[58] The Kaseya Acquisition of Datto

Welcome to PSA Impact, your podcast for all things PSA, RMM, and MSP, with your hosts, Rayanne Buccianico and Chris Timm. Learn how to get the most out of your PSA tool and manage your business by maximizing profitability and increasing efficiency within your MSP business. Let's listen in. Hi, everyone, and welcome to another episode of PSA Impact with your hosts, myself, Chris Timm, and my co-host, Rayanne Buccianico. Hey, Rayanne.

How are you doing? I'm doing great today, Chris. How are you doing? I'm very well. Thank you.

It feels like it's been weeks since we've spoken. But anyway, so what is it that you wanted to chat about today? So I think today I'd like to talk about the big news in the industry. I'm sure you've heard about the big news. Oh, you must mean DattoCon is back on for this year, right?

It's in September, I think, in Washington, D.C. Yeah? Absolutely. That's the big news. That's what you've got from this, right?

From the news. So no, joking aside. Well, you mean the other big news. The other big news, the big elephant in the room. Let's talk about the Datto acquisition.

Right. What are your takes on it? What do you make of it? I'd be very interested to hear your thoughts around not just the acquisition, but also some of the things we've seen on some of the forums, what people are saying about it and things like that. Right.

So earlier this week, it was first thing Monday morning. I'm sitting at my dining room table and I'm eating breakfast and I'm checking my emails. And here comes this email from channel E2E and it says, breaking news, Kaseya acquires Datto. And I about fell off my chair. Right.

Spill out your cereal. Who would ever have seen that coming? So my first thought was, wait a minute, are you sure they didn't get that backwards? Right. Because it seems like it should have been the other way around.

Datto is the public company, Kaseya is a private company. And so you would think, or at least it was my impression that Datto was the larger company and it would have made more sense for the big fish to swallow up the little fish. What were your first thoughts? Well, my first thoughts were exactly the same. I was like, I had to double take and reread the article because I actually, well, firstly, I looked at my calendar again and thought, are we the 1st of April?

And this is like some kind of elaborate April Fool's joke. I did the same thing, like, wait a minute, is it April 1st? I'm like, have I missed something? Was this article out on April the 1st? But the thing that shocked me even more than that was the price tag, $6.2 or $6.9 billion.

I'm like, that is ludicrous, that is insane amount of money. I know. I can't even fathom that many zeros. Yeah. And actually, it surprised me quite a lot as well, the fact that it was Kaseya that acquired Datto.

And I was actually had the same surprise when it was the other way around, when Datto acquired Autotask because I actually thought at the time that Autotask was a bigger company, well, bigger in terms of more well-known, you know, Datto was some kind of, you know, smaller company at the time. And, you know, they then acquired Autotask and I remember double-taking at the same time as well and like, have I actually read this correctly? And now, you know, I see that, as you say, you know, Datto is the public company, they're listed on the stock exchange, all that kind of stuff, and then to be acquired by Kaseya. Now, well, I had some speculations that Datto was going to be acquired only because I am a shareholder of Datto and, you know, as a shareholder, you get all the news of what's going on and because they have to ask shareholders. So I got an email basically saying, you know, there's an acquisition on the cards.

Would we as shareholders agree to an acquisition? I mean, I'm small fry as far as shares are concerned, so it actually makes no words whether I'd said yes or no, so I kind of ignored the email. You know, and I'm not even certain that I saw that email because I'm also a shareholder in Datto. And one of the things I can say definitively is that after the announcement was made on Monday, my stock went up about $10 per share. So yeah, exactly.

And I mean, I'm just looking at the spike now and it's literally gone through the roof. So which is a good thing in some ways. But let's get back to the whole thing, Kaseya. Once I got up off the floor, the first thing that I thought was Kaseya has really struggled with their perception in the channel over the past year, right? Their breach last summer didn't help matters and their aggressive way of doing business with their lock-in contracts and, you know, they're really difficult to get out of once you're in a contract with Kaseya.

I know that they've had a lot of bad publicity and a lot of bad PR. The people just don't want to do business with them. And I've been seeing that on Reddit probably all week long, you know, and I saw it on the ASCII group. I saw it on Reddit. I saw it on Facebook.

