SMB Nation Blog

SMB Nation has been serving the Bainbridge Island area since 2001, providing IT Support such as technical helpdesk support, computer support, and consulting to small and medium-sized businesses.

Datto/Autotask Merger: Sophisticated Investors Only

In late October, fellow MSP blogger Joe Panettieri broke the story, in advance of the public announcement, that there was a merger between Datto and Autotask. I’ll briefly review the multiple transactions that made this happen. It’s surprisingly sophisticated. This almost reads like a Russian spy novel with all the players LOL. Let’s start by following the money and then I’ll offer some community comments.

2004-2014
Autotask raises at least $10M in four funding rounds (see Figure 1)

autotaskfunding

Figure 1: Autotask started taking the money in 2004.

2014
Autotask acquired for $99M by Vista Equity Partners.

2015
Datto completes a funding journey that started in 2013 and ended in 2015 raising $100M. At the time I wrote of Datto being a “unicorn” as it claimed the $100m stake resulted in a ten percent share and a market valuation of $1B.

dattofunding

Figure 2: Datto’s funding rounds.

2017
June/July: I circled back into the Datto orbit by attending the DattoCon conference in Denver in June 2017. In this blog at the time, I opine that the “E” (‘exit”) word has to enter the Datto lexicon because private equity money is not patient money and has to be put to work. I further drill down into the mind of Austin McChord, Datto CEO in a 1:1 interview HERE in early July at the Datto HQ in Norwalk.

austinandharry

Figure 3: Harry’s 1:1 with Datto CEO Austin McChord where M&A thoughts surface.

October: Here’s where things speed up. Vista Equity Partners acquires Datto. Then it merged Datto and Autotask together. In reality, this amalgamation results in a relationship hierarchy. If it were the wild world of Craigslist personal ads, this hook-up would have Datto as the “Dom” and Autotask as the “Sub.” Of course financial terms weren’t disclosed LOL.

Analysis
The merger makes sense in the mature and contracting SMB technology sector. Cloud has squeezed out the value chain many old timey server-side Big Iron fellas remember well. Consolidation is a natural act. The hierarchy with Datto on top (McChord becomes CEO and Autotask’s Mark Cattini will exit) makes sense as I believe Autotask took the smaller SMB MSPs in the beloved SMB Nation community for granted like Clinton viewed traditional core Democratic constituencies in the 2016 presidential election a year ago. It felt like the past few years Autotask courted its big donors ignoring the working class man (this isn’t just my opinion but that of other bloggers and community members – in a recent outreach by myself to the SBS group on Facebook concerning this merger, the responses were a resounding “Meh” reflecting Autotask had lost mindshare in the SMB Nation community. )

So when I had a 1:1 with Datto CMO Peter Rawlinson last week while I was literally on Wall Street (see Figure 4) and Rawlinson was in the Datto HQ in Norwalk, CT, I zeroed on the conflation of the Datto and Autotask partner communities and what that means for our “Joe the ‘puter guys” getting a love tap in the yet to be renamed combined company.

girlandbull

Figure 4: How fitting to be on Wall Street for my chat with Rawlinson.

“Now with a combined partner base of over 13,000 SMB MSPs, we are absolutely making a commitment the smaller MSP and the SMB Nation audience persona.” Rawlinson emphasized. He went to round out the context of the merger. “This is a merger for growth, not cost cutting.” Warning: ten dollar word ahead. What Rawlinson is suggesting is that this merger is accretive which is a fancy way of saying 1+1 =3. My conversation with Rawlinson ended with a couple of unknowns: the new brand name and whether there will be an HQ1 (Norwalk, CT) and/or HQ2 (Albany, NY).

Dilutive v Accretive

My big question moving forward is whether the product overlap will effectively result in portfolio dilution and partner contraction. Other wiser minds in the SMB media have minimized the product overlap so in this sense the merger works. But what about ConnectWise partners that use Datto or Autotask partners that use a different BDR solution such as efolder? I’ll monitor the potential MSP partner churn-and-burn rate from this merger over the next year and report back. [If you’d like insights into the Datto product road map, watch my vid interview with Datto VP, Networking John Tippett here.]

