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Why Datto CEO Austin McChord Resigned

Datto Inc. CEO Austin McChord has resigned from the MSP-centric technology company that he founded more than a decade ago. Datto President and COO Tim Weller will lead strategic and daily operations until a new CEO is named, the company said today.

Andrew Stuart’s passing had a profound impact on McChord
Andrew Stuart's passing had a profound impact on McChord

So, why would McChord step away from the company he founded -- especially with a potential IPO looming in 2019 or perhaps 2020?

The answer involves a life-changing event amid the steep, long climb toward that potential IPO. Indeed, the unexpected passing of Datto employee Andrew Stuart earlier this year forced McChord to reevaluate his life, his priorities, and his time, the entrepreneur tells ChannelE2E.

McChord wrote a moving tribute to Stuart in this March 2018 blog. Partners from across the world, particularly those in Europe, shared similar stories about Stuart. As one friend put it, Stuart was a "big Scotsman with a warm smile and a firm handshake" who became fast friends with those around him.

When I caught up with McChord in October at IT Glue's GlueCon conference, it had been about seven months since Stuart's passing. McChord and I discussed the major events of the past year -- including Datto's continued growth.

But during that GlueCon conversation, we somehow stumbled onto the topic of life, family, friends -- and Stuart's death. McChord's face drained a bit, and his eyes turned upward as his spoke of his late friend, before we somehow stumbled back onto the topic of technology.

Inflection Point and IPO Ambitions

Fast forward to our call today, and McChord stated something that had become painfully obvious to me: Burying that friend was, indeed, a life-changing event for McChord.

Amid that reality, McChord says he reevaluated the road ahead, life-work balance and more -- especially since Datto will need consistent CEO leadership now through a potential IPO, and then for post-IPO stability. Wall Street, after all, craves consistent, predictable executive leadership. A CEO change -- near, during or shortly after an IPO -- simply isn't an option.

Tim Weller, CEO, Datto
Datto Founder Austin McChord

As Datto and its private equity owners formulated the company's 2019 plan, this quarter essentially became gut-check time for McChord: Stick around for another three years or so. Or step away now, while striving to provide a smooth transition to a successor who can prep the company for a potential IPO, and then lead it forward as a public entity.

McChord says stepping down now was the logical move -- especially since the company has momentum. If there were fires within Datto's halls, he adds, he would have stuck around to extinguish them.

Birth of An MSP-Centric Entrepreneur

McChord launched Datto 11 years ago -- I believe in his parents' basement. The company initially focused on backup and disaster recovery. During Datto's early days, some critics wondered if the company was merely OEMing and reselling StorageCraft's technology. But gradually, McChord silenced those critics with a portfolio of data protection solutions designed specifically for MSPs.

Over the past two years or so, Datta has grown through M&A and organic R&D to offer a suite of MSP-centric platforms. The expanded portfolio now includes IT and business management software, networking equipment, and the beginnings of some security-centric solutions. Key deals include such acquisitions as Open Mesh Networks, Backupify and Autotask.

Datto now has roughly 1,400 employees, serving 14,000 MSPs worldwide. That MSP-centric focus will remain core to Datto's DNA and every business move, according to Weller -- the company's interim leader. Describing that overall company DNA, Weller says: "It's amazing how many things now happen within Datto without Austin's direct involvement. Employee decisions and actions reflect the DNA that Austin instilled here."

Datto's CEO Search

During our conversation today, McChord endorsed Weller as a great choice for the permanent CEO role. But McChord also conceded that the proper next step is for the company and its private equity owners to conduct a broader industry search, as planned.

Related: Datto President Tim Weller - Five Things MSPs Should Know

No doubt, Datto parent Vista Equity Partners has an extensive rolodex of potential CEO candidates. But in addition to technical know-how, it's a safe bet the company's next CEO will likely have IPO experience.

As for McChord, he isn't quite ready to just disappear into the night. He's still set to keynote next week's DattoCon18 Barcelona conference in Spain. He'll also remain an active board member -- no doubt, weighing in on growth strategies for Datto and its MSPs for years to come.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.