But if you think about it, Chris, if Datto had acquired Kaseya, they would all be celebrating the fact that Datto was taking charge and going to turn Kaseya into a viable company or a company with which they would want to do business again. So it almost stands to reason, well, if you would find it acceptable in one direction, but not in the other, you have to ask yourself why. Because if one company would boost the other up, now you're saying, well, just because that other company bought this one, is that going to bring Datto down? I don't think that that's really the case. And I feel like, you know, when you're going through the social media, you know, groups and the MSP on Reddit and all of the Facebook groups and so on and so forth, I think there's just a lot of raw emotions going on, you know, and if you stop and step back for a minute and you're like, okay, you know what?

We made it through NCE. We made it through the Autotask Datto acquisition. We made it through the ConnectWise conglomerate and ITGlue, you know, Kaseya picking up ITGlue. You know, we all survived. And guess what?

We're going to survive this one too. Absolutely. My first reaction or first thoughts on this is, you know, keep calm and carry on. Don't panic, right? You know, I've seen on, you know, every one of the forums you've talked about and everything I've read in the last few days is people, you know, running scared, wanting to jump ship, you know, wanting to change PSA tools.

To go where? To go where? And my argument on that is, well, okay, so you've got a choice of some of the up and comings, right? You've got Halo, you've got Super Ops, you've got all these guys. Well, it's only a matter of time until they get acquired.

That's the way this industry works. That's the way, the nature of the beast, right? So at the end of the day, at some point, and Super Ops is a company that is making a lot of inroads in this industry, PE backed anyway, or VC backed, I'm not sure which one, but they've, you know, they backed. Halo is currently a private company, but, you know, they're making a huge amount of inroads as well. It's only a matter of time until somebody sniffs at their door.

So what's going to happen in 18 months time, two years time, right? You jump ship, you go into Halo and they get acquired. Or what happens if they get acquired by Kaseya too, right? Because Kaseya wants to monopolize and have the whole PSA space. I mean, you can't just jump ship every time somebody gets acquired by a company that you don't like, firstly.

And secondly, you know, I think that, you know, for all the faults that Kaseya had, I think there's also a lot of good things that are actually going to come out of this, you know, this acquisition, because Kaseya very often, each of the companies that they have acquired, IT Glue, ID Agent, those kinds of guys, you know, those guys run as pretty much as separate entities. So IT Glue runs as IT Glue. So, you know, why would Datto not be the same? And Datto has, it could actually be the other way around, you know, because Datto has a really strong product in the RMM and a really strong PSA product, but also, you know, they're really hot on security. So surely I would look at this and think, actually, this is a really good thing because Kaseya can really learn from that.

And actually, if they play their cards right, they can leverage all of that Datto has and actually make the rest of the Kaseya products really work well. And then from an integrations perspective, this is going to open up a huge playing field for integrations. I mean, as you know, already, all the task has been dabbling with a documentation tool for a while. How cool would it be to have, you know, IT Glue integrated directly into the PSA tool and have your documentation tool built in, right? So I think there's a total game changer, actually.

Absolutely. I think it would absolutely, absolutely change the game. I mean, I think there's a lot of positives that can come out of this. Of course, there's a lot of negatives too. But you know, I think, and I think a lot of people, because of all the problems that Kaseya has had in the past, which I haven't personally experienced, you know, people have, you know, they're running scared at the moment.

And I just think if the Autotask tool and the Datto RMM product suits your business and works for your business, why change? Just stay with it, stick with it. You know what? And who cares if they tie you into a three-year contract? At the end of the day, if this is a product that is going to work for your business and you're going to stick with it in the long term, then why would you be concerned about signing up a three-year deal?

And I totally get that, right? I also get the reluctance of wanting to, if I were signing up for ID agent tomorrow, and I don't know if this product is going to work for me for the next three years, and I'm not sure that I want to be locked in, I get that. I've been using Autotask now. What year is this? This is 2022.

I purchased Autotask back in 2008. I'm not likely to leave Autotask anytime soon, right? Because I've been using it for 14 years. Another three years isn't going to, my business isn't going to change so much that I'm going to change my PSA. And that takes me back to something else you said, you know, like you can't just jump ship every time a vendor buys a tool that you're using and you don't like that vendor.

