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Q&A: Fred Voccola, CEO, Kaseya

“We are one of the few software companies in this space that doesn’t screw the customer over”

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What are some of the trends you’re seeing in the MSP market? What technical areas have you identified where they can build businesses?

Our MSPs are now using some of the more advanced or innovative product lines to build niche managed services. Four key areas we’re seeing now are network management, security, compliance, and cloud.

Imagine you own a financial services firm in the City with 15 employees. If your network slows down or gets spotty, it junks the whole business. If the MSP isn’t monitoring and managing the network, what good are they?

Another example is cloud management; the challenge is that regulation has come downstream and is no longer just for the big companies. So, a small or midsized business has these unique requirements around security, compliance, network management: “We’re using public cloud, but how do we know we’re using it right? We can hire two more people with this expertise, but they are expensive, and there’s still a skills gap.”

So, we’re finding a lot of project sourcing – that internal IT will project source, usually, network management, a lot of their security [and] their compliance to someone, because even if they found someone to do it, it’s not a full-time job and they would blow their budget. The IBMs, the Deloittes, they can’t do a £20,000 a month job, so there’s a new market for MSPs to move upstream.

The next five years for MSPs, endpoint management is still going to be the anchor for [them] – endpoints are growing at 50% a year. Also, identity security as a service (IDaaS) – that business has grown almost 100% a year for us. The reason for that is why have made it so easy for MSPs to make money with us. We charge £1, and they’re charging customers between £6 and £10 a month. We give the MSP a package with several components, including a playbook on how to build a business around IDaaS. We tell them how to sell it to their existing customers and their prospects; it’s not just a bunch of licences. Because the more money our customers make, the more money we make.

And cloud?

Most organisations that are leveraging the public cloud have no means of managing the infrastructure in that cloud, and more importantly, understanding their financial utilisation of the cloud. Are they spending too much money? Who tracks that? That’s a full-time job.

That’s why we’re releasing a new product, Kaseya Cloud Manager that allows customers to manage their infrastructure behind the public cloud firewall. It also integrates with the APIs of cloud providers and gives a report that says what you’re spending and what you’re actually utilising. They can potentially save hundreds of thousands of dollars. We have 30 early adopter MSPs, and they’re crushing it.

You’ve spoken in the past about your plans for turning Kasaya around and improving customer relationships. Have you seen any progress over the past 12 months?

We had a very, very, very strong year; we beat our board and investor expectations substantially. We’ve created hundreds of millions of dollars of enterprise value for the company; a fantastic overall year. And I’d love for us to take credit for it, but we’re in the middle of a huge wave where SMBs are viewing technology the same way the enterprise did 20 years ago; it’s that strategic. The amount of tech investment is around 10 times that of GDP growth. We’re in the right place.

The company has figured out MSPs need to be a little bit ahead of the curve of what their SMB customers want to consume, and we need to be right there with products they can monetise. And not just say, ‘here’s the technology’, but ‘here’s the business around it, here’s how to sell it.’

If I look at my time at Kaseya, the common theme we’ve heard from customers, is: “Help us to make money. Help us to stay relevant.” [Chief customer officer] Alex Cuevas has done a great job with our customer success group. Customer support now is light years better than when I first joined; our NPS (net promoter score) was at over 95% when I checked for yesterday, and I check every night before I go to bed. Our renewal rates are over 94%, which in this business is great.

You have also been vocal regarding your competitors in the past – are things more settled now?

I don’t know if I would say ‘settled down’. We were vocal is just saying the obvious; we are one of the few software companies in this space that doesn’t screw the customer over.

Our business model is simple: we only make money when our customers make money directly. When you look at other people in the space, they’re primary business is selling PSA software. PSA software is critical – it’s essential an MSP has a good administrative software package to run their business – and we think we have the best one out there. However, no small business is paying an MSP a penny for them to build a managed service around a PSA product. You just don’t do it. The business model of these people, their primary revenue when it comes a PSA product is one where they charge per user of the MSP. We do the same thing with our PSA product, but they charge about six times what we do.

However, if that MSP loses 20% of their customers, they’re paying the same amount for that PSA product. In the case of Kaseya, every single one of our products is revenue-generating, and if the MSP loses that customer, we lose that revenue as well.

We basically give our PSA almost for free, because I don’t think an MSP should have to invest substantial dollars that doesn’t directly lead to revenue from a managed service.

Have you seen customers migrate from any rival systems?

Hundreds and hundreds of customers have migrated from competitive MSP solutions to [Kaseya’s platform] IT Complete. The obvious reason is they make more money. Secondly, from a PSA perspective, MSPs can save £30,000 a year switching from Autotask or ConnectWise, for example. That’s pure profit. We also have a PSA migration process which automatically migrates you from Autotask or ConnectWise in one to five business days.

What are your plans for the UK and Ireland?

60% of our revenue comes outside North America. We are also building up a customer briefing centre in Dublin, to join the one in Las Vegas. It’s an intimate experience where the customer can experience the whole platform. That will open in about three months.

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