Competition
Michael George (CEO, Continuum), who I’d offer lives life out loud, didn’t lack words about the Datto/Autotask merger. “Consolidation of this nature should come as no surprise to anyone in the MSP market. Standalone vendors are finding it increasingly difficult to compete as MSPs move to the few key providers that matter most to them. Today’s news should galvanize MSPs to focus on one or two key platforms, rather than trying to price-optimize with standalone independent vendors.” George said.

“Today’s merger brings together two critical categories in the channel: RMM and BDR. That’s a clear signal that a unified approach to these services is in demand from MSPs, and that’s why Continuum offers partners these solutions as the cornerstone of our platform.” George commented. “But, to stay relevant over the next three to five years, the next major play is security. We anticipate that the next market consolidation will come as MSPs look to acquire the tools and services to secure their clients amid today’s heightened threat landscape. That’s where we’re already moving with our new security offering launched this month, and we can expect that standalone vendors will begin to beef up their capabilities to meet that demand, and MSPs will take notice.” If you’d like to read my recent 1:1 interview with George, look HERE.

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RapidFire Tools, Inc. Presents Session on HIPAA Compliance at Datto Show

RapidfireRapidFire Tools, Inc. will be presenting at today’s Datto Partner Show, taking place in Las Vegas, NV. In particular, the company will have Mike Semel, President, Semel Consulting, who is one of the leading HIPAA consultants in the US, presenting an educational session on how to sell/price HIPAA Risk Analysis Reports.

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Datto Receives “Best Channel Vendor Award”

dattoDatto, Inc. recently announced that they have received the “2013 Best Channel Vendor Award” from Business Solutions Magazine. For these awards, the votes of over 4600 VAR subscribers were collected, and Datto was ranked alongside fellow providers on a scale of 0 to 5.Only the top 5% of each category received a “Best Vendor Award.” Datto reported that it earned a ranking of 4.39 out of 5, with high marks in the Channel Friendly and Product Reliability categories.

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Oops…My Bad! 5 Blogs We Missed Last Week

Oops ladyHere we go again! As I do each week, I am really enjoying bringing our readers a quick round-up of the blog coverage I didn’t manage to get to during the week prior.
 
In addition, here at SMB Nation, we are already gearing up for our annual fall event to be held next week in Las Vegas at the Rio! We have designed a  Web site specifically for this event, which you must check out today. For additional information on the new Web site, our cool XP Migrations video produced by Bigger Brains, and our fall conference, check out our blog post here. Hurry up, and get your registration in, as we are just about one week away from this event…it’s crunch time!

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Oops…My Bad! 5 Blogs We Missed Last Week

Oops ladyHere we go again! As I do each week, I am really enjoying bringing our readers a quick round-up of the blog coverage I didn’t manage to get to during the week prior.

In addition, here at SMB Nation, we are already gearing up for our annual fall event to be held Oct. 10-12 in Las Vegas at the Rio! We have designed a brand new Web site specifically for this event, which you must check out today. For additional information on the new Web site, our cool XP Migrations video produced by Bigger Brains, and our fall conference, check out our blog post here. Hurry up, and get your registration in, as we are less than two months away from this event!

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Datto Integrates Kroll Ontrack PowerControls for Exchange Server, SharePoint Recovery Support

Datto logoDatto said earlier this week that it is now offering Kroll Ontrack PowerControls 7.0 through Datto’s integrated software. According to Datto, this new implementation makes Datto the only BDR solution provider to offer granular recovery support for Microsoft Exchange Server 2013 and Microsoft SharePoint Server 2013 in addition to having new functionality for preserving and exporting Exchange/SharePoint source and metadata.

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Oops…My Bad! 5 Blogs We Missed Last Week

Oops ladyHere we go again! As I do each week, I am really enjoying bringing our readers a quick round-up of the blog coverage I didn’t manage to get to during the week prior.