You could spend the rest of your natural life trying to pick up the pieces from changing from one PSA to another, and you're constantly running down the street, you know, trying to stay ahead of this vendor that is destined to chase you, right? So what is the benefit to your business by doing that? Are you chopping your nose off to spite your face simply because you don't like the name of the vendor at the other end of it? And believe me, I'm, I totally understand the concept of, I don't want to do business with this company because this company doesn't want my money, right? And I don't want to give it to them.

I completely understand that mindset. However, we can talk in those terms when you're thinking about who will I go to, you know, for a new product and if all, you know, apples to apples, all things being equal, and you say, I like everything about both of these products, except that I like this company's politics better than this company's, or I like this company's, you know, social agenda better than this company's, then great. Go with the one that, you know, the company that you like, but, you know, things are not apples to apples to apples, and they're rarely all things being equal in the IT channel. You know, what's the tool that's going to work for you? Absolutely.

And you mentioned something actually earlier on, which is something you probably know a lot about me where I always get on my soapbox, and that is where, you know, you mentioned about, well, how do I know that this product is right for me? So somebody that's just buying Autotask for the first time when it's, you know, owned by Kaseya and they get forced into a three-year deal. Well, my argument on that is, well, if you did your homework right in the first place and you've done all your due diligence and you know that Autotask is the right tool for your business, then signing up for a three-year deal shouldn't make a difference to you. The problem is, and, you know, and one of the fundamental mistakes that MSPs make is that they choose the wrong PSA tool. And we've had this discussion many, many times on our podcast, and you and I have talked about it, you know, offline.

And I know we've talked about it in separate forums ourselves, is that the fundamental problem is people buy a PSA tool for the wrong reasons. They want a service desk, so they buy Autotask, or they want a CRM, so they buy Autotask. Whatever their reasons are for doing that without actually thinking about what is this tool going to do for my business and how is it going to solve my business? And also looking at every single PSA tool out there. So if I was a brand new MSP and I knew nothing about this space, or I knew about all the tools perhaps, the first thing I would do is I would approach every single one of the vendors, be it Datto for now, Connectwise, Halo, all of them, and I would say, okay, show me the product, show me what it can do, talk to me about it, these are my pain points, this is what I'm looking for in the product.

And then, you know, I would have my pros and cons list and I would look through all of the products and I would make my informed decision based on what I get shown in the product and what the product can do. And at that point, I've then made the decision of whatever tool it is that I'm going to use in my business, and therefore I've made the decision. So I know it, well, at least I think it's going to work for me. So being tied into a three-year deal is no major big deal as far as I'm concerned. You know, and that's a really good point that when you are choosing your PSA or your documentation management system or your RMM, think about what your business is doing today, but also think about, you know, where you want to take your business.

When you start a business, right, you build your business plan on a piece of paper and you're talking about the things that you're going to do in the next 12 months and the next five years, in the next 10 years. And if you haven't done that, you should, but that's, you know, that's a different topic. But when you are building that business plan, you have five customers today, hopefully two years from now, three years from now, you're going to have those five customers will turn into 20 customers or 30 customers by that time. And your business will continue to grow on its, you know, forward momentum. And so which tool is going to best support your growth plans and your growth strategies?

And that's, I think that's how people end up in PSAs that they outgrow in a couple of years. And even if you're going to outgrow your PSA, chances are you're not going to outgrow it in three years, because if it's good for you today, and it provides some room for growth, you know, by the time three years is up, and that contract is up, then you may be ready to move on to the next PSA level or to the next, you know, service level. But hopefully, like you said, if you did your due diligence, and you plan for your future and your future growth plans, then hopefully you've purchased a tool that will take you not three years into the future, but perhaps 10, or in my case, 15. Absolutely. And I think the other thing is that a lot of people in this industry are talking about the negatives about this whole deal, but no one's actually sitting down talking about the positives.

And we're all kind of, well, not we all, but people in this industry are all talking about how bad Kaseya is as a company and their business ethics and all that kind of thing. But you know what? It's only because those have come to light. Who's to say that those same business ethics aren't happening in any other company that's going to acquire them? Who's to say that that isn't happening in Data or ConnectWise or some other company?

