ConnectWise CEO Jason Magee: Rob Rae Leaving Datto-Kaseya ‘An Opportunity’ For Us

‘It’s all about the partnership. As they grow, we grow. We don’t grow if they don’t grow. So we’re invested in their growth, we’re invested in them. It’s a partnership,’ ConnectWise CEO Jason Magee tells CRN.

For Jason Magee, ConnectWise’s focus is on cybersecurity, automation and helping partners grow.

“It’s all about the partnership,” Magee, the CEO of Tampa-based ConnectWise, told CRN. “As they grow, we grow. We don’t grow if they don’t grow. So we’re invested in their growth, we’re invested in them. It’s a partnership.”

The partnership is a community, he said, and the company’s annual conference, IT Nation, is a part of that community with a common goal to forge relationships so that everyone can benefit.

“IT Nation Connect is an event, but IT Nation is bigger than an event for us,” he said. “It’s multiple events. It’s peer groups. It’s just our engagement with the community and so on. So that’s a big part of our differentiator.”

That’s what he believes makes ConnectWise stand out from competitors, like Kaseya which bought rival Datto for $6.2 billion earlier this year.

“That’s opportunity for us to continue to showcase our community, what our community stands for and means and to solidify the ConnectWise IT Nation community as the community,” Magee said of the $6.2 billion Kaseya-Datto merger.

He also sees the departure of former Datto SVP of Business Development Rob Rae as an opportunity for ConnectWise. Rae is a passionate advocate for MSPs and was the longtime face of the Datto channel. He left Datto less than six months after the acquisition and has not yet signed with another company.

ConnectWise wrapped up its IT Nation conference last week in Orlando with just under 5,000 people in attendance.

Over the three-day event, the software vendor shared a series of business improvements that reinforce the company as a “consistent center of gravity” for the MSP community. The acceleration of innovation on the infinite edge is helping MSPs in real time harness automation, putting data to work for them and their customers, deliver exceptional customer experience and have a deep focus on cybersecurity.

CRN sat down with Magee to discuss recession fears, culture and why former Datto SVP of Business Development Rob Rae leaving Kaseya-Datto is a good thing for ConnectWise.

What are your thoughts on all the M&A in the industry?

Yeah, I mean, M&A will always be there. Industries go through consolidation all the time. But new entrants pop in and if those new entrants solve needs that the incumbents are not, then those new entrants become larger and it keeps fueling M&A and consolidation and so on. I don‘t see it as a bad thing. You’ve got to make sure that when companies do get acquired that the intent is right and that it’s being done in a good way.

Do you think it’s a good thing for the partner community?

Yeah. If you look at our ecosystem and the space that we play in, there‘s lots of small startups. And those small startups, in some cases, they were from a MSP themselves and they started to say, ‘Hey, I can solve this problem more broadly.’ They’re entrepreneurs looking for exits themselves. Whether it‘s us, or our competitors or other big companies who acquire these smaller vendors, were providing wealth to those employees and those companies. I see it as a good thing from that standpoint.

I would love your take on the Kaseya acquisition of Datto, now that the dust has settled.

Yeah, look, again, consolidation is going to happen. We went and acquired Continuum, right. It was a much smaller scale because Continuum wasn‘t the size of Datto. So from that standpoint, you know, it’s going to happen. Kaseya… they‘ll figure it out, I’m sure. Fred [Voccola, Kaseya CEO], he‘s a business guy and he’ll find his way to make it a success. Fred‘s got to be doing some good stuff, he’s still the CEO. And so…yeah. I look at it as opportunity for ConnectWise and I’m looking at it as opportunity for new entrants.

You say it’s an opportunity for ConnectWise. In what ways?

Anytime there’s an acquisition or a merger of this nature that goes on, there’s going to be disruption. Their customers will definitely be looking elsewhere and so on. So that‘s opportunity for us to continue to showcase our community, what our community stands for and means and to solidify the ConnectWise IT Nation community as the community.

Do you think (former Datto SVP of business development) Rob Rae leaving Datto-Kaseya is a blow to Kaseya therefore benefiting ConnectWise?

The short answer is, Rob was with Datto for a long time, right. So when you do acquisitions and you have tenured employees, Rob or anyone, people are always going to reevaluate their go forward. I can‘t speak for what went through Rob’s mind but from experience when we acquired Continuum, when ConnectWise was acquired by (private equity firm) Thoma Bravo, people who were with ConnectWise 10 or 15 years took it as an opportunity to reevaluate where they wanted to be. So I don‘t think there’s anything wrong with that. They‘ll be conspiracy theories, people will say probably a lot of things about it and people will try to have some fun with it but people are going to leave when you do big acquisitions. Do I see it as an opportunity for ConnectWise? The short answer is yes. But you know, in typical fashion, we try to be above the line and not use things like that.

Did you see a lot of Datto and/or Kaseya customers jump to ConnectWise once that acquisition happened?

I don‘t know exact numbers but anytime a merger like that goes on, yeah, you’re going to get customers that are going to raise their hand and say, ‘Hey, this opens up an opportunity for me to look at my tech stack again.’ I‘m sure it’s not just ConnectWise, my other competitors [are probably] seeing a benefit or an increase in stuff. But it doesn‘t happen overnight. It’s not easy to change out a PSA or a RMM or a cyber stack. It‘s probably still too early to say how big of a benefit any of us have had, but yeah definitely a lot more hands went up. Whether that translates into them jumping ship from them, too early to tell.

