Datto and its private equity owners are searching for a new CEO to lead the MSP-centric technology company. The search starts amid founder Austin McChord's decision to leave Datto -- though he'll remain on the company's board.
So, what type of CEO does Datto need for the next stage of business building? Here are five considerations:
1. IPO Experience: Yes, Datto must remain MSP- and partner-centric. But let's focus on the bigger priority, folks. Datto's private equity parent -- Vista Equity Partners -- apparently wants a successful IPO in the 2019 or perhaps 2020 timeframe.
The challenge? It's difficult to find an executive with (A) IPO experience and (B) MSP-oriented partner DNA. Ironically, one of the few people with that experience is Datto President Tim Weller. He was Akamai's CFO during that company's blockbuster IPO two decades ago. Now, Weller will run Datto until a new CEO arrives. In fact, Weller is a candidate for the CEO post...
2. A Quick MSP Study: There's a chance Datto's owners will promote Weller into the CEO slot -- ensuring that somebody with established MSP know-how is calling the shots. However, there's also a real chance that Datto's owners will hire an outsider to succeed McChord. That outsider will need to immerse him or herself into the MSP community from Day One. It sort of makes me wonder: Will CEO candidates be attending DattoCon Barcelona next week in Spain? Hmmm...
3. Celebrate DattoCon Geeks: DattoCon conferences feature a healthy mix of business and technology content. But frankly, attendees value McChord's ability to geek out during keynotes. That doesn't mean the new CEO needs to emulate McChord's approach. As Steve Jobs once told Tim Cook: Be your own person. If the CEO is more of a business leader, then delegate the DattoCon geek talk to CTO Robert Gibbons.
4. Solve for Security: Datto presents its data protection appliances, software and cloud services as key components in a security solution. That certainly makes sense. Moreover, the Datto Networking Appliance (DNA) features some security capabilities. But overall, the company is still searching for a killer offering in the managed security services market -- especially while rivals ConnectWise, Continuum, Kaseya and SolarWinds MSP either launch or invest their way into the security market. Part of Datto's challenge involves inflated security company valuations. But a correction could be coming soon -- and the new Datto CEO must be prepared to pounce on M&A deals.
5. Balance Sales, Support and R&D: Datto's private equity parent -- Vista Equity Partners -- has one goal: Transform business-software companies into profit machines, according to The Wall Street Journal.
That's potentially good news for investors. But it's a tricky reality for MSPs. To boost profits, Datto must either (A) drive more sales or (B) cut costs or (C) do both. Driving more sales requires MSPs to consume more and more technology. But that also requires those MSPs to pass on the costs to end-customers.
Sure, Datto's next CEO will look to drive more sales. But he or she must also continue funding R&D and support -- two cost centers that MSPs deeply value. More than the typical customer, MSPs want to see extensive roadmaps and timely product launches. Plus, they want a smooth omni-channel support experience.
If Datto's next CEO stumbles in those areas and overplays sales, the moves could poison relationships with the company's lifeblood MSPs. How likely are such missteps? I think the risk levels are reasonably low -- especially since McChord remains on the company's board, and the executive leadership team has remained largely intact since at least last year.