'Datto Mojo Will Fade': Partners Voice Concerns Over Controversial Kaseya Acquisition
At least one MSP hopes that Kaseya will adopt Datto’s philosophy in customer relations and prioritize relationships over dollars.
April 20, 2022
!['Datto Mojo Will Fade': Partners Voice Concerns Over Controversial Kaseya Acquisition 'Datto Mojo Will Fade': Partners Voice Concerns Over Controversial Kaseya Acquisition](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt8eaf22f860a51d66/65242f30d49b3336704f858c/1-Concerned-Businessman.jpg?width=700&auto=webp&quality=80&disable=upscale)
What was/is your general reaction to and thoughts about the announcement?
My initial reaction was “oh no… ” I’ve been in this business long enough to see many times when someone buys a company that is doing very well, they do nothing but screw it up. Datto has their act together. Kaseya doesn’t.
What do you predict the business impact will look like? The expansion?
This will play out over time. It all depends on how Kaseya integrates Datto into their suite. It could be great, but based on the past performance from Kaseya, I’m not hopeful.
What will this mean for partners? For the industry as a whole?
For partners, it means that we are seeing the beginning of the end of vendors working together and supporting each other’s products. What motivation will Kaseya have to continue to support, long term, other players such as ConnectWise? What value is ConnectWise going to have in supporting Kaseya that currently has two competing PSA products? Partners won’t be able to choose best-of-breed products that all integrate. We will be forced to choose a vendor that has the “best” overall product suite with less integration between those other vendors. Overall, it won’t be good for a partner like us who wants to be able to pick and choose the best of breed. That will be more and more difficult to manage.
What will the new brand look like? Who and what will survive?
If Kaseya is smart, the brand will look more Datto-like than Kaseya-like. Unitrends needs to be spun off and sold.
What was/is your general reaction to and thoughts about the announcement?
A lot of the chatter focuses around cultural concerns and key relationships. This is an important thing to watch, but we can’t miss out on the point that a $6.2 billion valuation of a channel-only vendor is a huge vote of confidence for the future of the MSP market.
What do you predict the business impact will look like? The expansion?
At the end of the day, we have to accept that any restructure will be focused first on the [private equity] return, which doesn’t bring a warm feeling to partners. However, keeping Datto’s culture intact in the face of Kaseya’s reputation seems to be key to the financial performance.
What will this mean for partners? For the industry as a whole?
Again, I think this is a vote of confidence in our industry. However, time will tell if the PE playbook aligns with partner needs and desires.
What will the new brand look like? Who and what will survive?
This is the question that everyone is asking. However, the most important piece to partners should not be branding and staffing. The ability to execute on meeting market needs will win in the long term.
What was/is your general reaction to and thoughts about the announcement?
Thankfully we are not using Datto as an RMM platform, but if we were, I would be very concerned. I don’t know if the Datto RMM platform survives. Overall, the continued consolidation of vendors will leave MSPs with fewer choices and poorer service in an industry that needs and relies on service. PE firms do not spend this type of money without expecting growth and a return on investment. I foresee price hikes in the future for Kaseya/Datto partners as competition dwindles.
What do you predict the business impact will look like? The expansion?
The vendor space is mirroring what is going on in the MSP space. The result of consolidation and PE investment will be a few, very large players that MSPs will need to work with whether they like it or not. A problem with any market that has just a few large players (like the ISP space for example) is customer service takes a hit over time as there are limited options to choose from. Don’t like Comcast support? Try AT&T, they aren’t any better. The barriers to entry to new competition become so large that we will be stuck with the few that survive the M&A phase.
What will this mean for partners? For the industry as a whole?
Kaseya and ConnectWise appear on a collision course for who will dominate the industry. The lack of competition will ultimately lead to higher prices for MSPs for their tools. The smaller MSPs have a clear choice for the future. Sell, grow or fade away. Larger MSPs with aggressive growth goals will take business from the small MSP and partners like Microsoft are already moving the needle on goals/requirements to maintain partnerships. The way the industry is moving will make it very difficult for the smaller players to survive and thrive, which ultimately stunts innovation.
What will the new brand look like? Who and what will survive?
I find it difficult to believe they will adopt the N-Able strategy of keeping two RMM tools long-term. It is inefficient and a PE=backed company will be looking for efficiencies and return, customers-be-damned.
What was/is your general reaction to and thoughts about the announcement?