What makes ConnectWise better than Kaseya-Datto? What differentiates you guys in the market?

Just look at this week [at IT Nation]. Have you heard any of the stories of what people did to actually get here [during Tropical Storm Nicole]?

People diverted to Atlanta, some people rented a car and drove down from Atlanta, people took flights from Atlanta to Tampa and Uber’d over. People wanted to come. IT Nation Connect is an event, but IT Nation is bigger than an event for us. It‘s multiple events. It’s peer groups. It‘s just our engagement with the community and so on. So that’s a big part of our differentiator. A lot of the stuff we do in the community is around helping our partners grow. And ConnectWise only grows when our partners grow. That‘s why we do what we do around the community.

Looking back over the last year, where has ConnectWise seen the most growth?

I think it‘s pretty simple, right? Cyber. But not just ConnectWise, it’s our partners. They‘re able to leverage the growing threat landscape as opportunity for them, which then ConnectWise grows and does well. So that’s the simple answer, cyber.

What are you hearing from partners? What is their biggest challenge and how does ConnectWise address that challenge?

There’s lots of things, so let me try to compartmentalize it. The people thing is always a big challenge. It’s not any easier for them, and they’re competing against big tech and whatnot for the talent. So we are committed to help solve those challenges through automation and continued automation. We’ll take it to a whole new level in the coming years with the Asio platform, and also we do have the expert services. So [we are] committed to helping them solve those problems through automation and our expert services. I‘d say that’s probably a big one, but it‘s also the partner program that solves for a few things. There’s lots of companies in the ecosystem that help MSPs grow. Depending upon the maturity of the MSP, they may or may not have sales and marketing resource. So when a MSP looks to grow and that’s not something that they may be good at, if they‘re part of our partner program we help with that. Partners in our partner program are growing four times greater in cybersecurity than those that are not.

What is your biggest pain point? What keeps you up at night?

I just had this conversation with a whole bunch of partners, [it’s] the threat landscape. I feel good that we’re doing a lot of good things, but is it enough? That keeps me up at night. It keeps our partners up at night. If our partners are being kept up by that, so am I.

You said during your keynote that the talent shortage is going to get worse before it gets better, so what is ConnectWise doing to combat that?

It goes back to what I said. We‘re going to continue to drive automation to new levels through the Asio platform and everything we do. If we’re able to automate a lot of those manual tasks, that means less people are needed or you can do more with your current resources. We’ll continue to incrementally do things like the partnership with Arrow [Electronics] where that will help streamline some of the back-office stuff around procurement and driving that down to the MSPs customers on invoices and so on. The other piece is we’ll continue to hire in our expert services and where they have gaps, we can help them.

Where are some growth opportunities for your SMB partners?

Increasingly, there‘s more and more midmarket customers reaching out to MSPs these days. It’s actually been a pretty good opportunity for some of our partners, they are getting more midmarket customers than ever.

But I’ll go back to my simple answer earlier, cyber. MSPs are still just scratching the surface around offering cybersecurity, the complete soup to nuts there in terms of how to protect their customers. If you look back five…10 years ago [there was] antivirus. That’s what everyone had… ‘Oh we’ve got antivirus so we’re protected.’ Obviously then there‘s EDR, MDR, SEIM, vulnerability management. But cyber, make no mistake about it, will be a huge opportunity for MSPs regardless of SMB customer or even the increase of some midmarket customers that are needing help.

With talks of an economic downturn, how is ConnectWise helping partners be recession resilient?

Many people believe this industry is recession resilient. With that said, you won‘t know until after you get through it if we were or not. So we’re doing things right now, doing surveys, capturing data and we‘re going to share it with the broader community so everyone sees what they’re all feeling and seeing. We‘re helping our partners that are closely engaged with us [and telling them], ‘Make sure you’re looking at key metrics in your business that will tell you if you‘re going to start to see a slowdown.’ The first part is let’s have the visibility and make sure if it‘s going to impact us or not, and just be smart about it.

How would you describe ConnectWise’s culture?

Everchanging, because it is always changing. You put certain things in place to help drive the culture, the alignment and everything, and we‘re doing a really good job with that. Now we’ve got, what we call, ConnectWise Way and we‘ve got guiding principles or core values aligned to our mission and vision and all that stuff. But then you do acquisitions. When you acquire companies and you bring people in or even hire people organically, you bring in new people with thoughts, ideas, experiences, and it evolves. It’s ever changing. If I was to really boil it down, we‘re about alignment, we’re about accountability, we‘re about let’s deliver on what we say. We may not be perfect, and that’s fine. Let’s reset expectations with our partners in the community.

Do you have initiatives in place in terms of diversity, equity and inclusion or employee resource groups?

Yeah, we have a DEI committee headed up by non-executives. The last few years we’ve had the pandemic, we’ve had geopolitical stuff, we‘ve had all the stuff around diversity, so we’ve put a lot of things in place. In some cases we‘re learning like everyone else, and that’s okay. But the important thing, and it ties back to our culture, we‘re not afraid to say, ‘Hey, we don’t know.’ Even around some of the DEI stuff, we did bring in an outsource company to help and put this framework in place.

As CEO, what is your message for partners going into 2023?

It’s all about the partnership. Again, it’s as they grow, we grow. We don’t grow if they don’t grow. So we’re invested in their growth, we’re invested in them. It’s a partnership.