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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

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.

Datto CFO Tim Weller

Datto CFO Tim Weller

Datto CEO Austin McChord

Datto CEO 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.

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4 Comments

Comments

    Rich Forsen:

    Joe,

    I, for one am thrilled that Austin read that moment in his life as a reason to re-assess. So often we are not given the opportunity to think about the paths our lives take until we are looking backwards. Unfortunate that the tragedy of a loved one has that impact, but it does.

    As you know from our discussions over soup, my sister died at 38 of cancer (I was 35 at the time.) From that moment on, my focus was changed to one of making sure each day had an impact. It also made a lot of things that seemed important seem less important.

    Thanks to some pretty wonderful people growing and helping us grow, I was able to pass my daily leadership role in my company to the next generation, which has given me the opportunity to serve on the board of Cancer Can Rock (www.cancercanrock.org for anyone that wants to find out more).

    This industry has given me more than I’d ever expected it to, let me travel to places I didn’t imagine I would, and let me meet and enjoy fellowship with some really great folks. But most importantly it’s afforded me the luxury of some choice in what to do with my days.

    I am so thrilled that Austin is in the position to choose as he did, and hope that he will inspire others to remember that tomorrow isn’t promised to anyone. I look forward to seeing what Austin’s commitment to what’s best for the people he serves will produce in the future.

    Congratulations, Austin, and thank you.

    Joe Panettieri:

    Hey Rich: Thank you for the comment above, and for all of the conversations over the past decade. I could write a few hundred words, but for now I think I’ll quote you: “This industry has given me more than I’d ever expected…”

    Ditto. And best wishes.
    -jp

    MIchael Buckner:

    Rich: A touching comment. I have met Austin as one of many customers at various Dattocons. One day I sent him an email about a personal matter due to a remark he made. To my surprise he personally and candidly answered it. This announcement and blog was just sent to me by one of their “competitors” as if it were a major problem for Datto. I see that the problem is with the competitor. Kudos to Austin.

    Joe Panettieri:

    Hi Michael: Thanks for taking the time to read ChannelE2E and post your comment.

    Your note is a timely reminder to all vendors: Compete on the merit of your products, services and support. Vendors should also be careful of the mud slinging. MSPs don’t appreciate it.
    -jp

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