Kaseya CEO Fred Voccola: ConnectWise Investor Thoma Bravo Focused On ‘Cost Reduction’ While We Invest In ‘Growth’
“When Thoma [Bravo] put ConnectWise and Continuum together it was about, ‘Let’s get everything offshore,’” says Kaseya CEO Fred Voccola. “They cut costs massively, and as a CEO that sucks. It’s not fun. This is fun. This is growth, and let’s create, so I’m looking forward to it.”
Kaseya CEO Fred Voccola said there’s a big difference between Kaseya’s planned $6.2 billion acquisition of Datto and private equity powerhouse Thoma Bravo’s $1.5 billion acquisition of longtime MSP platform rival ConnectWise three years ago: Kaseya is focused on driving growth, while Thoma Bravo was focused on cutting costs.
“When [ConnectWise founder] Arnie [Bellini] was running ConnectWise, it was all about the channel,” Voccola told CRN. “They got bought by Thoma Bravo. Thoma Bravo is a very successful private equity firm, but they’re more on the cost reduction, ‘let’s create value through cutting costs as opposed to creating growth’ side. When Thoma Bravo put ConnectWise and Continuum together, it was about, ‘Let’s get everything offshore.’ They cut costs massively, and as a CEO that sucks. It’s not fun.”
In contrast, Kaseya and private equity partner Insight Partners are planning to invest in the Datto products, brand and channel culture with no plans to shut down Datto offices, Voccola said.
“Insight [Partners] is the private equity firm behind Kaseya, and it’s all about invest, invest, invest,” said Voccola. “The DNA of both companies is growth. It’s a good culture fit. Let’s not cut costs and find ways of saving every penny. Let’s put on big MSP events, let’s invest in our customers, our people, our organization, etc.”
Seventeen months after the Thoma Bravo acquisition, ConnectWise announced “large-scale” layoffs in the midst of the COVID-19 pandemic. Those layoffs were an unfortunate consequence of COVID-19’s impact on the company’s plan for 2020 and not the mandate of private equity owner Thoma Bravo, said ConnectWise CEO Jason Magee at the time.
In fact, at the time, Magee said Thoma Bravo actually gave ConnectWise between $25 million and $40 million in additional cash to enhance its products and delivery.
Thoma Bravo did not respond to a CRN request for comment.
In an emailed response to CRN, Magee said, “We’re proud of our 40-year heritage of industry leadership and community-building. With unwavering confidence in our vision, we remain laser-focused on partner experience, innovation, cybersecurity leadership and MSP business transformation.”
Voccola believes Miami-based Kaseya has always been No. 1 in terms of MSP breadth and reach.
“We were way ahead of ConnectWise before the deal,” Voccola said. “And the numbers speak for themselves.
Kaseya has 17,000 partners, Voccola said. The company plans to bring on an additional 18,500 Datto MSPs once the acquisition is complete, according to a Datto spokesperson. ConnectWise would not comment on how many partners it has compared with Kaseya. ConnectWise, however, did say it has more than 300,000 users of its business management solutions and over 11 million endpoints under remote monitoring and management.
When it comes to the top MSP platform providers, the numbers do speak for themselves, said Phillip Walker, customer advocate CEO at Network Solutions Provider, a Manhattan Beach, Calif.-based MSP that works with Kaseya.
“A lot of [ConnectWise’s] old loyalty to brands and the MSP channel shifted with the acquisition because it’s not the same company,” Walker told CRN. “Kaseya went through changes, but they took the opportunity to grow. ConnectWise took the opportunity to cut costs and increase their margins. It’s a business choice.”
While Walker said neither of the vendors are wrong in their business choices, those choices do impact him as an MSP.
“We made the decision to go with Kaseya because I saw the platform going where it [is today],” he told CRN. “I saw that all the pieces they had bought up, that together in one bucket alone lower my costs and help me add more value. There was nobody in the market doing that at the time.”
“I feel great. This is super fun,” Voccola said of the Datto deal. “Datto is awesome. As the CEO of a company, when you get the opportunity to pick up several thousand really good people with an awesome brand, I’m excited. I think it’s going to be great. We’re going to learn a ton.”
Joseph F. Kovar and Steven Burke contributed to this article.