After the Datto IPO: Memo From CEO Tim Weller to MSPs

After a successful IPO (initial public offering) earlier today, Datto is now a publicly held company. But Datto’s core focus on MSPs (managed IT services providers) remains unchanged, CEO Tim Weller tells ChannelE2E.

Datto CEO Tim Weller

Tim Weller, CEO, Datto

“I reject the thesis that being a public company makes you different” in terms of Datto’s focus and priorities, Weller politely says.

How can Weller prove that assertion? He points to Datto’s track record over the past decade. Regardless of the company’s financial backers or business stage — from angel investors to private equity and venture capitalists — Datto has always remained focused on managed IT services providers (MSPs) as partners, Weller asserts. Shifting to public market ownership doesn’t shift the core focus of the business, he says.

Instead of making profits the absolute top priority, Datto will continue to focus on long-term business building and relationships with MSPs because “we’re in an early period of a massive growth opportunity,” Weller says.

Datto’s Journey: A Lesson for SaaS Startups Focused on MSPs

Austin McChord, founder, CEO

Admittedly, Datto has grown dramatically since founder Austin McChord launched the business in his parents’ basement in 2007. From 100 employees and 1,000 partners in 2012, the company now stands at 17,000 MSP partners and 1,600 employees worldwide.

Meanwhile, dozens of SaaS-focused startups are now pursuing MSP partners in the SMB (small and midsize business) sector. Amid that reality, ChannelE2E asked Weller what advice he’d offer to SaaS startups that are seeking funding and looking to go on a long-term journey with MSPs.

Weller’s reply: “Choose your investors carefully. Austin kept [the investor list] to a tight circle for a number of years. The mission has always been — and will always be — about the MSPs rather than the VCs. When VCs and private equity got involved with Datto, we found the right investors who were aligned with our culture and our commitment to growing with MSPs.”

Married to MSPs: Regardless of the Economy

That focus on MSPs needs to remain unwavering — even during tough economic markets, Weller adds. “We have a firm belief at Datto that we’re all in this together — with the MSP industry. Our growth runs parallel to the industry’s growth.”

For those keeping a one-day score: Datto shares ($MSP) rose 6.28 percent during their first day of trading. The company’s valuation is roughly $4 billion. Looking ahead, Datto’s quarterly financial reports should give rivals and startups a benchmark from which to measure their own performance.

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    Peter Radizeski:

    Despite the rhetoric and that I really like Datto (CT’s newest unicorn), being public changes everything!

    Josh Way:

    Absolutely! No question! For those of us who have worked with public companies, we wait and see.

    Joe Panettieri:

    Hi Peter, Josh: No doubt, public companies face intense pressure from shareholders. And businesses can change dramatically once they’re public. But in this particular case I think there’s one KPI (key performance indicator) that will measure whether Datto remains true to its DNA.

    The KPI? Percentage of revenue through partners. Today, the figure essentially is 100%. I don’t see the figure changing anytime soon. But if it ever does, we’ll be sure to report it.


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