757 Kaseya Shakeup? Fred Voccola - From CEO to Vice Chair

[Uncle Marv]
Hello friends, Uncle Marv here with a very special edition of the IT Business Podcast. And I am recording on Friday, January 10th, and we're going to go over some very recent news. And as many of you probably saw by now, you should have, yesterday Kaseya put out a press release that was very shocking to our IT industry.

And I put a blog out about it, and there were other people that covered it, CRN covered it, the MSP Success Magazine, Robin Robbins publication published it, and of course others all followed suit and had some very interesting stuff to chat about. So basically what it is, is that Fred Voccolo, CEO of Kaseya for the last decade, is stepping down from his role as CEO to become Vice Chairman. And this transition comes after a record-breaking year for Kaseya with over $1.5 billion in annual recurring revenue. Voccolo will focus on long-term innovation and strategy while assisting the board in finding their new CEO. So a lot of you know that Kaseya announced a very huge product, Kaseya 365, last year. It's a unified subscription service for IT professionals, and that obviously is what drove a lot of their growth.

The leadership change comes at a pivotal moment in the MSP market with competitors like ConnectWise also experiencing recent leadership shifts. So in the duration, Kevin Thompson, a current board member, will play a key role in identifying Kaseya's next CEO. And there is rumblings, and I do have a confirmation, that Kaseya is preparing for a potential public offering in the future.

How do I know that? Because I reached out to Kaseya for comment and to see if they would have somebody come on and interview me, and they replied with an official response. And this is it in verbatim by email.

Fred joined as CEO over 10 years ago and accomplished far more than he initially set out to do in this role. Stepping up into the role of Vice Chairman, he will focus on long-term innovation and strategy while helping the board hire a new CEO to run day-to-day operations. Our priorities haven't changed.

Given Kaseya's amazing performance in 2024, fueled by the launch of Kaseya 365, we'll be looking for Kaseya's next CEO to continue the strong positive momentum and effectively run the daily operations on a path the next major milestones and beyond, including a potential public offering. So they have confirmed that that's where they're going to go. And I don't know if I'll actually get to talk with Fred or anybody about it, but I do have somebody joining me here in just a moment.

I want to give a little disclosure. So for those that do not know, I run an IT company in Fort Lauderdale, Florida. I do managed services, and I have Kaseya products in my portfolio.

I have their IT glue, which was a product that was acquired by Kaseya. I started using Datto backup products, I believe, in 2015. That was acquired by Kaseya.

I also used Open Mesh, which is a wireless mesh networking platform that was acquired by Datto and then acquired by Kaseya. So full disclosure, I do use Kaseya products. Also disclosing that I kind of pulled back on a lot of my Datto products.

I basically got rid of their BCDR appliances in my stack. That's a whole another story, but now you know my association with Kaseya in that regard. But I wanted to have somebody come on to give us more insights and commentary and answer some questions that I tried to ask Kaseya.

And I've seen a lot of you out in the forums and social media talking about. So joining me now is not him. What happened to my?

A former member of the Vendor Channel and now a member of the Media Podcast host, Dave Sobel from MSP Radio. Dave, how are you? Mark, thanks for having me.

I'm great. I'm looking forward to this conversation. All right.

Sorry about the intro there. We're not live. I don't know if I'll edit it because I don't.

[Dave Sobel]
Half the fun is people knowing that this was a real conversation. Not only my former vendor, I'm also a former MSP. I used Kaseya way back in the day, so long ago that I don't think I need a disclosure.

But certainly and pre-FRED actually in many ways. But yes, super excited to talk to you about what's going on and answer your questions.

[Uncle Marv]
OK, so let me just ask, because I'm assuming you saw the press release when I saw it and all of that, I don't know if you had any insights before the press release, but let me just ask, what were your initial thoughts when that came out?

[Dave Sobel]
I'll smile and go, huh, that was the first. So my first question actually when I was looking through this was, OK, let's talk about, think about the strategy here and understand what the messaging was. Let's start with it's the beginning of the calendar year.

This is a very natural time for leadership changes to happen. This isn't the first leadership change I reported on the first year. Actually, I talked about Pia's leadership change on my own show earlier in the week.

So this is when those happen. So to a certain degree, you led off with a shocking, well, actually, from a timing perspective, this is when those kinds of conversions happen. So then my first, my next question was, OK, let's think about this and understand FRED in his position and understand what that was.

