Will Kaseya Continue With Datto ’ s Products ?
Given the perceived redundancy that Kaseya will have with two RMMs ( remote monitoring management ), two backup offerings , and two PSAs ( professional services automation ), will they continue to sell and support Datto ’ s products ? “ Yes , we have to , and we will continue that for the foreseeable future ,” Voccola said . “ I measure foreseeable futures in 5 – 10-year increments . I ’ m not sitting here saying we ’ re going to support anything for a certain amount of time because I legally can ’ t say , but we ’ ve stated we are supporting all products moving forward .”
Voccola explained that the reasoning behind this decision is that it ’ s a lot less expensive for a company the size of Kaseya to pay extra to maintain and make better multiple products in the same general areas than it is to “ p * ss off ” customers and tell them the product they love is gone and they need to use the new one . “ That is not why we are spending $ 6.2 billion buying Datto . We looked at Datto ’ s great culture . We ’ re keeping the Datto brand , just like every acquisition we ’ ve done . There ’ s no rationale to go shut down Datto offices and change their culture . When we buy companies , they operate as autonomous , stand-alone business groups . That ’ s not going to change . We ’ ve done it with ID Agent , RapidFire Tools , Unitrends , Spanning , IT Glue , you name it . We throw a ton of money into them . We have lots of financial resources to juice the product substantially and we ’ re not going to break what works . Datto has world-class support and world-class customer experience . Their people are great . And that ’ s what we want .”
Why Does Kaseya Have 3-Year Contracts Knowing That Many MSPs Don ’ t Like Them ?
While MSPs can negotiate better deals with vendors on an individual basis , in general , Voccola says Kaseya ’ s three-year contracts allow them to price things anywhere from 30 %– 67 % less than what other vendors charge for a similar product . This allows MSPs to make more money . For example , Acronis charges $ 2.40 for a Office365 backup license per mailbox . On a three-year agreement , Kaseya ’ s list price is 95 cents . “ It ’ s commercially advantageous to Kaseya , and we try to make it commercially advantageous to our customers ,” Voccola said . “ For us to be 67 % cheaper or some number like that , and in order for us to say we ’ ll be 95 cents when Acronis is $ 2.40 or ConnectWise for RMM or pick your vendor , PSA same thing , we say , ‘ Listen , we want you to commit to a three-year transaction with us .’ One , we don ’ t raise the price at all . The average software vendor raised its price by 27 % in 2020 . A lot of that ’ s in the enterprise , but that ’ s huge , so there ’ s no risk there . Second , we ’ re trying to make it beneficial for the MSP . It ’ s much more profitable for our MSP partners to buy products from Kaseya that are 30 %, 50 %, 60 % less expensive on a three-year commitment when that price will not go up than to buy a competitor ’ s product that ’ s 30 %, 40 %, 50 % more expensive , and rising 10 %– 20 % a year . The MSP makes more money .”
Voccola did say they allow one-year or two-year contracts , but those will be a higher price than if MSPs sign a three-year contract . In the example above , instead of 95 cents , the MSP would
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Robin Asks Fred Voccola The Tough Questions On The Main Stage At Our Boot Camp Event In Nashville
pay $ 2.20 . “ We do one-year transactions . It just doesn ’ t make good financial sense ,” Voccola said . “ It ’ s important for everyone to understand that when you negotiate with your customers , it must be mutually good business . With software , there are no COGS . The hosting costs are nominal , 5 %– 10 % max . So , our gross margins are 90 %, 95 % depending on the product line . If we lock in our recurring revenue stream , the inflation for software engineers is 33 %. We did a 33 % bump in our engineering cost-of-living benefit increase this past year . Thirty-three percent . Everyone wants new features and new functionality . Three-year deals allow companies like Kaseya to invest more to do that . We think three-year deals allow MSPs to make more money , and that ’ s why we offer them .”
What Would You Say To People Who Are Concerned About All Their Eggs In One Basket ?
“ The first thing I ’ ll say is Kaseya is not going out of business ,” Voccola said . “ There are hundreds and hundreds of options out there ,” he said and noted there are competitors of every size in every category . “ There are tons and tons of options . We want to earn the business . We believe the value of integration of the kit is to make the software engineer or the technician much more efficient . It ’ s huge . And as labor costs go up , it becomes more and more important , and we ’ re getting better at it .”
Is ConnectWise Next ?
“ ConnectWise is a great company ,” Voccola said . “ ConnectWise is owned by Thoma Bravo . If you ’ re lucky enough to be able to invest in a Thoma Bravo fund , do it because you ’ ll make a ton of money , and I ’ m sure Jason [ Magee ] will tell you the same thing . Thomas ’ approach to investing is financial engineering . They ’ ll buy companies . They ’ re great at it . They ’ ll reduce costs , they ’ ll drive EBITDA , and they ’ ll grow that way .
“ Insight Partners , the owner of Kaseya , comes from the venture side . Venture investing is more growth-oriented . Everything ’ s about growth , not irresponsible growth , like some of the Silicon Valley companies . Datto comes from growth . If you guys know Austin [ McChord ], it ’ s about growth , not ‘ cut costs and be cheap .’ It ’ s invest , invest , invest ! So , I don ’ t know if there ’ d be a good culture fit from that perspective with ConnectWise , but it ’ s a great company .”
What Is The Cooper Intelligence Engine ?
For the first time , Voccola also talked publicly about Kaseya ’ s innovative new technology , the Cooper Intelligence Engine , which is named after Voccola ’ s beloved beagle / Pekingese mix , Cooper . ( Voccola has a foundation called the Cooper Voccola Family Foundation . Read more about that at the end of the article . Cooper , who has limited use of his hind legs due to an accident , travels with Voccola around the country inspiring disabled veterans .) Under development for several years , Cooper AI is due to be released in June at Kaseya ’ s Connect IT Global conference in Las Vegas .
“ One of the challenges I ’ ve seen in products and companies I ’ ve started , and in products we ’ ve built over the years , is that most users of B2B software don ’ t get the most out of the software ,” Voccola said . “ It doesn ’ t make the software bad . It ’ s just the reality . For example , everyone here is using an RMM . I ’ m sure all the RMMs out there , including Kaseya ’ s , can spin you on your head and do a million things for you . It can talk in Spanish , Greek , German , and French . But it takes a lot of time to do it , and no one gets the most out of their software . Cooper Intelligence Engine is an AI engine in our platform , IT Complete . The