Memo to GoDaddy: Embrace FreedomVoice MSPs
When GoDaddy acquired FreedomVoice yesterday, quite a few MSPs reached out to me and voiced concerns. The big issue: Will GoDaddy continue to support FreedomVoice channel partners — particularly managed services providers (MSPs) — that sell cloud PBX, VoIP and other voice services into the SMB market?
GoDaddy’s official announcement says “FreedomVoice products will continue to be available online and through partners.” But frankly, that statement doesn’t go far enough. GoDaddy must go much further to prove its commitment to MSPs. The person who has to make that happen: Barry Saik, who recently joined GoDaddy as general manager and senior VP, Telephony. FreedomVoice essentially becomes part of his business.
Plenty is at stake for GoDaddy, FreedomVoice and channel partners. GoDaddy is paying $42 million in cash for FreedomVoice — plus up to $5 million in potential future milestone payments. That suggests FreedomVoice’s executive and sales teams have incentives — $5 million worth — to hit specific revenue and/or profit goals.
FreedomVoice certainly isn’t a VoIP or cloud PBX giant. I suspect the privately held company’s revenues are somewhere between $20 million and $35 million (sorry for the large range; FreedomVoice doesn’t disclose actual revenues).
But if you take a look at the business, FreedomVoice Channel Chief Chris Sterbenc and his team have done a solid job over the past year or two building momentum with channel partners — particularly MSPs that want to push beyond PC and server monitoring. Indeed, the company now works with more than 1,000 resellers and MSPs.
GoDaddy Needs to Study MSP Market
My advice to GoDaddy? Take a closer look at companies like Barracuda Networks, Carbonite, Continuum, Datto, SolarWinds and Sophos (among others). The reasons:
- Barracuda Networks acquired Intronis last year for cloud and business continuity services. But it was more than a technology or platform buy. Barracuda also wanted to enter and understand the MSP channel. Intronis provided a springboard into that market. So far, the Intronis buyout is performing well, according to Barracuda CEO BJ Jenkins.
- Carbonite acquired EVault last year to offer midmarket business continuity services. Take a look at the company’s most recent financials, and you’ll find that Carbonite has evolved from a direct-sales consumer business into a channel-led B2B business. And momentum is accelerating.
- Continuum, acquired by a private equity firm in 2011, is an MSP-centric software and services company. Instead of offering one service to MSPs, the company has successfully blended multiple services (RMM, NOC, Help Desk, BDR) into a total portfolio for MSPs.
- Datto is a pure-play unicorn — a profitable startup with a $1 billion+ valuation. The twist? Datto only sells through MSPs and channel partners. The company is taking some innovative steps to build its brand and partner momentum. A case in point: Freemium file sync and sharing services that seek to deliver 1 million sales leads to MSPs.
- SolarWinds acquired N-able Technologies in 2013 to push into the SMB cloud sector. But the real play actually involved N-able’s base of MSPs. Fast forward to the present, and N-able now offers a broader portfolio of MSP-centric solutions that are performing well in the market.
Sophos acquired Reflexion Networks, an MSP-centric email security company, last year. Instead of folding Reflexion’s partner program into the Sophos channel strategy, the company built a new MSP partner program from the ground up. Scott Barlow, VP of global MSP for Sophos, is a Reflexion veteran.
Starting to see the pattern? Over and over again, some of the most successful tech M&A and/or funding has involved MSP partner ecosystems in recent years.
What GoDaddy Can Do Right, And Wrong
Amid the examples above, GoDaddy faces a market inflection point. The company can either promote FreedomVoice and other telephony services directly to end customers — or GoDaddy can double down on MSPs.
GoDaddy is taking multiple steps to build its channel. In the SMB cloud space, the company now works with a growing ecosystem of developers. There are also signs that GoDaddy wants to work more closely with digital media agencies that design and manage SMB websites, marketing campaigns and more.
But frankly, I’m a little worried about GoDaddy’s in the MSP sector. Supporting a reseller program isn’t the same as building and nurturing an MSP program. As a GoDaddy customer myself, I’ve had some great (and not so great) experiences with the company. GoDaddy handled our move from a legacy hosted email server to Office 365. Things started off well — until we discovered some of our email addresses blacklisted by major service providers.
When we called GoDaddy for help we actually got the wrong advice/guidance from the company’s support team. Frankly, we’ve considered reaching out to a third-party MSP for more productive help.
I worry the same scenario may unfold with FreedomVoice under GoDaddy’s ownership. I’d like to hear more — much more — about how GoDaddy plans to support FreedomVoice’s MSPs. And how those MSPs, in turn, will offer FreedomVoice support to end-customers.
Anything less than perfect execution could trigger serious consequences. FreedomVoice MSPs could wind up reaching out to alternative cloud PBX providers. And Microsoft, by the way, is building up its Cloud PBX channel practice right now. Thousands of partners already promote Office 365. Microsoft’s Cloud PBX could be a natural upgrade offer from them…
Of course, both GoDaddy and FreedomVoice deserve the opportunity to address their channel strategy. We’ve reached out to both companies for comment, and look forward to hearing more…