In addition, here at SMB Nation, we are already gearing up for our annual fall event to be held Oct. 10-12 in Las Vegas at the Rio! We have been hard at work designing a brand new Web site specifically for this event, which you must check out today: http://fall.smbnation.com/. For additional information on the new Web site, our cool XP Migrations video produced by Bigger Brains, and our fall conference, check out our blog post here.

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Former LPI Managers Urvish Badiani, Nadia Karatsoreos headed to Datto

urvishWe heard today that more Level Platforms staffers have left the recently acquired company to join another channel-related vendor, Datto. This time it’s Urvish Badiani and Nadia Karatsoreos, who had both previously worked at LPI as Partner Development Managers. Badiani had been with LPI since 2006, and Karatsoreos was with the company for the last three years.

(Pictured): Former LPI Partner Development Managers Urvish Badiani and Nadia Karatsoreos will be joining Datto on August 12 in similar capacities.

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Exclusive Q&A: Rob Rae…his First Days at Datto

Earlier this month, BDR provider Datto announced that it had hired Rob Rae as the company’s new VP of Business Development. Definitely no stranger to both the channel and the SMB industry, Rae is best-known for his tenure as Director of Partner Development and Operations at Level Platforms, where had been for the last six years prior to joining Datto last week.

For those of you that have met Rae personally, you will undoubtedly know that his commitment to the channel and the partners that serve our SMB industry is always something that’s top of his mind. This was always his mantra while he was with LPI, and he says it is something he will be taking over to his new position at Datto.

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Datto Acquires Paradeon Technologies to Form Datto UK

Datto said today that it has acquired distribution partner Paradeon Technologies in order to further expand into the UK and EU markets. Marking the first stop of an ongoing international expansion program, the UK site will include a dedicated office with sales, operations and marketing teams focused on the UK and broader EU sectors.

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ASCII Group Makes a Stop in Atlantic City for its Roadshow Series

This year’s ASCII Group Summit road show stop for the NY/NJ area moved its location further south from Woodbridge to Atlantic City, NJ. Held at Caesar’s (no, not where the real Caesar lived), the event attracted a healthy mix of MSPs, VARs, vendors and distributors. I even managed to reconnect with a friend that I have known since first grade, who coincidently was attending with her husband, Joseph Fulgieri, a Long Island-based VAR.

(Pictured): ASCII Summit attendees gathered today at Caesar's in Atlantic City for a full day of business strategy tactics and education.

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Datto Appoints LPI Veteran Rob Rae as VP of Business Development

It was announced today by Datto that the BDR provider has hired Rob Rae to the position of VP of Business Development. Rae, who is known by most in the SMB channel for his work as VP of Partner Development at Level Platforms, will begin his tenure at Datto on Monday, August 5.

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Datto Inc. Announces New BDR Solution for SMBs

Datto ALTOToday, Datto, Inc. announced the launch of a new solution designed to provide both on-site and off-site BDR to SMBs. The new solution, called Datto ALTO, is built to be scalable and affordable.

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Oops…My Bad! 5 Blogs We Missed Last Week

Here we go again! As I do each week, I am really enjoying bringing our readers a quick round-up of the blog coverage I didn’t manage to get to during the week prior. We have been pretty busy around here at SMB Nation in gearing up for our SMB 150 Awards, and our Spring Conference.

Also note that this year’s Spring Conference will be held May 3-5, 2013, at the Microsoft Redmond Campus. For more information, and to register, go to: http://spring.smbnation.com/.

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Datto Technology Now Integrated Into Level Platforms Solution

Datto Level Platforms logoThis morning, Datto, Inc., announced the release of deep product integration with the Level Platforms Managed Workplace platform. This integration will allow Datto partners to provide an improved end-user experience to their customers.

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Datto to Provide BDR and Biz Continuity for Team Logic IT Network

Datto said late yesterday that it will provide backup, disaster recovery and business continuity solutions to more than 50 TeamLogic IT locations across the country. TeamLogic IT is a nationwide network of businesses that provide comprehensive computer-based services for managing information technology.

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