What does an MSP need to succeed in the midmarket? I believe Datto may have found the answer through its board, expanded executive team -- and one of its most recent executive hires. And that could be good news for MSPs that are looking to step up beyond the traditional SMB customer base.
First, a little background. Datto, which offers business continuity solutions to MSPs, has typically designed its offerings for the SMB market. The company has been in high-growth mode, raising $75 million in Series B funding in November 2015. And the privately held company, which is profitable, now has a valuation that exceeds $1 billion.
Datto has vowed to grow purely through channel partners. Part of the strategy involves global expansion, as VP of Business Development Rob Rae has explained. Another piece of the puzzle involves product diversification -- including a forthcoming WiFi router for SMBs -- dubbed Datto Network Appliance (DNA).
Now, a third piece to the growth puzzle is emerging. I believe it involves midmarket MSPs -- and hands-on experience that Datto can potentially share with its partners.
Starting in the Boardroom
Take a look at the Datto executive team and the board of directors, and you'll find the diversification and clues. It starts with Founder and CEO Austin McChord -- an engineer at heart. Although McCord is an "under 30" executive leading a fast-growth IT company for the first time, the board includes executives who have experienced (and survived) the highs and lows of IT -- the dot-com booms, the busts and more.
The board lineup includes:
- Three key venture capitalists (Paul Sagan, Steve Herrod and Ted Coons) who have enterprise and midmarket experience with such brands as Akamai, EMC and VMware.
- Pat Gray, a CPA and PricewaterhouseCoopers veteran who have extensive experience consulting with fast-growth businesses that pursue IPOs.
- And Xerox CEO Ursula Burns -- a 36-year veteran of the copier and document management giant.
Extending to the Executive Ranks
Datto's executive ranks have also evolved in recent years, and now feature seasoned talent across finance, legal, technology and sales. But one name, in particular, has serious midmarket MSP experience.
That's where Chief Revenue Officer Brooks Borcherding enters the picture. His background features tours of duty at big IT companies and service providers -- AT&T, Avaya, Cisco Systems and Lucent Technologies. But his experience as CEO of NaviSite (2009-2013) and Senior VP at Time Warner Cable (2013-2015) are what caught my attention.
When it was an independent company, NaviSite offered managed hosting, managed applications and cloud services to more than 1,000 customers worldwide. When Time Warner acquired the company in 2013, NaviSite had 10 data centers across the U.S. and United Kingdom, with expertise in SAS 70 Type II and other major compliance mandates. The business also had around 570 people at the time.
Now, imagine that experience -- the journey Borcherding took as a midmarket and enterprise MSP -- shared across Datto's executive ranks and filtered down across the employee base. And then imagine that expertise expanding out to Datto's MSP partners...
More Signs of Expansion
Last week, I visited Datto's new headquarters in Connecticut. A four-floor buildout represents 180,000 square feet. Of Datto's 600 employees worldwide, roughly 370 are in that Norwalk, Conn., location.
The office space is state of the art, no doubt, but the little things are what caught my attention. For starters, Datto still shares KPIs (key performance indicators) on massive digital displays throughout the office. This has been a Datto trait since the company launched. Basically, anyone who works at Datto can see how the business is performing -- in real time -- just by looking at one of the displays.
The other attention grabber, quite frankly, was Borcherding -- and his experience at NaviSite. We spoke for a few minutes, informally, during my visit. We recounted the early days of MSPs, the emergence of cloud, and plenty more.
And I kept on thinking: Borcherding has already built what thousands of MSPs are still hoping to build -- an MSP that truly scaled into the midmarket and beyond. Can Datto tap into that expertise, bottle it and serve it up to the company's MSP base?
Overall, I sense that Datto is still an engineering company -- with CEO McChord and CTO Robert Gibbons leading roughly 100 engineers at the Connecticut headquarters. But the business conversation is evolving as well. It's more than a business continuity conversation. It's becoming a data protection conversation. And I think it's about to stretch from SMB up into the midmarket...
I'm not suggesting the road ahead will be easy. Competition looms around every corner. And we all know SMB companies that have stumbled or failed while marching toward the midmarket.