I was shocked until I wasn’t. In hindsight, you could definitely see that Datto was making themselves more attractive to a purchase through Q3-Q4 of last year. I think a key ingredient to all of this was that Datto’s stock wasn’t performing up to expectations. From the perspective of a partner, there’s no question that we will ultimately have to re-evaluate our relationship.
Unfortunately, Kaseya has too long of a track record of souring the partnership relationship and becoming more of a vendor/reseller. I fear that the “Datto mojo” that has been built up over the past several years will quickly begin to fade and tarnish.
What do you predict the business impact will look like? The expansion?
Nobody knows. The immediate impact will be a lot of positioning to minimize the damage the announcement has done to the Datto space. I’ve never seen an announcement that was so universally negatively received by the customer base. The question is whether that will impact the buying habits of loyal Datto partners (I suspect it will).
What will this mean for partners? For the industry as a whole?
First of all, nothing lasts forever. One of the values that we (should) bring to our clients is we (should) keep track of changes in the industry (both IT in general and MSP specifically), addressing change as necessary. Anybody who buys a single solution (even <gasp> MS 365) and thinks that they’ll never have to visit that decision again is mistaken. The other thing is that Datto has (deservedly, I think) been able to build a “we’re the good guys” brand (no small part due to Rob Rae) throughout the industry. I can’t imagine that brand will survive (even if it’s a perception issue).
What will the new brand look like? Who and what will survive?
I suspect that Kaseya will attempt to minimize the changes to the brand for the first 12-24 months. From that point on, I would expect there to be some form(s) of consolidation with some of the other products/services. ConnectWise, Barracuda and SolarWinds (and their BCDR counterparts) will all try to convert partners with various offers and/or rebranding strategies. But similar actions happened in the mid-late ’90s where a lot of software products/vendors were purchased by Computer Associates. Most of those products and companies were never heard from again.
“We are both a Datto platinum partner and also utilize or resell multiple Kaseya products. I think that there is synergy between some of the best products from both Datto and Kaseya. The Datto BCDR offering has been a solid and reliable system that has proved itself on numerous occasions. Likewise, Kaseya has some nice products in regards to cybersecurity scanning and management.
“We hope that most of these products remain relatively unchanged, just under a different banner. However, it is also concerning that there are fewer and fewer products in our portfolio that are not owned or controlled by one of the biggest three providers in the channel, soon to be two with this acquisition.
“As a seasoned MSP, we appreciate having reliable, well supported products in our portfolio. When these mergers and acquisitions happen, there is often some deterioration of products and support in general, at least temporarily. We certainly hope that the disruption is minimal.
“On the other hand, we like to see new and innovative options that can help us take care of our clients better and enhance the experience for our own clients. The rate of M&A in our industry makes it hard to truly find these innovative products before they get gobbled up or pushed out by the very large providers.”
What was/is your general reaction to and thoughts about the announcement?
My first gut reaction to the news was that this is not good for PCH Technologies as a top-level Blue Diamond partner. Kaseya is just coming off the supply chain attack last summer, and is not a company we wanted to be affiliated with when it comes to RMM.
Datto has made great strides and it is a security-first company in everything that it has been doing. I have been to several invite-only partner events and have been very impressed by the senior executive team in terms of their commitment to security. Secondly, if Datto is merged into Kaseya, I am dreading the dip in service levels that go along with any merger.
So after some more thought, I am going to take a “wait and see” approach. I feel it would be much better if Kaseya kept well enough alone and let Datto run as is with the current team in place. The one other positive for Datto is that by going private, there would be less regulation than being public, and Datto could be more nimble as a company.
What was/is your general reaction to and thoughts about the announcement?
Absolute dread. We have been with Autotask since 2014 and built our service delivery and overall business processes around it. We were along for the acquisition of CentraStage that became Autotask Endpoint Management (AEM), then along for Datto’s acquisition of Autotask and AEM. We’ve still had great experience with Autotask and Datto RMM to date under the overarching Datto company as a whole.
Conversely, all the while, we have had poor experience with Kaseya for years, and have actually embarked on a mission to offload all Kaseya tools at the time of contract expiration. Kaseya demonstrates over and over to me that they value the dollar of a contract over their client’s experience and ability to actually use their products.
What will this mean for partners? For the industry as a whole?
I think it’s going to bring about the rise of the next major PSA and RMM company. Kaseya’s acquisition is already generating buzz on forums like Robin Robin’s QUEUE from many MSPs that are now looking to leave Autotask and Datto RMM because of their similar poor experience with Kaseya.
