Michael, welcome to the Evolved Radio podcast. Thank you, Todd. Pleasure to be
here. Excellent to have you. So you have
a very interesting career in the MSP space.
To kick things off, do you want to tell us a bit about your journey?
It's a long adventure. You can give us the shorter version of this,
where you've been, where you've come to now.
Okay, I'll try to keep it short. I'm an old guy,
so I'd say I'm an accidental lawyer.
I graduated law school not knowing what I wanted to do with.
I graduated from college not knowing what I wanted to do with
myself. I still don't, but that's
another story. And
enjoyed history, political science, political
philosophy, and studied and decided to go to law school
like a lot of other people at my, at that phase of
life at that time. And
you realize when you're in the middle of law school that the only thing that
you're, they're training you to do is to go work at a law
firm for like five years to learn to actually practice law.
It's like think about a doctor who just gets out of medical school. They're not
ready to practice unsupervised.
And so that's what happened. That's what I realized. And so
I took advantage of that realization, worked
as a lawyer, and then
once you're five years into working as a lawyer, you've got a lot of sunk
costs into the deal. So, so I kept working as a
lawyer. And by the time I was 42
years old,
I had practiced law and done a few different things, but
mostly in the legal field, but was really
unsatisfied with the legal career up until that point. Really
very much of a journeyman, I would say, jack of all
trades. And just
so happened to be across the old conference room table
with a 27 year old founder named Austin McCord
at the time. This is 2013
and I was looking for an adventure. He was
on an adventure and needed a, needed a
Sherpa of some kind. He and I, or
caddy, he and I hit it
off quite well. Our personalities
and the, the things that he needed were things that I was
capable of helping him with. And so that
spawned a
interesting partnership. And for me it was the beginning of an adventure in
MSP land. I joined the company as general counsel.
It was about 100 employees at the time. And Datto
grew to be a public company with more than 2,000
employees. I was the general counsel and head of
HR for two different CEOs over the
years and got to be a part of that
entire journey of scale. And
I thought, I mean, I think that that was the best job in America. I
did that for like nine years. When it came to an end,
I pivoted a bit and started
working in venture capital again with Austin and
his, his other partner, Teddy. And
about a year into doing that, we, Austin and I
decided to. That it was time
to rekindle the magic. And
that's how we started Slide. Awesome.
So we'll. Yeah, we'll, We'll. We'll. We'll jump forward a little bit here.
I want to linger a little on Datto, because it is.
It almost has sort of this mythic status in the MSP ecosystem because
of. I think the timing was so right
and the sort of
meteoric growth that you guys had. And when a company grows
that fast, there's sort of this public narrative of success,
but privately, there's usually some cost in the background.
What did you guys see as a leadership team and as
individuals, that it sort of cost you or the people around you?
And how did that influence. How were you going to do things differently in Slide?
Well, there are so many costs. Most of the costs
are, you know,
like badges, you know, so they're, they're,
they're less. The generals badges, you mean? Yeah, or like a Cub
Scout or Boy Scout badges or whatever, you know,
I think their lessons learned.
And so as much as they may have cost, they were valuable.
They were worth the cost, I would say. I can't ever regret
any costly mistake or endeavor because
we always learn so much from them. We had a lot of different people
in different leadership roles over the years
in Datto. And I think that the most interesting
observation from looking back on that entire
arc of time was the, the ability
for the business to evolve with different
people who spiked in different areas
at different times in the timeline of the organization and its development.
And not everyone is right
at all the right times. And
that's a hard lesson to learn sometimes because
a lot of people that bring you there don't
necessarily
have the experience to do the things that the company needs to do
in the future. And a lot of people that join who have a
lot of experience aren't really set up for the swashbuckling
craziness of a startup. And so timing
is really important throughout the life cycle. When you talked
about timing, I'm thinking to myself, well, you know, at which,
at which era, in my mind, I have many eras
in that adventure.
So the
mistakes are
pearls of wisdom. As long as you don't die from them.
And so there's innumerable. But I'd say
the most important takeaways there were that we
all have our sort of butter zone. And
being able to identify people's butter zones is
a learned attribute that I think has helped me
in this adventure that I'm on now. Cool. Okay.
