The Continuum-Datto BDR Partnership: Questions Answered

When Continuum (formerly Zenith RMM) yesterday announced a BDR (backup and disaster recovery) storage partnership with Datto, nearly 1,000 managed services providers (MSPs) and VARs signed up to gain early access to the platform, according to Continuum CEO Michael George. Still, MSPmentor raised five questions about the Continuum-Datto relationship and its potential implications for MSPs. George and his management team late last night spoke with MSPmentor and offered deeper insights. Here’s the update. Among the key takeaways: Continuum isn’t just getting into the BDR market, the company “wants to dominate it,” said George.

First, a little background: Summit Partners acquired Zenith RMM (now Continuum) in September 2011 from Zenith Infotech. The new Continuum Vault solution, launching in partnership with Datto, essentially positions Continuum to compete against Zenith Infotech in the BDR storage market. Among the topics MSPmentor discussed with Continuum and George…

MSPmentor’s Question: Can Continuum truly compete against its former owner, Zenith Infotech, especially when Zenith Infotech owns a minority stake in Continuum and Zenith Infotech CEO Akash Saraf sits on Continuum’s board?

Continuum’s Perspective: George said there’s nothing stopping Continuum from competing against Zenith Infotech because “we were the buyer and they were the seller. It would be pretty unique for a buyer to be restricted from doing new things [i.e., entering new markets.” When companies are purchased and sold, he added, “the seller is usually very restricted but the buyer is usually rarely restricted.”

MSPmentor’s Question: Will Saraf remain on Continuum’s board now that Continuum Vault essentially competes with Saraf’s primary company, Zenith Infotech?

Continuum’s Perspective: George said Saraf remains on Continuum’s board and that his presence doesn’t impact Continuum’s business. “It is not a situation in any way impares or impedes our ability to do business and make decisions,” said George. “Our significant owner is Summit Partners. We [Summit and the Continuum insiders] as a management team own more than 85 percent of the business. The fact that he’s on the board the board is a non-factor. We don’t lose sleep about it.” If in the future Saraf’s presence does become an issue, Continuum will explore the situation at that time, he said.

MSPmentor’s Question: Will Zenith Infotech maintain its minority stake in Continuum now that Continuum Vault essentially competes with Zenith Infotech?

Continuum’s Perspective: “It’s a fair question to ask,” said George. “But we’ve had no issues related to that.” George reiterated the fact that Zenith Infotech has only a small stake in Continuum. Also of note: Zenith Infotech may not be able to sell its stake in Continuum in order to adhere to an alleged court ruling in India, where Zenith Infotech is currently locked in a dispute with bondholders over a debt payment default. “Having Zenith Infotech sell their remaining stake on Continuum might require [Zenith Infotech] plaintiff approval. That’s an area at the moment we don’t care about; we only care about building our business and serving our partners.”

Note: MSPmentor does not know if Zenith Infotech would consider selling its minority stake in Continuum. I’ve reach out to Zenith Infotech for comment.

MSPmentor’s Question: Is the Continuum-Datto relationship exclusive or will Continuum work with additional BDR companies and storage companies?

Continuum’s Perspective: George confirmed that “there are some exclusive components” to the Continuum-Datto relationship. To summarize his thoughts, it’s safe to say the Continuum Vault solution involves and exclusive partnership between Continuum and Datto. Also, Datto has agreed to put a Continuum RMM (remote monitoring and management) agent on every device they ship. (MSPs can manually switch the Datto devices to alternative RMM agents if they so choose.)

“We’re a strong believer in business relationships that have real commitments to one another. We look for unique advantages from any strategic partnership and we want to offer a great strategic advantage to our partners who are willing to make big commitments to us.”

Still, George added, Continuum’s RMM platform will remain open to integrate with additional third-party BDR solutions; the Continuum Vault solution is where the Continuum-Datto exclusive deal essentially emerges.

MSPmentor: Why is Continuum getting into the BDR market?

Continuum’s perspective: “Candidly, we thought we would draft off of Zenith Infotech’s success in the BDR space,” said George. “Right up until the news about their [bond] default, Zenith Infotech was growing successfully so it was a natural place for us to feel comfortable drafting behind. But their news [the bond default] from a market perspective changed everything.”

George sees the BDR market as a “sharp edge of the sword” that allows MSPs to slice their way into the managed services market and stir even more demand for remote monitoring and management. “Once we decided we needed to address the shart edge of the sword we knew we would want to get into the market and not just be in it. We wanted to win and dominate it.” Hence, the Datto relationship and launch of Continuum Vault, George said.

Next Moves

George and the Continuum management team are expected to be in Chicago today, meeting with roughly a dozen MSPs “to listen, rather than talk,” he said.

During our conversation last night, it became clear that Continuum is running a marathon at a sprinter’s pace. Think of it this way: Summit Partners acquired Zenith RMM (now Continuum) in September. Since that time, George and his management team have completely rebranded the company, held dozens of MSP-centric meetings across the country, and met with most of the major BDR, RMM and PSA software providers.

Some skeptics wonder if Continuum can maintain this rapid pace — pushing into new markets even as Continuum strives to strengthen its core RMM and NOC (network operations center) services. We’ll be watching.