There is going to be a feeding frenzy from newer minded PSA/RMM providers like HaloPSA, SyncroMSP, SuperOps.ai, etc. to market to and scoop up those departing the Datto ecosystem because of the Kaseya acquisition.
One of them (and possibly a handful) is going to explode in growth as a result in the coming months and years. For example: just go look at https://goodbyedatto.com. That domain name was registered on April 11 in response to the announcement (I assume, at least), and I feel getting a PSA tool free for a full year is going to be mighty attractive and just what it takes for many MSPs.
What will the new brand look like? Who and what will survive?
Here’s what I hope happens: Kaseya adopts Datto’s philosophy in customer relations and prioritizes relationships over dollars, and dumps its current strategy and approach that’s left so many MSPs burned and reeling. I hope they have enough sense to know that a $6 billion business obviously was doing something right vs. their previous size at $2 billion, and listen and use Datto’s strategies from the senior leadership for the good of the MSP community and those currently using Datto products. And, for the good of those still trapped by Kaseya’s current approach/tactics.
If we start seeing the leadership of Datto disappear into the ether, we’ll know Kaseya is proceeding otherwise though with their same past approach, and it’s only a matter of time with so many future contract expirations before their world starts to crumble. Hopefully they pivot sooner than later in this realization. As I told our Kaseya account rep in the days that followed the announcement, I love working with good companies and I’m loyal to good companies. I’d like to see Kaseya pivot and become one.
What was/is your general reaction to and thoughts about the announcement?
After an initial “wow,” I wound up with “that makes sense.” The tools and technologies in IT services, both for us solution providers and IT departments who are buying these tools directly, have been and will continue to be consolidated. This will be driven in no small part by Insight Partners, Thoma Bravo and Vista Equity Partners. The consolidation of the Kaseya and Datto ecosystems will clearly put additional pressure on the folks at ConnectWise as well as providers of point solution tooling.
What do you predict the business impact will look like? The expansion?
If the past is prologue, we’ll see a period of deduping solutions, and then an effort to try to consolidate two extremely large customers/partner communities; both of which are heavy lifts. What will be interesting is the degree to which Kaseya tries to integrate Datto’s solutions into their collective code bases to get to what customers really want — a “single pane of glass,” tightly integrated, resilient solution set.
What will this mean for partners? For the industry as a whole?
In the past, the consolidation efforts Kaseya, Datto and ConnectWise have executed as they’ve performed follow-on M&A have had some negative consequences. In particular, with their solution provider customers – many of whom reported slower than desired responsiveness with issues and, in some cases, lowering of the priority on selected development efforts viewed as important by the solution provider community.
The good news is these negative impacts on the solution provider community usually have been short-lived and I would expect that Kaseya would work through the inevitable issues of integration, with essentially a business of equals, in relatively short order.
What will the new brand look like? Who and what will survive?
I don’t have a crystal ball but Kaseya and Datto (and subordinate brands like Autotask) have tremendous brand equity so I’d guess Kaseya will tread lightly here.
What was/is your general reaction to and thoughts about the announcement?
This is bad for MSPs. We are deep customers to both Kaseya and Datto, and they both have products that are largely overlapping. We see this not so much as a synergistic mix of aligned products, but rather as an anticompetitive move that will decrease choices and push up prices for the MSP market.
What do you predict the business impact will look like? The expansion?
Kaseya/Datto will need to decide which are the preferred products of each competing set. Those MSPs that have the one(s) that end up losing will find themselves having to migrate to another platform (e.g. Auth Anvil). This will take years, but moving to another RMM or PSA or backup system is never an easy process.
What will this mean for partners? For the industry as a whole?
Less choice and higher prices for partners. As the MSP tools market consolidates, we will likely see a few large players forming an effective oligopoly and a bunch of small niche players.
What will the new brand look like? Who and what will survive?
These two companies have had drastically different cultures. Datto has been a high-end, high-touch company that had Qty1 pricing with flexible options. Kaseya has been a mass market provider with high entry costs (but relatively low per unit costs) that has tried to move MSPs into long-term contracts. These two different approaches will collide when MSPs are corralled into switching.
Still, we see the following the following winners:
Kaseya VSA (over Datto RMM)
Datto Business Continuity (over Kaseya Unitrends)
Autotask over BMS (but this one might be close)
“This is the kind of market consolidation that is straight-up not great for business or competition. Datto had a great thing going with its RMM and line of products and the deep integrations, and they had a great channel presence. I always felt taken care of by them. It is honestly a bit rough to see them get purchased.
