event.
7. What's Next: Stay tuned for updates involving this week's Connect IT conference in Las Vegas.
