Business continuity, MSP, Storage

Datto CEO: We’ll Remain Pure Channel

At first glance, Datto is wrapping up another year of significant business milestones -- including raising $75 million in Series B funding. The funding pushes Datto into rare company -- a "unicorn" startup with a valuation of $1 billion or more... that's also generating profits.

Austin McChord
Austin McChord

But take a closer look. The funding isn't the core story. Instead, the business continuity provider prefers to put the spotlight on Datto's continued evolution. And the march forward, asserts CEO Austin McChord, will continue to feature a pure channel sales strategy.

In recent weeks, ChannelE2E traded email with McChord to get his latest thoughts on Datto's evolution, the company's product portfolio, and ongoing work with managed services providers (MSPs). Here's a sampling of the digital conversation.

Datto CEO Austin McChord: The Interview

ChannelE2E: In addition to your U.S. footprint, Datto has offices in the UK and Sydney, Australia. Will you expand those locations or open more offices, or both?

McChord: Both, we’re looking to grow wherever there is a need for backup. Wherever there is that need, our plan is to be there. We’re working with more than 5 million SMBs across the world, and there is plenty of room to grow.

ChannelE2E: You've got the storage and business continuity solutions. An SMB Router is on the way. How is the router R&D shaping up, and might you move into additional technology areas beyond storage and networking via the funding?

McChord: The router is progressing very well, and it will be a fantastic product when it’s released. We’ll see when it comes to other technology areas. When it came to the router, we felt like we could do it better. If there are other technologies where we think we can make a dramatically different change, then we will tackle those areas in the future.

ChannelE2E: I believe the vast majority of your partners are MSPs. But I sense that you'll be working more with VARs in the months/years ahead. VARs that don't necessarily have managed services practices in place. Instead, they'll simply extend product reselling to cloud services. Thoughts?

McChord: In the market we’ve noticed that a large majority of VARS are becoming MSPs. At Datto, we can then enable them to become great MSPs.

ChannelE2E: Can you achieve your short- and long-term sales goals with a pure indirect sales model? Or do you have to sell direct to a portion of the market?

McChord: Datto can absolutely achieve our goals by keeping our channel-only promise both short term and long term.

Funding and Continued Evolution

ChannelE2E: How far out (how many quarters or months) will the new $75M in funding take Datto? At what point would you potentially need to pursue more funding?

McChord: Since Datto is a profitable company, we don’t need the $75 million to fund operations, so indefinitely at this point. The funding simply gives us extra gas in the tank if we want to make any big bets in the future.

ChannelE2E: How have Steve Herrod and Paul Sagan helped to influence/shape Datto's direction and strategy since their arrival as board members?

McChord: Paul and Steve have been instrumental in helping me grow the company. Since I started the company right out of college, they have been critical in offering the right guidance to help us build a great business.

ChannelE2E: I hear you joined the $1 billion valuation startup club. Congrats. But I also see plenty of news about unicorn valuations now falling/heading for a correction. Anything you can say about why Datto is different than all the other unicorns -- other than the fact that you're profitable?

McChord: Datto doesn’t do what we’re doing with the goal to become a unicorn. As a profitable company, we set our own destiny. We’re not trying to build a unicorn to be part of the Silicon Valley rat race, but we’re trying to build a meaningful company. We’re in it for our customers who don’t spend a lot of time thinking about valuations.

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.