CRN Exclusive: Kaseya CEO Voccola On What ConnectWise's Acquisition Means To Industry, MSPs, And Kaseya

Life After Arnie: Voccola's Take On The MSP Platform Business And Kaseya After ConnectWise Acquired

Once the planned acquisition of ConnectWise by Thoma Bravo, announced this month, closes, it will mean all the big MSP platform companies--ConnectWise, Kaseya, Datto, Continuum--will be owned by private equity.

Fred Voccola, who took over as Kaseya CEO in 2015, told CRN that the ConnectWise acquisition is good for the MSP industry as it shows the importance of MSPs to the investor community. He also said it good for Kaseya as ConnectWise will need a couple years to work through the change. However, he said, that's not a reflection on ConnectWise, and that Kaseya when through its own two-plus-year period of pain and lost customers when it was acquired by another investment firm in 2013.

Voccola also offered a peek into potential upcoming acquisitions by Kaseya. However, he declined to discuss the rumor that Insight Venture Partners may have also been planning a bid to acquire ConnectWise.

Click through the slideshow to read the interview.

From your perspective, what is going on with the acquisition of ConnectWise and the move by CEO Arnie Bellini (pictured) to resign as CEO and act as a senior advisor to the company’s management team?

It's pretty simple. First off, Arnie and I, we go back and forth. We have this quote-unquote 'rivalry,' people say. It's all fun. It's all good. We both have a lot of fun together. Actually, I've talked to him about it.

First off, you have to congratulate the guy. He started his business, what, 30-something years ago. Now he's selling it for, I don't know, $1.5 billion, $1.7 billion, $1.3 billion, depending on who you talk to and what you hear. It's awesome. That's awesome. I'm happy for him. As an entrepreneur, when you see another entrepreneur do that, you gotta be happy. Good for him. I'm happy for him. He built a really, really good company. He's got really good people there. I'm happy for him, his family, his people.

How does this impact the MSP platform industry?

I think it's good for the industry. It continues to show that the MSP world is a world that the smartest investors on the planet--we're owned by Insight, Vista owns Datto, Thoma [Bravo] owns ConnectWise, Thoma owns Continuum--the smartest people in the world are saying this is the place where they want to put billions of dollars. So I think that's good. So I'm happy for Arnie.

What does this mean for the market overall?

Long term, it's awesome. You have another institutional player managing one of the assets coming in. Short term? And I say this from experience, I don't say it from a place of trying to cause chaos, when a private equity firm like Thoma, very smart and capable, comes in, they cut costs. Arnie's admitted it. You see it in the announcement. They're going to cut costs. It takes about 18 months--you know I've done this four times--about 18 months to right-size and figure out what the right balance is. ConnectWise will be no different. Kaseya went through this six years ago. Datto's going through this right now. Autotask [which was merged with Datto] is almost gone. That's what happens.

What does that mean for ConnectWise?

I look at this and say, it'll take a year or two to get things settled. In the meantime, you'll see a lot of turnover. This is not a knock on ConnectWise. Let me be very clear on that. You're going to see a lot less resources in support. Less people in customer service. The back office will get cut down a bit. That's what happens. And please make sure you make this very clear. It's not because ConnectWise or Arnie or Thoma Bravo is bad. That's just how it works. There will be a period of pain, one to two years, for their customers. It happened to Kaseya six years ago. There'll be a period of pain. But I think overall it's good for the industry, and good for everyone in there. And congratulations to Arnie. That guy's going to be one of the richest people in the State of Florida. And that's saying a lot.

How will the ConnectWise acquisition impact Kaseya?

Arnie and ConnectWise have made Kaseya better. They pushed us. If you have a good competitor, it pushes you. It forced us to make sure our products are the best, our people are the best. It's good to have that push. I will miss Arnie not being in the community. If you take a guy like Arnie out, ConnectWise is only going to be less good. I don't care how good his replacement is. Arnie's a talented dude. We'll miss him in this space. I'll miss him because he helped make us better.