But it's just they haven't come about yet. It doesn't mean they're not happening. It doesn't mean that that company... I remember back in the day when Autotask was a standalone entity, especially in the UK, they had a very bad reputation as a company of being very pushy with their sales and also tying people into ridiculously stupid contracts, you know, normally three years and crazy kind of business ethics. But people still bought the product.

People still went for the product. They did really well in the UK and worldwide. So I think people are panicking unnecessarily. And unfortunately, people are kind of giving Kaseya a bad rap and looking at the negatives instead of kind of actually looking at what the positive side of this deal could be. And I think I agree with you for the most part.

But, you know, there is one more topic that I feel like we should address, and we'll call that the frown face heard round the world. Yes, indeed. So for anybody that doesn't know about the frown face, there was a question on, I want to say it was on Reddit, or was it? It was on one of the social medias. Anyway, and it was somebody asking, what were your thoughts on the Kaseya acquisition of Datto?

And then there was a the vice president of sales at Huntress that said nothing but put in a colon and an open parentheses. Exactly. And of course, you know, social media lit up and was completely on fire as a result of that, which I think I think the issue was, is that Huntress was a gold sponsor. Or was it Kaseya Connect? Yeah.

So I think I think that from what I made out of that whole thing, I didn't read it all because by the time I got to it, there was about 50 million posts and I kind of skimmed through it. So it was TLDR, too long, didn't read. And I ended up from what I made of it, though, it was, you know, somebody at Kaseya had got back to Huntress and said, this could impact on your, you know, where we place your booth at our conference or something to that effect. Oh, I think I saw Dave Sobel's comment. He said something, you've got a nice booth there.

It would be a shame to lose it. Exactly, exactly. You know, and I think, yeah, I mean, I think a lot of people have reacted over that. And maybe maybe that was in poor taste to have kind of said that because I think people should be entitled to their opinions. And if, you know, in my opinion, if somebody at Huntress is upset about the and this could be looked at two ways, by the way.

So if he's upset about it, he has every right to express that upset about it. But equally, I would argue that social media is probably not the place for that. So you could look at it from both sides. Right. I would look at it most likely.

And even more importantly, I think perhaps that frown face should have been done under a private moniker. Don't drag your company into that. You know, we've all seen it. We've all seen people get, you know, fired from their jobs because they were holding up pro-Trump signs or anti-Trump signs or, you know, whatever. And once you bring your personal feelings into a public forum, when you are representing your employer, almost anything could happen at that point because your employer, there's consequences that go along with anything that you do.

And maybe this is just one of them. I mean, I don't think that anything happened to the Huntress employee, but there are always consequences if you use your professional stature. Yeah. I mean, look, I think, you know, a lot of it's kind of playground bullying or playground tactics. You know, it's like, OK, you know, we're bigger than you, we're holding a, you know, holding your tarantula.

We're going to tell you that you can't have this booth because you said this. You made a frowny face. Yeah. He said, she said, they said. So I get it.

I get why people are a bit head up about it. But equally, it's like in the overall scheme of things, does it actually matter, first of all? And secondly, yeah, maybe you could argue on both sides, right? I don't really know how I feel about it. I'm like, people are entitled to say what they want and feel how they want because people have the right to do that.

But equally, you're right. Maybe it should have been done under a personal moniker. Maybe it should have been or not been done at all, right? Maybe it should have been kept to himself and don't air your dirty laundry in public for everyone else to see. But then I look at it and I think, well, if he didn't do it, somebody else would have.

So at the end of the day, people use social platforms as a way to get their point across and to, you know, to say these things. So I don't know. I don't know how I feel too much about that particular side of it. But I think, unfortunately, the Kaseya haters are all now turning around going, well, you see what Kaseya is like as a company. They're bullying a smaller company.

And I'm like, well, wouldn't you kind of, you know, if somebody is slating your company publicly, wouldn't you kind of be the big bully too? I probably would. I'd be like, you know, if you're going to come and represent me at a show that I'm putting on, I'd probably do the same thing as Kaseya, to be fair, because I need to defend myself. If somebody is throwing bricks at me, I'm going to actually need to defend myself in the same way as any other company would do that. So I don't know necessarily if that was in poor taste of Kaseya.

I think it was. I don't know. I don't know how I would kind of look at that. There's another Reddit that, you know, it's called Am I the Asshole, right? The A-I-T-A.