10 years is a very long run. So that's actually oftentimes longer than many leaders stay in a position like that. So, again, you look at it and say, OK, when I'm thinking about it, you expect everything to stay always the same, but maybe it didn't.

And then I start looking and saying, OK, what's the, like, is there a downside? Is there an upside? And, you know, I know FRED at times is often not popular.

When we look at his results, right, he's coming off of a quarter where Kaseya moved into the number one spot after displacing ConnectWise after 29 years of ConnectWise being the number one player. Kaseya does the displacement. They're now running at a $1.5 billion rate, as you've alluded to. You know, they're clearly in a good position. You know, you can kind of go, maybe he's just mic dropping, right? Like, maybe it's just the, like, I'm out.

I'm done. I've done a 10-year run and positioned this company incredibly well. It's time to do the next adventure.

That could be a completely logical bit. And then you start talking about, OK, what is Kaseya's next move? Are they at a growth point that they might change?

When you get to a billion-dollar company, the leadership skills may be different. And there may be a decision by your discussion with the board where FRED's thinking, maybe it's time for my next chapter. The board may also be involved in that conversation and say, hey, you know, now we're a billion-dollar company versus where we were before.

We're going to be moving, you know, we're going to need different skills to get us to the next level. And it might just be a mutual decision. So you look at it and say, like, that was my first set of reactions was, look, the dude's going out on top.

You know, you can argue strategy. You can argue personality. You can do that.

But, you know, the business results of where he's placed them kind of stand on their own.

[Uncle Marv]
Yeah. Now, he's not actually leaving. I mean...

[Dave Sobel]
Correct. That's a notable detail.

[Uncle Marv]
He's transitioning to the board. And it's funny that some of the comments out in the forums and social media made it sound like, oh, FRED tried to leave, but apparently he didn't realize he was in a three-year commitment. And so he had to stay on board in some capacity.

[Dave Sobel]
Well played. Well played, Internet. Well played.

[Uncle Marv]
Yes. But the fact that they've actually acknowledged this potential IPO almost makes it seem like what you were alluding to, leadership needs to change and there needs to be this next chapter. And maybe FRED is a part of that, but he can't do it, you know, dealing with day-to-day operations.

He needs to be out and about in a more behind-the-scenes role. Does that sound right?

[Dave Sobel]
Certainly the way I think about it. But I think, you know, let's not over-complicate it, right? There's a certain degree of like, let's read the message that was there.

He's not been removed. He's still involved with the business. The acknowledgement that he has a board role is a critical indicator to the market of like, look, he wasn't shoved out the door.

So that's what we should take away from that is like, look, the board. And a lot of people don't always think about corporate governance and the way this works. So the board of directors for an organization is generally in charge of really one thing, the CEO.

Their job is to both make sure they have the right person, make leadership changes when it's required, and then advise the person in that role. So, you know, you can look and say like, FRED's going from being the person in that role to one of the advisors of the person in that role. That's an acknowledgement that he's done the past 10 years and achieved success.

[Uncle Marv]
Right. Now, I want to pivot here real quick because this was met with reaction extreme side to extreme side, not to go political there, but there are MSPs that love Kaseya and there are MSPs that hate Kaseya. I'm in the middle.

I don't know what I feel because my relationship with Kaseya was always, I would start with a stack item that would get acquired by Kaseya. I would get another stack item, get acquired by Kaseya. And the idea of the contracts and stuff, I get it.

A lot of companies are moving to that. I, myself, don't want to commit long-term to a lot of things. So that's where a lot of the comments go back and forth.

But I think a bigger item to look at is Kaseya is also talking with, going after our clients. So in some areas, they may be a competitor. So going public certainly opens up the playing field for them.

I mean, granted, even now they can do whatever they want.

[Dave Sobel]
Well, let's separate the idea of IPO, which I think we should talk about versus the business strategy. My take on this is, and I've been five years on the kind of analyst side of things. And I view my role as to give you some opinions and insight into the way it goes.

I don't have favorites in this. I just want to analyze the strategies and understand. I think the emotional reaction to many of these moves is a little overdone.

And I would counsel MSPs to just not get too emotional about your tools. Ultimately, the most important thing that you have to focus on is your customers. That's the main thing.

And let me observe that every vendor in the platform space on here has a direct strategy. They just all do, right? Because Kaseya goes direct, ConnectWise has a direct arm.

Everyone has a direct way. And you have to be realistic about the world that we live in, where most buyers are coming to you well-informed already, having done 70% to 80% of the research independently before they even talk to you. I just think everyone who gets really hung up on the, they go direct and steal my customers thing, are kind of spending their time in the wrong place.

