What’s next for Datto? Where better to find out than DattoCon19! This week Richard is joined in Paris by Datto CEO, Tim Weller, who shares his thoughts on MSP acquisitions, PSA tools and a whole lot more.
An Interview With Tim Weller
Stepping into Some Big Shoes
Datto’s hallmark has always been close personal partner relationships — it wasn’t unusual to call tech support and end up on the line with Datto founder Austin McChord, who started the business from scratch and grew it to over 1700 employees and over 16,000 partners.
For Tim Weller, those were some pretty big shoes to fill. So how has he found his first year as Datto CEO?
“It’s been it’s been a blur, the channel’s moving fast and so is Datto.”
But one thing that helped him hit the ground running is some solid advice from Kevin Johnson, Starbuck’s new CEO who succeeded founder Howard Schultz.
He told Tim the key was having, “the wisdom to understand what’s best about the company and what your predecessor did, and the courage to change the things that need to change as you grow.”
Fortunately Austin had some equally useful advice to share with Tim before handing over the reins. He said, “Don’t try to be me. This is a great business, follow the channel and it’ll take care of itself.”
And Tim is in no hurry to make drastic changes to the company culture. “We’ve always been keen to do anything for a partner and we still want to deliver on those promises. Now the question is, how do we deliver on those at scale? Then it comes down to business processes, software systems, training…but the culture is still the same.”
Tim on the Rise of MSP Acquisitions
There has been a significant upswing in MSP acquisitions over recent years — and it comes as no surprise to Tim who views it as yet another signal that the channel is growing up.
“I’ve been in a lot of tech industries and it’s common at this phase of an industry; if we have 16,000 partners, the upper quartile are executing better at some level and getting some scale and are just more mature businesses. And so they start looking at the rest and saying, can we gain scale? It’s the same with restaurants, hotels; it’s the evolution of any industry really.”
Tim sees Mitesh Patel of Fifosys, a guest from a previous episode (Click here to find out How to Do MSP Acquisitions Well) as a good example of this: “There are real synergies in all tech businesses when you do M&A if you’ve got your tech stack in order. Mitesh is running a very tight operational business and then buying younger MSPs who are less mature — he has the opportunity to get not only scale on the revenue side, but quite a bit of operating leverage from profits too. Datto sees it because we’ll have two partners that merge and if they’re both Datto partners, that’s great. If one or the other is a Datto partner, then we view it as a fresh chance to go into the one that’s not and talk about the suite.”
However, as trends go, Tim thinks it’s still early days for MSP acquisitions: “One of our partners, Tim Walker, from the UK, led a panel I was on this year and we had a breakout on M&A and I think we probably had 40-50 people in the room. Of those maybe only 5 or 6 were actually acquiring. I think more MSPs are looking than buying right now but it’s definitely a trend we’re starting to see.”
The Right Time for MSPs to Start Using PSA Tools
During his keynote speech, Tim shared the stat that 80% of DattoCon attendees use a PSA (professional services automation) tool. So what advice does Tim have for those MSPs who are still on the fence about PSA tools?
“Many people wait until their turnover hits maybe 50 million before they start using a PSA tool. But as much as I love Excel, spreadsheets can only take you so far.“
In this business, if you’re going to make the move to managed services, if you’re going to start charging recurring revenue and using your tech people for service desk and maintenance, you need to be able to track their time and which projects they’re working on.
And it’s just too hard to do that effectively. So I think if you don’t want to grow rapidly, you can sort of work your own scripts and your own tools and cobble things together. But if you have aspirations for growth, it’s the single best investment you can make from a platform perspective.”
For Tim, the important bit is implementation and getting the PSA tool setup right from the get-go and he believes this is much easier for younger companies. They generally encourage people to go with the default settings and then adapt them to their business as it grows. “The big MSPs have their playbook already done. And they have to adapt the tool to their playbook, which is why we make it highly configurable. But it’s much easier to put it in when you’re young. I think it’s really like the foundation of a house, it’s the same thing. You can build it later but why would you?”