That sort of pace of evolution and the changes that you guys saw,
I think there's a parallel with MSPs as well, especially now.
I used to joke that the IT industry is a great
industry to be in because the novelty, because the change, like
everything has a shelf life of about six months. And now with
a lot of the technology changes we're seeing, it's more like the technology has a
shelf life is six weeks. So the pace of change is just so
wild. That sort of rate of evolution,
what are you seeing as far as impacts or
questions from the clients that you're dealing with now about how
that is impacting their business or how they need support from
you guys as a vendor? What does that materially change or
what observations do you have about how that evolution is changing
the MSP channel?
So I, I think my, that's a
really good and difficult question.
The I, I
have a very strong thesis on the value of MSP
as the transit transmission mechanism
for IT services to be delivered to small and to medium
enterprises across the globe. And so as
small to medium enterprises manage
greater complexity in their
digital space, they become more and more reliant
on the effect of MSP to
run their business and not get caught in a, you know,
catastrophic cybersecurity event or a similar
disaster or, or
not keep up with modern workflows
and so as not to keep up with their
competitors. So today, this day
and age, well, we've seen waves of technology
fall over the SMB IT
space and we've seen timing be so important
for the growth of the MSP delivery
mechanism. And so I, that's only
strengthened my thesis for the, the, the MSP space.
And as we move into a world of AI and digital
transformation at a pace that no one's ever seen,
the MSPs that are
looking around the corner, looking around the bend, learning
modern workflows, learning modern tools, learning
modern security threats and.
Living with that, learning IT for their own businesses so that they can then
translate that into being that for deployed AI
specialist, for the SMBs who are going to need them
for that so badly, those MSPs that get that
are going to be exceptionally
valued and there's MSPs that are not going
to get that or they'll be behind the curve and they're going to
struggle. Yeah, like one of the sort of the dirty secrets
is the open secret now of the MSP industry and
service leadership has talked a lot about this historically of
25% of the industry is break even or losing money. Do you feel like
that curve will get steeper as maybe there's increased
consolidation or the threat of
these MSPs needing to adapt as things get harder and harder
for them in the channel? Do you think this is a different
circumstance than it has been through the changes in Cloud and the changes in
security? Does this feel more existential? Maybe.
The greater the reward,
the greater the risk. Right. That is the essence of this Life.
And the
MSPs that don't stay ahead of the curve
with modern technology are, are
going to die
and. But that's always been the case. Is it
more, is it more existential now? I think it may be. It
might move more quickly. But I also
think that there's always, there's always winners and losers in
all of these technology transitions. And my
expectation is that this technology transition is going to be so
overwhelming and massive that there's so many opportunities
for winning that I just assume pay
attention to that side of the, of the wave, then
worry too much about the backside of the wave. Yeah.
Okay. Both at Datto and with Slide, you guys have
been very intentional about leveraging the channel as
a go to market strategy, not doing direct sales and a
real strong belief in what the MSP channel provides as a
partner for you guys as a vendor. You kind of talked a
bit about this of like a really strong thesis of the importance
of MSPs. But what is sort of the internal discussion, especially as you guys
rebooted with the go to market for slide
of why the MSP channel as a delivery and a sell
through model is so important. What are your thoughts on that.
Thing has changed in Austin
or my philosophy around this? If you go
and read the S1 registration statement from
2020 from the Datto days,
it's long but there, you know, most of it is, is
legalese. But there's some really important provisions in there that really set
out the thesis and
there's just no way for. Well, as, as
SMBs manage more and more complexity in their
businesses related to their digital
transformations that they're all going through and that
complexity relates to how their work gets done, how
secure their environments are, how,
you know, how, how efficient their people are and
that's just getting fat that's just moving more and more quickly because
SMBs have profits that they need to protect,
they have stiff competition, and in order
to stay ahead of the curve, they need to be digitally transforming all
the time. And so that, and again that pace is just
getting faster and the complexity is just growing. And
so that just makes MSP more and more central
to their success. If they're to be successful,
by and large, they will need excellent
IT Sherpas.