Spend your time making sure your customer experience is amazing, and you won't have this problem at all. So I just want to say, I think that's the way to think about this. And let's not single Kaseya out from that.

For example, by the way, I could go the same argument over on the laptop side. HP, Dell, everybody has a direct strategy. You're just less emotionally invested in it.

So let's just acknowledge that. I don't think any discussion of IPO has anything to do with that sales strategy. Now, certainly Kaseya has leaned into a very particular aggressive style of sales.

I think it's important to note that they offer multiple levels of those contracts. They're famous, of course, for the three-year lock-in contracts, but you can buy at a higher price point, a recurring engagement with them. You just can't get their best pricing without that.

That's kind of a natural way of engaging. And it's a natural sales strategy. Sure.

I think we might acknowledge that their sales teams are more aggressive about that in the way they communicate that. That's an aggression that I think is part of their corporate personality, which is probably why they're so polarizing. But let's not say that that's the only way they do business.

You can do business with them in lots of different ways.

[Uncle Marv]
Well, I mean, I want to also caution that just about every vendor is doing something similar. And it's not just vendors, it's other industries. I mean, Comcast has this commercial that I see four or five times a day about their five-year deal.

And they're high fiving everybody to commit for five years. So I think that when companies are now looking at having a known recurring income over a period, everybody's starting to do that. We want to do that as MSPs to get our customers to commit to us long-term.

So it's not about that, at least for me. I'm not worried about that. And if I have the option to go month-to-month, I can.

It is interesting to me, though, that companies that claim to be MSP-friendly are also public-friendly. And I think a lot of MSPs take issue with that, where I want to be able to sell a product and not have my customers be able to go behind my back and get the same product.

[Dave Sobel]
I'll offer that I think that actually, in a way, MSPs should look at it the other way around. I think you should be excited that there are companies that have an MSP strategy versus looking at that they have to only have an MSP strategy. Let me highlight something that I just want to plant into the thinking for MSPs.

OpenAI and Anthropic, two of the major companies that we're all talking about right now, absolutely do not have an MSP strategy. That's important to note. We're talking all of this time around these companies that do invest in this community and have a strategy here, and some of the hottest tech that we're talking about in a broader sense have absolutely none.

I think it should be much more important to talk about the fact that companies that don't even have a strategy versus quibble over the ones that might have a dual strategy.

[Uncle Marv]
Got you. You mentioned earlier a lot of movement happens this time of year. There's been a ton of movement, not just at the corporate CEO level, board level, but even channel chiefs have moved, although the names have changed.

They're not called channel chiefs anymore. Some of them have left pretty quickly. What do you think of the timing in the sense that not only that it was announced, but it was announced rather suddenly as if this was immediate?

[Dave Sobel]
I'd argue completely that that's all entirely perception. That's how press releases work. This one was incredibly well coordinated.

By the way, they clearly have a plan. They announced it, they know what Fred is doing, they know his role, they know the people that are managing the transition. They know exactly who's doing the search.

To act like this is surprising is more the, well, when you're told something, yes, that is the first time you've had the information, so thus it is surprising, but you actually need to analyze and say, no, they have clearly a plan. I'd offer, I suspect they already know who the new CEO is. You got to double whammy on announcements by doing an announcement of the change and then later an announcement of the CEO.

You get two press cycles out of doing it that way. I'm going to push back a little bit, Marvin. No, I don't think this is a surprise.

They planned all of this. It is, of course, a surprise to someone who is hearing it for the first time, but if you take a step back for a moment, a 10-year run, a long time, happens right at the beginning of the year, the press releases is all well-coordinated, is well-drafted. There are plans all in place.

Oh, they knew what they were doing. They've worked on this for a while.

[Uncle Marv]
Well, and they didn't drop it Friday at 5 p.m. Correct. I know that they've already talked about what they're looking for in the next CEO to continue the growth in there. One of the questions that I tried to ask them is what qualities are they looking for in their next CEO?

I don't think there's another Fred out there, but I'm assuming that they want somebody similar. Maybe.

[Dave Sobel]
It's interesting. The selection of Kevin Thompson is notable for me in terms of the selection process. For those that don't remember, Kevin Thompson was the CEO at SolarWinds.

My disclosure, I worked under Kevin Thompson during my three years at SolarWinds. Kevin was involved with the SolarWinds MSP, both the acquisition, he was leader when it was SolarWinds enabled, so he worked with that. He's thus very familiar with the MSP space.