“Alternatively, Unitrends is in no way as feature-rich as the Datto backup suite of products, so it would be great to see Unitrends get jettisoned into the sun permanently and have Datto be the de-facto SMB backup product in the field.
“If we can torch VSA in lieu of Autotask and bring the level of integration of the stack of products that Datto had been working on, great!
“Also, Kaseya has an absolutely trash record of auto-renewing three-year aggressive contracts which are extremely one-sided and really hurt up-and-coming MSPs. Forcing a three-year deal on something like Datto Backup products doesn’t make sense and would make the partner assume all liability.
“All in all, this could be great, in a sense, because Kaseya is lacking in some of the products that Datto excels at. However, Kaseya’s track record with companies they’ve purchased have been absolutely abysmal, so I’m not getting my hopes up.
“The ideal situation would be that Datto stays exactly the same and nothing changes, but we know that’s not going to happen.”
What was/is your general reaction to and thoughts about the announcement?
This can’t be happening. This is the one company I don’t want to see acquire Datto.
What do you predict the business impact will look like? The expansion?
That depends. Hopefully this goes well and they don’t change how things work at Datto. My biggest concern is tying us to three-year agreements after our original agreements expire. They made us do this with RapidFire Tools and it’s ridiculous to think I can’t get rid of a tool that I may no longer be using for three years.
As far as expansion, it doesn’t do much for us. One of the first things Kaseya needs to learn is to listen to the partner. Most companies think they know what we MSPs want, but it’s nowhere close. Datto does a great job of listening to the partner.
What will this mean for partners? For the industry as a whole?
This isn’t a good thing for partners, as I see it. This somewhat makes them a monopoly. There are other companies, but not many, and none this size. They will slowly become the next Microsoft. Hopefully for the industry, it will help spawn off other companies who can become competitive over the next few years.
What will the new brand look like? Who and what will survive?
I hope the entire Datto executive team stays, as they are the lifeblood of Datto. What they do for partners is second to none, and no other vendor in our space matches this. They do what’s right at any time for the partner.
What was/is your general reaction to and thoughts about the announcement?
Excitement. I, for one, am excited to see what comes out of this acquisition being both a Kaseya and Datto partner. Datto has some of the best people in the industry and having them as a part of Kaseya will truly strengthen Kaseya.
What do you predict the business impact will look like? The expansion?
I do not expect [many] changes for the first year or two, but would expect to see some blurring of the companies at the 18-24 month mark. Overall, I think this will have a positive impact on the MSP community.
What will this mean for partners? For the industry as a whole?
I think this will mean [fewer] vendors to deal with, better relationships with key vendors, and most importantly, exciting product development with the paired R&D of these two amazing companies.
What will the new brand look like? Who and what will survive?
Looking at how Kaseya has handled past acquisitions, I would expect the two brands to be kept separate.
What was/is your general reaction to and thoughts about the announcement?
Initially I was not very happy. I actually called our rep as soon as I heard, and broke the news to him as it was not shared internally at Datto yet. Kaseya had some unflattering media coverage recently that is unsettling, but time will tell what this combined powerhouse looks like.
What do you predict the business impact will look like? The expansion?
There will likely be some duplication in services like Datto Backups and Unitrends. However, I think Datto was purchased for their technology, so the long-term effects may be felt more by Kaseya customers with improved technologies than by Datto customers. I just hope they do not “Kaseya-ify” the Datto products and leave their teams be. The combined company does present strong competition to ConnectWise.
What will this mean for partners? For the industry as a whole?
There continues to be consolidation in the MSP space, which is no surprise. I think this particular acquisition will create better integration among products that partners already utilize but it will take time. I don’t think that the benefits will be truly felt by partners for at least three years. We all know, that is a long time in tech.
What will the new brand look like? Who and what will survive?
Again, I think Kaseya saw the value in the technology that Datto provided. My opinion is that Datto products will fare better than the Kaseya ones. However, they can all be improved upon. Products like IT Glue will remain and bring additional value through direct integration in a PSA tool like Autotask. Honestly, Kaseya would be better served to take the Datto name due to the negative press and experience associated with Kaseya.
What was/is your general reaction to and thoughts about the announcement?
I have mixed reactions about the acquisition. Less choice and more power for a few companies typically means less favorable deals and terms for small to medium shops like myself. But it also provides further proof of the maturation of our industry and the expanding value of our companies, which is exciting to be a part of.
What do you predict the business impact will look like? The expansion?