And that's just a
virtuous cycle for me. That's an exceptionally
exciting marketplace to
have an opportunity to participate in. Yeah, I think we
agree pretty strongly on this point about the, the importance
of MSPs leveraging what they're learning and
how they're adapting their businesses and what they can actually teach their customers
about those lessons. I don't feel like this is something that a lot of
them recognize in themselves of the,
the necessity for competition and understanding all the aspects
of business are pretty universal. Like they, they tend to be
technically led organizations, so they do focus a lot on
technology, but as they continue to grow, they focus a lot more
on the traditional HR functions and management and scale,
the marketing and sales functions, which don't come naturally to a lot of the
technical founders. And I think that there's a lot that they can turn and
lend to their customers around digital transformation of the things that
they've learned about their business, but are probably 80% applicable to
their customers as well. This is sort of that evolution of how
people are consulting to their customers and
moving more to a business consultant rather than just purely a
technical consultant. Right.
MSPs that I talk to, that I
listen to most carefully, whom I learned the most from
are ones that are digitally
transforming their own businesses. And
they are taking the learnings from that
process and then being able
to translate those learnings into tangible results
for end clients. And at the end of the day, if
there are no tangible results,
this ain't gonna work. And so the only
way for one to obtain tangible results is to know it and live
it. In my view, eating our own dog food. And so there's
no room for the cobbler whose kids
shoes are shoddy or whatever that
metaphor that I just mixed
really means. But the MSP
cannot be that effective for deployed
AI and security engineer,
digital transformation consultant, without
having really understood it and lived it
themselves. And so the ones that,
at least that's my takeaway from my learnings
to talking to MSPs whose opinion I value
more than others. Perfect. The other part I'm
interested In it's just a bit of your guys's view of market
dynamics. Right. I think
Slide, do you go. Maybe I'll ask this a different way
to sort of get sideways into this question.
Do you guys view Slide as a bit of a rebel in the industry? Is
that part of what you would identify as sort of the
hallmark of how you guys are participating in the channel at all? Or
is that maybe me extrapolating things onto you?
We're really not seeking to embody any image other than
a partner, a
true partner. And maybe that
is a rebellious part. Is that the rebellious part? Maybe,
I don't know. Our job is to help MSPS build their business
and I think there are a lot of
technology companies in the MSP space who
may not view their jobs that way. They may view their jobs as to extract
as much value out of msps.
We're trying to sort of, you know, make
the, the tide rise rather than, you know,
suck the, suck the water out of the, out of the bay. We really
want MSPS to be successful. We think we're going to have the best
solutions to help them become successful. And so we think that's going to help
us in the long run. But I, but if you think about the values that
this crew of individuals carry
with them, it is aligned with
doing the right thing, doing what's best for the msp, not
looking after short term gain, doing your life's work. And
so we don't really think about how that might
impact our image across the landscape other
than as a strong partner and a great technology
company. Okay. And part of the reason that I'm curious is like I
do feel like there is an intention to do things differently. Right. Like you guys
had some type of magic with Datto
and you know, the post acquisition and maybe things
felt or looked different, not what was imagined in the
earlier days. And Slide as an opportunity to sort of
revisit what made the, the sort of, the, the earlier days of
Datto magical. Is, is, am I again, am I applying something
that isn't there to you guys or that there's some truth to that?
Yeah, I think the whole idea here is
that there is a need in
the market that we identified, I believe
for a couple things. One,
technology that is developed
in the very recent past, you know, modern
technology using modern tools to solve business problems
using the freshest, best
people and tools and technologies underlying them. And
it's, you know, when we challenged this team
to build a modern BCDR infrastructure,
we asked them to go to first principles and
build something that was.
Markedly better than, than what was there before.
That was always our pedigree. But you know, it's hard
to, you know when you, when something is
rests on a 20 year old foundation, there's only
so much you can do with it. When you start from
scratch and you spend a year and a half, two years in the
lab, you have the ability
to be inspired and to create that inspiration that we
always sought in the old days. The
other piece that is super important is
I alluded to this a little bit before. The values
to us, it shouldn't be
thought of as doing things differently as you described. It should be
described as doing things,
doing the right thing, taking care of your partner,
being a true partner, valuing the long
term relationship over short term gain, doing, you know,
encouraging, inspiring. Hopefully your, your. The people around
you to do their lives work.