Overall, for Kaseya's customers, I think it's a good thing. It shows that this market is real. There's real power behind it. And for Kaseya as a company, it's great. Look, I'm looking forward to picking up a lot of ConnectWise customers who don't want to deal with two years of pain. Just like six, five, four years ago, a lot of people left Kaseya. It's what happens. It's reality.

What is unique about the MSP business that draws this kind of investment across all the major players?

We have seen this before, and that was in enterprise software. Really, we're talking about software infrastructure. 1992 to 2008, we had companies like Cisco, Oracle, Dell EMC, Citrix, BMC, CA, there's hundreds of them. They all grew up in that space. And they all consolidated. The reason that so many companies sprung up and grew like crazy is because the companies were spending on IT infrastructure like it was going out of business. And who rolled them up? BMC rolled them up, CA rolled them up, Oracle rolled them up, Cisco rolled them up. They developed platforms. And if you were stuck with a single-product company, and now there's a platform, you were hosed. You picked the wrong platform company, you were hosed. All those were public companies then. [Now,] private equity is replacing public companies. They were all professionally financed, venture funded, all of them. We're seeing the same today. And I think it's because this market is growing so fast.

Is that what happened with Kaseya?

Insight and Kaseya saw this a little bit early on, and we invested tens of millions of dollars in building a platform that lets that multi-functional IT guy or gal that works in an MSP to have one platform to use for all their stuff. And one interface, one product, one single pane of glass. We made a huge investment because we saw this happening.

Saw what happening?

It becomes harder and harder every day to be a single-product company in this market. Not because of the institutional investors, but because, think about it, an IT person and an MSP and a service delivery person, they're not spending all day in one product. They have to go between endpoint and management patching, networking, backup and disaster recovery, sit on a service desk to open a ticket. They have to do all these different things. Monitor the network. Understand security backlogs. So, if I'm just a single-point product, I'm in trouble when you have alternatives that can do it all. And I think you're going to continue to see that. That requires serious capital, serious investment. And guess what. Arnie chose now to say, it's time for me to exit, because the capital requirements. He's a couple years behind in investing the required capital into his business. That's not a knock on the guy. It's just what we are seeing.

Word on the street is that Kaseya's investor Insight Venture Partners was also interested in acquiring ConnectWise. Was it?

I can't really comment on what Insight or Kaseya may or may not have done, or any of that kind of stuff. I'm not one to mince words or be political. [But] there's reasons why I really can't go into it.

We've been the most acquisitive of all of [the MSP platform players]. We invest the most capital. We're continuing to see where things go before we make another big acquisition. It could be days, it could be weeks.

When you say 'we,' you mean 'we' as in Kaseya or 'we' as in Insight?

Kaseya and Insight. Insight's the majority investor in Kaseya. 'We' meaning Insight-slash-Kaseya.

You just said it could be days or weeks before Kaseya makes another big acquisition. You didn't say months. When can we expect something?

Or it could be months, or it could be years, or it could be never. How's that for being political?

I think you'll see Kaseya making some announcements, a couple more acquisitions coming. There could be some very, very large acquisitions coming as well. So I think that you'll see Kaseya being incredibly active in the very near future. That's probably the safest way I can say it without getting myself put in jail. Or getting sued.

What areas could we see Kaseya investing in?

Well you know I can't answer that.

Look, I'll answer that in a very general way. I think that Kaseya has a platform, and you'll see a lot of security, compliance, as well as some other large players in the industry that may want to come into the IT Complete banner. And I'll leave it at that.

Datto's former CEO Austin McChord recently retired at age 33 to become an investor. ConnectWise's Arnie Bellini is retiring. Do you have any time table about when you might want to sit back and rest on your laurels?

I'm a lot closer in age to Austin than I am to Arnie. I say that with respect to Arnie. If I was going to retire, I would have retired after we sold either Identity Software [to BMC in 2006] or Trust [to FGI Finance in 2012]. I love what I do. I'm like one of the few people on the planet who truly loves what they do. I like the grind, I like the strategic, I like the relationships with the customers. I really enjoy it. Unless people get sick of me, I don't see myself going anywhere any time soon. I'm having too damn much fun.