And one of the appropriate responses is everybody sucks here. And so maybe that's how we just look at this. The frowned face. Yeah. The guy from Huntress shouldn't have done it.

Yeah. The Kaseya probably, you know, responded a little more harshly than a frowned face warranted, you know, and the whole thing just turned into an unfortunate mess. So let's, you know, let that go. Let's wrap this up and give me your 30 second overall feeling about the future of the IT channel based on this week's events. Well, I think based on this week's events, I think the future of the IT channel is that all vendors, there will be two big vendors and they'll own everybody.

Who those two are, I don't know, but I guess that they would be two. But I think that's actually a really good thing because that opens the doors for a huge amount of competition out there because, you know, it opens the doors for all the small guys to actually build a better product and to compete and, you know, all those. I mean, there's a reason people like Super Ops and Halo PSA exist in this industry and are doing really, really well because they've taken on the big Goliaths and they've taken on the big boys and are actually in some instances winning against the big boys. You know, so in some ways, I think it's a good thing that the industry is owned by two or three. But I think, and I said two because obviously I don't think there'd ever only be one vendor because, you know, antitrust laws and all that kind of thing.

But I do think there'll be probably two vendors that will pretty much own everybody in this space. What's your take on it? So my take on this week's events is that I feel like emotions are still raw and, you know, six months from now, probably not a whole lot of change will have come about based on, you know, the events of this week. It will probably take another couple of years before everything is fully integrated and DattoCon becomes KaseyaCon. Or maybe Datto even keeps its name for quite a few years.

I mean, how long has Datto owned Autotask? And Autotask is still Autotask, right? It never did become Datto PSA. We talk about it as Datto PSA. But yeah, so since Centristage, or when was it called?

To Endpoint Management, right? And Endpoint Management was just too long of a name. So it made sense to call it Datto RMM. It just made sense to rebrand that. But Autotask never got rebranded.

And if anything really good comes out of this is that Kaseya will start to put more time and effort into improving Autotask because it is clearly the superior product over BMS. And I suspect that they've known that for some time. There's plenty of space. There's plenty of room for the BMS users in the IT channel. But there's a lot of things that I think BMS doesn't do that Autotask does.

And so either Kaseya is going to take from Autotask and improve BMS or decide that Autotask is the PSA that they want to focus their efforts on. Who knows? We'll see. Who knows? And I mean, it happens all the time with these products is that the name stays as it is, the dominant name.

And I think Autotask as a product will always be around. And who knows? We've seen this happen with Enable. And we've seen it happen with other companies that have been acquired by somebody and then spun off back into their own entity again. So who's to say in two years' time, three years' time, Autotask doesn't spin off back into its own entity and be called Autotask?

Yeah. So I think there's too much hype in the industry at the moment. I think let's let the dust settle. Let's see what happens. For me, I'm not going anywhere.

For me, I'm actually seeing this as a massive opportunity for me because the product, I think, is going to be improved a lot because there's, as you say, there's certain features in BMS that Autotask doesn't have and vice versa. So I think amalgamating the two products and making them one big product, I think, is going to massively benefit the industry. And also taking products like IT Glue and integrating it in and making a super PSA, I think that can only be of massive benefit to the industry and massive benefits to people like yourselves and me who are consultants on these products for us to get more customers, more experience in the industry, that kind of thing. And I think it's a huge, huge benefit for me personally. And I'm going nowhere.

I'm going to stick with it. And who knows what'll happen? I'm not going anywhere either. But anyway, this was a really great conversation, very timely. And any last thoughts before we take off?

No, but if you are, I'm planning to go to DattoCon or KaseyaCon or whatever con they call it this year in September. So I will see you there. Oh, I'm very excited that we'll finally get to meet up in person. Maybe we can do a show live while we're there. Absolutely.

That'd be cool. So excellent. Well, great chat, as always. Good talking to you, Ryan. And all that's left for me to say is your PSA is the key to your MSP success.

So go out and make an impact on your world today. Thanks, Chris. See you next time. Thanks, Ryan. See you next time.

Thank you for joining us today on PSA Impact. We hope you've learned something and that you'll join us next time when we answer new questions posed by our listeners. Bye.