Cloud Continuity and Why It’s Not Just For Disasters
One of the most interesting subjects Tim touched on in his keynote address was cloud continuity and resilient imaging.
Tim is keen to point out that cloud continuity isn’t only for disasters, for earthquakes, fires and floods — it’s for the everyday ‘disasters’ that won’t make the headlines.
“I’ve been in tech long enough to know, disaster was me tripping over the power cord, me dropping a magnet near the desk. I mean, it’s the server crashing, it’s not the fire. It’s about maintenance, the normal on and off of servers.”
“If you’re on a Windows server, you get a technology called Windows snapshots. In lay terms you can essentially tell Microsoft to pause the server and give you an image of everything running, all of the applications, and then you can take that image offline and ‘virtualise’ it.
On a laptop or PC, there really isn’t such a thing. You’re in a different OS. And of course, laptops and PCs are on and off, and you might unplug it at the end of the night, you might be travelling on mobile, you might be offline.”
Resilient imaging is the result of a two-year effort to build the tech that will rebuild images in the cloud only. Datto’s engineers have figured out the algorithms required to deliver a full image of your laptop or PC.
“Say you leave your laptop in an Uber here in Paris on the way to the airport, we can say, okay, here’s the last known likely good image of Richard’s laptop. You get back home, go over to a colleague’s web browser and you can run everything that was on your laptop. Or you can go to the high street, buy another laptop and pull whatever you’re running on our cloud back on to an image on that laptop. The ease of ‘virtualising’ and then pulling the image back onto the MSP’s laptop means you don’t need to spend an hour restoring, rebuilding all of the toolbars and configurations. And then of course you get screenshot verification which Datto invented.
As I’m fond of saying, it’s easy to back up, it’s hard to restore!”
It’s fascinating tech but Tim worried initially that it wasn’t necessarily commercially viable. However, after launching commercially only a few months ago, almost 10% of their US partners are already using it and Tim is pretty excited to bring it to Europe soon too, once they’ve allowed for GDPR compliance and data sovereignty.
Microsoft Teams and the Need For SaaS Protection
There were literal cheers in the room when Tim touched briefly on Microsoft Teams in his keynote, and with the huge rate of growth there, it’s hardly surprising.
Again, Tim isn’t focusing on disasters. As he says, “Microsoft isn’t going to lose your data centre, but even if you use it for only 10 minutes, you want to be able to back up all of that data. Doubly so for teams because as people come and go from end user companies, you want to be able to find that thread from marketing, for example. You want to be able to index and search documents posted by people who’ve since left, or the cover yourself against the rogue employees that might wipe out all the accounting spreadsheets and you don’t notice as they just disappear into the cloud.
It’s not like the PC you could surveil and back up — it’s a very ambiguous concept. We find partners using it all the time and losing data.”
Tim sees Datto’s new SaaS protection as huge opportunity for MSPs to profit from the prevalence of O365 in Europe. He envisions a “whole path of value added services, that in total will add up to multiples of the margin they’re getting on the actual O365 seed.”
What’s Next For Datto?
There’s no doubt that Tim has had a busy first year as Datto CEO and he’s not about to slow down, as he goes back to his Finnish roots with the company’s new Nordic expansion. He’s impressed by the maturity of the tech levels in Nordic countries, as well as the rate of expansion they’re experiencing over there, so opening offices in Copenhagen, seemed like a logical next step. As he explains, it’ll offer easy access to Stockholm and Helsinki and he’s excited to be putting sales support and account management in Copenhagen where they already have engineers.
When it comes to Europe, Tim hints at even more interesting times ahead: “we cover everything from somewhere. And of course, we’re sitting here in lovely Paris, so you might well guess what the next market could be…”
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Richard Tubb is one of the best-known experts within the global IT Managed Service Provider (MSP) community. He launched and sold his own MSP business before creating a leading MSP media and consultancy practice. Richard helps IT business owner’s take back control by freeing up their time and building a business that can run without them. He’s the author of the book “The IT Business Owner’s Survival Guide” and writer of the award-winning blog www.tubblog.co.uk
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