That's, that's different. Okay. I
mean I don't know. I mean I think that that's the best,
the best I can be the best I know how to. Those are the only
tools I have in my quiver. Only arrows I have in my quiver.
And so the fact that those values
carry on from one
organization into a new organization, well that's just a
reflection of the human beings who've, you know, who've
assembled together to form that organization.
Cool. And like related but not related more on sort of the technology
and the sort of the, the idea of the
direction for the organization. I feel like the era of
platforms is very pervasive in msps and there's
sort of a strong pull for a lot of the vendors to
create a one stop shop in everything that they do.
And you guys have been obviously very intentional about the
solution that you provide and doing it really well. Has there
been temptation to do other things as you start to scale
up and grow or what do you guys talk about internally of
maintaining that sort of deliberate focus on. This is what we do. We
do this really well in enabling our customers to
have the best platform or the best solution possible for
go to market. Is that a temptation based on market
dynamics or how do you guys think about your,
your deliberate focus on what you guys do? Currently
we're pretty, we're pretty deliberate in our passion for
our chosen field. Right.
So we are a backup company. We, we are
MSP only. Right Channel only. And so
MSPS backup and our
have the privilege of protecting data on behalf of their end
clients that lives in lots of different places
and that's laptops and desktops and mobile
devices and Azure Workloads and workloads
that sit in O365 applications like that,
additional servers, virtual servers, et cetera, of Linux
boxes, Microsoft environments.
We have a massive
field to cover. We have only,
we've only touched on one piece of that so far.
We will be the backup company for MSP's period
paragraph. Our first shot out of the Canon is the
BCDR piece. There's a few different reasons why we chose that. First,
it wasn't obvious originally. A lot of
investors and other people say to me, why would you do that? Why did you
do that? And we were very deliberate about that choice. One,
this is BCDR is
an extraordinarily hard technical problem to solve, believe it or not.
Many moving parts and
low level access to some really
dense stuff. And then you have to,
you have to coordinate all these, all these data flows. You have to
present them in an elegant way. You have to keep them secure.
You have. And so
that technology in MSP land
rests on 20 year old tech for
the most part. And it's so,
it's the most neglected piece of tech out there in our view. It's
a big piece of the market in our view, in our experience,
and it's not going anywhere. As it moves, it evolves.
Some workloads go here, they go there, they come back,
they navigate, they migrate. At the end of
the day there's a massive need out there to back up server
workloads on prem server workloads. And the tech is old.
And so we thought, well, that's also the basis for backing up
on a direct to cloud basis. It's also the basis for backing up
a workload that lives in a virtual server
in Microsoft Azure. There are so many
foundational pieces of our future stack that are
based on the big BCDR product.
So that's why we started with the hardest problem first. We had the time that
we needed, we had very talented people and we, we were
looking to be audacious. So long
story longer, we, we have a
massive field to cover before we start getting cute
and doing other things. That said,
we're also entrepreneurs and stuff
happens, like opportunities
happen that you don't know. You're walking on the ground. You
see a $20 bill in the park,
it's a $20 bill, you pick it up. Sometimes there are opportunities that you
don't expect. And so I'm never going to be dogmatic about all that stuff, but
we're very clear eyed on all the things
our partners are asking us for and all the things we feel
like we can help them with. So
fantastic. You've had a really interesting seat, I think,
like because being in the early days of Datto through sort of the days
of, you know, the funding run up to going
public and then the sale and the transition, all
that, that, that history I think is really fascinating.
I'd love your perspective on how sort of different
funding vehicles and money in the MSP ecosystem is sort
of reshaping things. So there's obviously the private equity both on the
MSP acquisition side as well as private equity in the vendor side.
And there's obviously some mixed opinions on. Now we're actually seeing
VC money coming in as well and there's mixed opinions
on the pros and the cons of the PE
involvement with both MSPs. And there's
been some great wins and there's been some
eroded trust as well. And I'm curious, sort of what you think about
PE money in the industry as a whole, where it's been acquisitive
or helpful or, and some areas where it's
maybe created some rifts or some
broken trust and what sort of those
money vehicles mean for Slide and how you think about
approaching or taking on investors, those sorts of things.