He is actually stylistically very similar to Fred. He's got a bit of a bombastic personality. That is his style.

Thematically, kind of fits, certainly understands the investment partners. He's been involved with Insight and done business with Insight partners before. Thematically, you can look and say, okay, they've picked someone thematically that's a lot like Fred to be involved with the day-to-day operations till we get to next CEO.

Whether or not that's already selected or a process is ongoing, we'll see. Don't be surprised if it happens quickly, because it might already be selected. I would think you're going to try and fit someone culturally to the organization that fits the way they like to do operations.

Additionally, I think you're looking for someone with some level of experience that has run a billion dollar more or plus organization. Yes, the list of people that are smaller, it's smaller than those all potential CEOs, but it's not so short that they can't find somebody. Additionally, I would expect it's someone probably related to the businesses that Insight has invested in before.

They're going to bring in some kind of known candidate that they have some familiarity with.

[Uncle Marv]
That candidate may not be known to us in the channel but known to them in dealing with companies.

[Dave Sobel]
I wouldn't be surprised if they have technology experience, that they've been involved with some other Insight company. Perhaps they're coming from an enterprise software piece, because by the way, at 1.5 billion, you're a pretty big enterprise software company, probably with some level of SaaS experience. I think there's going to be elements of that that we're going to see that we're going to feel thematic to be the same.

You’re right probably doesn't come from the channel necessarily, the channel in big quotes, because there are just not that many $1.5 billion channel companies. Unless we expand the lens to say, companies that have gone public, perhaps it's a former HP, Cisco, Dell, Microsoft, Exec, someone along those lines who does have larger company experience. I'm not necessarily going to say IPO is important.

I understand that they've said the IPO is the target. I've got reasons to believe that that necessarily isn't the immediate goal. I think we're going to be focused much more on existing growth.

[Uncle Marv]
Okay. I was going to ask you as the last question out the door is, if they do decide to do the IPO, do you think that changes them schematically in any way or drastically as it relates to the MSP channel?

[Dave Sobel]
So broadly, I think any company of that size is able to position for IPO, because that's just a growth strategy that you want to make sure you're ready for. I don't have any expectation that they're going to IPO in 25. Let me just throw that out there.

And I have two reasons for that, but really highlighted. The first is this isn't exactly a great IPO market. We're not seeing a ton of companies go public over the previous 12 months.

And the markets are a little unstable right now. We're waiting to see if we're going to get in a trade war with China in the next 12 months. The market is a little bit cautious in some of what's going on.

We've not seen a lot of IPOs. So I think that's the first reason. The second reason is managed services hasn't done particularly well in the IPO market.

We have two examples of it. We have Datto and Enable, and neither are blockbusters. Datto went out, was a failed IPO, and was bought on the cheap to pull back.

Enable is still public but has been on the list of analysts' top potential go privates for the past 12 months. I wouldn't be surprised if Enable goes private versus Kaseya going public. So I just offer that managed services has not been a darling of the public markets.

So why would you take your company out that isn't a darling in choppy waters? It just doesn't make a lot of sense to me.

[Uncle Marv]
It will be interesting to watch, and we will do it together, sir.

[Dave Sobel]
So may you live in interesting times, right? And I look forward to having these conversations with Marvin and watching together. We're thinking toward the end here is, to listeners, be careful and strategic about your reactions.

These aren't emotional changes. These are analysis that you do over the way that it's going to impact your own business. Short term, there's no change here.

It's day-to-day business as usual for these organizations. In fact, during this transition time, Kaseya is going to be the most stable that it's going to be because they're not changing anything, right? They are going to be keeping the lights on, running things with the current strategy.

Nothing has changed today. What we're looking for is just to understand when they announce the new CEO, whether or not post-selection or already selected, we will then say, okay, what does this person bring to the mix that will change ongoing?

[Uncle Marv]
All right. Well, we will pay close attention, and if anything changes, I'll reach back out to you. Thank you very much for your time today and giving us your thoughts.

[Dave Sobel]
You're always happy to help out.

[Uncle Marv]
All right. That's going to do it, folks, for this very special edition of the IT Business Podcast. Be sure to check out Dave's podcast, The Business of Tech, and he is over at MSP Radio.

Some very good commentary and opinions. Thank you much, Dave. That's going to do it, folks.

We'll be back soon with another episode. Until then, holla.