Initially I doubt there will be a lot of business impact. The key will be if Kaseya decides to keep Datto as a separate brand or flavor into their stable of products, or attempts to combine their multiple PSA and RMM offerings into some single offering. Many industries show that large companies are often more successful having multiple, separate brands and solutions than a single offering. I believe that this will likely be a better path forward for Kaseya and Datto and their partners.
What will this mean for partners? For the industry as a whole?
For partners, I expect this to mean changing terms and term lengths moving forward. Kaseya is well known for having minimum three-year terms by default and I imagine that will become the new normal with future Datto contracts as well.
For the industry, I believe this provides an opening for younger or smaller RMM and PSA alternatives to gain additional market share in the smaller-midtier MSP market. I don’t imagine Datto backup services will be much affected other than potential changes in contract term lengths. I believe these consolidations can provide efficiencies as you have a larger suite of products and services under a single roof that should be designed to work well together. I do however worry that this further consolidation creates additional fragility in our supply chain where black swan events will have larger and larger impacts that service providers will need to plan for and guard against.
What will the new brand look like? Who and what will survive?
Right now I believe there is value in both brands, and Kaseya would be wise to maintain and promote the Datto branding. Not only for continued loyalty, but as a way of creating a firewall between product offerings if there are future security issues like N-Able’s root breaches or Kaseya’s zero day from last year. They can differentiate and target MSPs that are in different life or business cycles and there is room for both brands in the industry.
What was/is your general reaction to and thoughts about the announcement?
I was somewhat shocked at this announcement, but the more I think about it, it is becoming less surprising to me. The channel has been extremely active the past few years with consolidation and VC/PE firms buying up companies.
What do you predict the business impact will look like? The expansion?
Kaseya will realize an instant expansion of their customer base. However, many MSPs have been bitten by Kaseya buying other platforms they use, receiving significant price increases and making it very difficult to cancel their services. MSPs have been extremely vocal about their displeasure of these practices. I would expect from their past track record that more of the same will occur with the Datto client base.
What will this mean for partners? For the industry as a whole?
At the outset, there are many benefits from strategic partnerships, collaborations and mergers. Integrations between multiple toolsets make MSPs more efficient and productive. However, I see this as more of a buying up of the competition rather than expanding the products and services offered and pouring money into expanding the product.
What will the new brand look like? Who and what will survive?
I can’t see any investment company wanting two PSAs, two RMM’s, two backup platforms, etc. Datto will likely be cannibalized and eliminated. If that happens, this is not a good acquisition for the channel, as it will reduce the options available for MSPs.
What was/is your general reaction to and thoughts about the announcement?
I was somewhat shocked at this announcement, but the more I think about it, it is becoming less surprising to me. The channel has been extremely active the past few years with consolidation and VC/PE firms buying up companies.
What do you predict the business impact will look like? The expansion?
Kaseya will realize an instant expansion of their customer base. However, many MSPs have been bitten by Kaseya buying other platforms they use, receiving significant price increases and making it very difficult to cancel their services. MSPs have been extremely vocal about their displeasure of these practices. I would expect from their past track record that more of the same will occur with the Datto client base.
What will this mean for partners? For the industry as a whole?
At the outset, there are many benefits from strategic partnerships, collaborations and mergers. Integrations between multiple toolsets make MSPs more efficient and productive. However, I see this as more of a buying up of the competition rather than expanding the products and services offered and pouring money into expanding the product.
What will the new brand look like? Who and what will survive?
I can’t see any investment company wanting two PSAs, two RMM’s, two backup platforms, etc. Datto will likely be cannibalized and eliminated. If that happens, this is not a good acquisition for the channel, as it will reduce the options available for MSPs.
The dust has somewhat settled from the stir-up caused by Kaseya announcing last week that it would buy Datto. Now that partners have had a chance to pick their jaws up off the floor, we asked them to weigh in on what they think about one of the biggest acquisitions in MSP history.
Kaseya stands to dramatically shift the dynamics of the MSP industry by building what will become the largest MSP platform developer, now that it has Datto. So, what does it mean for the industry? What will be the business impact? What exactly is the integration plan?
Be counted among your peers as one of the top managed service providers in the world. Click here for the 2022 MSP 501 application. |
Partner sentiment was fairly consistent, leaning heavily on the sides of “huh?” and “uh oh …” with some “that makes sense” mixed in.
Check out the gallery above to see what our 2021 MSP 501ers and NextGen 101ers are voicing about the acquisition.
Want to contact the author directly about this story? Have ideas for a follow-up article? Email Allison Francis or connect with her on LinkedIn. |
About the Author(s)
You May Also Like