Very good questions. It's, it's a very complicated
question because.
There's, there's a great VC
behind some of these companies, right? And
there's VCs that are, I wouldn't qualify characterize as great
behind some of these companies, right. There's private equity
sponsors that are,
are doing great things, they're
building great businesses that are going to be very valuable and that are
delivering value to their, their customers.
And there are private equity shops that are
not, I'll say, and I'm
not really trying to be political here. I'm trying to just be. As I've seen
it. I'll give you two examples. One, when
Datto originally we were planning on going public
back in 2017 and we made a
strategic decision to, to,
to sell the company, a majority of the company to a large private
equity firm that the private equity firm merged us
with Autotask and what emerged from that
was a private equity backed
monolithic, if you, if you will. That's a term that I use a lot of
the time. Platform is a term you use
that from my point of view for several years
continued the magic.
I mean I really, I feel like that last four years of
running Datto as we went and became a publicly traded company and then,
you know, hooked in, given the fact that we were now
A platform. We had to fill out the platform. Right. And so we did some
interesting tuck in acquisitions and it was an incredible adventure. And
at the end of the day, throughout that process, those values
were etched on the walls. It doesn't matter who owned the majority of the company.
We ran the business the way that we
wanted to and that was successful. That was a rising tides
scenario. I have seen other scenarios where private
equity, and again when private equity comes in, depending on where
they are in their journey, they usually pay top
dollar for the business. So their
opportunity is both grow the
business but also make the business more efficient.
And so they will seek to do both really strongly. And
some firms are more focused on cutting the
costs and getting
the most out of getting the most out of that business
in cash. Some of them are more focused on building a bigger
business and reinvesting some of that cash into the business.
I've seen both. I happen to believe that
right now in MSP land there is
a glut of
platforms, as you would call them, that
in my view are
running largely outdated technology
that are not great at any of the things they
do, that are not differentiated in any of
those things, that are not
focused on necessarily
the kinds of values that make us successful, in my
view. And so we're seeing a lot of
MSPs look to non
platform vendors to get the best products in the space and
expecting those, those best of breed vendors
to play nice together and to have strong
APIs and have modern tool stacks and to integrate with
one another and to enable them to grow their businesses and do
that in an efficient way. And that's sort of where I stand in this whole
thing. Fantastic. I guess just
looking to wrap up. I'm curious, given
the different levels of exposure that you've had to all sorts of
parts of the industry, both on the client side as well as the vendor side
and the different funding vehicles and all the adventures that
you've had. Any general advice for
both the MSPs themselves
as well as maybe some smaller vendors? We're seeing a lot of
sort of stuff bubbling up from the surface as people are
breaking away and kind of doing their own thing. A lot of
constant entrepreneurial spirit in the msp. And
what would you sort of suggest given your experience for both of those parties with
those MSPs looking to digitally transform and the vendors looking
to break into the market and grow their companies?
Get out there. MSP land is the best. MSP land is
the best. There is nothing like being
on the in a boardroom or in
a. On a conference, you know,
expo floor. When you have curious
MSPs wandering around that floor and seeing you and
your competitors going at each other trying to, trying
to compete for business,
that's where great ideas come from. That's where the competitive
juices emerge. That's where MSPs go to learn
this stuff. That's where. That's where vendors
either rise to the occasion or wilt.
You have to be out there, get out there. This is a unique space where
anyone can get out there. There are more opportunities
than you can imagine to get out there and just
whoever you are, if you're an msp, go to an event
where your vendors that you're interested in are present.
If you're an MSP. I'm sorry, if you're a vendor,
go to where MSPs are hanging out and get as much
feedback as you can from them and talk to them, learn from them
and your business will be better for it.
Fantastic. I appreciate your time, Michael. It's
always interesting to catch up on what
you've seen and the insights that you have. So I appreciate you sharing and coming
on. Pleasure. Thank you, Todd. Great to see.