Five Interesting Thoughts from…Fred Voccola
Kaseya’s vice chairman quantifies why SMBs, MSPs, and MSP profit margins should all matter a lot to everyone.
Fred Voccola has been CEO of managed services software giant Kaseya since 2015. Or rather, he was CEO until early January, when news broke that he was stepping out of that role to become vice chairman instead. Voccola spoke at length about that change during a recent interview on Channel Mastered’s MSP Chat podcast. Along the way, though, he shared insights on a variety of other topics. Here are five of our favorites:
1. MSPs are indirectly responsible for a huge percentage of jobs. Small and midsize businesses, per Voccola, account for nearly 80% of net new jobs in the U.S., a plausible figure given that small businesses alone have generated more than 70% of new jobs since 2019, according to the federal government.
“That’s only happening because these small to midsize businesses are fully dependent upon the business and industrial systems that manage their businesses,” Voccola says, “and they can’t do it without MSPs.”
2. By logical extension, there’s a lot riding on MSP profitability. Though nearly four-fifths of net new jobs might not exist without the work MSPs do, the average MSP, according to Voccola, has a dangerously slim 10% profit margin.
“If you’re a business running a 10% profit margin, you can’t make material investments. If you lose one customer, your business runs a solvency risk,” Voccola observes. And that, he adds, should scare everyone, not just MSPs.
“If the MSPs that are acting as the enabler for the most important part of the global freaking economy are running a 10% profit margin in aggregate, that’s risky as hell,” he says.
3. Building Kaseya 365 cost a lot of money. Introduced last spring, Kaseya 365 is the centerpiece of Kaseya’s strategy to raise average margins from 10% to 35% or better. Creating it has cost $12 to $14 billion so far, according to Voccola, and that’s excluding
all the money Kaseya has spent buying other vendors.
“We’ve made 18 acquisitions, including Datto and IT Glue and RapidFire Tools and ID Agent and Graphus and RocketCyber,” Voccola says. “We have several thousand engineers every day that are banging away at [Kaseya 365].”
4. Kaseya 365 is starting to produce its intended effect. According to Voccola, the more than 7,000 MSPs using some combination of the two Kaseya 365 modules introduced so far (Kaseya 365 Endpoint and Kaseya 365 User) are collectively on track to drop a lot more money to the bottom line every year.
“They are generating an additional run rate of over $1 billion of incremental profit,” he says.
5. Kaseya has something very big on the way. And we’ll all find out what it is during the company’s Kaseya Connect Global event in Las Vegas this April. According to Voccola, who declined to provide further hints, the new offering will dwarf prior Kaseya 365 launches by a wide margin.
“The impact will be a 5x impact [of] Kaseya 365 Endpoint and User combined,” he says. “This is what we’ve been waiting for. This is the end game of end games.” Want to hear more from Voccola, including why he changed jobs and what it means for Kaseya going forward? Listen to the complete interview on our podcast and read up about it on my blog.