In a deal that immediately makes it the top player in a critical product category for MSPs, IT management vendor Kaseya Ltd. has acquired managed services documentation vendor IT Glue.
The transaction, which was completed last month, completes a process that began some two years ago with the signing of a previously undisclosed agreement between the two vendors giving Kaseya a “controlling interest” in IT Glue and setting the companies on a path toward full-blown acquisition. Specific terms of the sale were not disclosed.
Kaseya will operate IT Glue as a separate business unit under its existing name. Founder Chris Day will step down from his current duties as CEO to pursue other ventures. “He likes to spend his time building new stuff,” Voccola says, adding that the rest of IT Glue’s senior leadership group will remain in their present roles. That includes Vice President of Product Luis Giraldo, Vice President of Engineering Nadir Merchant, and Vice President of Marketing Holly Pateman. Kaseya has no plans at present to replace Day with a new CEO.
Kaseya shipped AssetIQ, a jointly developed edition of IT Glue’s popular documentation solution directly embedded within the Kaseya VSA remote monitoring and management solution, in May, roughly two months after announcing a source code-level integration pact between the two vendors. According to Voccola, converting IT Glue from partner to subsidiary will give the company access to a cash-heavy balance sheet it can use to roll out more functionality more rapidly.
“We can now supercharge the rate of product innovation,” he says. “We can spend a boat ton more money on R&D and product, and we are planning on it, to accelerate the roadmap substantially.” Voccola plans to expand IT Glue’s roughly 120-person workforce significantly as well. “We think we’re probably going to double that team in the next two years,” he says.
Kaseya’s deep pockets—the company currently generates upwards of $300 million in annual revenue and is growing organically at about 30 percent year over year—will also position to IT Glue to offer more generous financial terms to its customers. “I think you’ll see functionality being included in the product that otherwise may have been charged for,” Voccola says.
IT Glue’s pricing structure and policies have long been a sore point with users. The company eliminated minimum purchasing requirements and added a self-serve online procurement option in October in an effort to alleviate that criticism.
According to Voccola, the rewards of making IT Glue part of Kaseya benefit all IT Glue customers, including those who use RMM and PSA products from ConnectWise, Datto, SolarWinds MSP, and other competing vendors. Kaseya and IT Glue will both remain committed to open standards going forward, he says, noting that interoperability with other members of the managed services ecosystem is what allows IT Glue’s software to be the metaphorical “glue” that connects information from multiple sources.
“If we don’t maintain that openness, we hurt ourselves as much as hurt our customers,” Voccola states. At present, he continues, more than 80 percent of IT Glue customers use products from a mix of managed services software vendors.
“We believe our platform and our technology is the best in every sector that we play in, however we are not and will not become a ‘Kaseya or nothing’ type company,” Voccola says. “If that ever happened, it would destroy the company.”
Echoing comments made by Day at IT Glue’s GlueCon partner conference in September, Voccola says that Kaseya’s competitors are free to link their products to IT Glue as closely as Kaseya itself has. “I’m more than happy to build that exact same functionality anywhere,” he states, adding that while multiple vendors have expressed interest in such a venture none has acted on it yet.
“We’ve been actively trying to build that level of integration with other providers,” Voccola says. “Everyone’s willing to do it. It’s just where do people put it on their priority list.”
Founded just five years ago, IT Glue nearly went broke in 2014 and didn’t hire its first employee, other than Day, until 2015. In the three years since then, the company’s flagship solution has caught fire with MSPs in need of effective tools for capturing configuration and operational data about client environments. As of the GlueCon event in September, IT Glue had 5,000 MSP customers supporting 500,000 businesses in 31 countries with some 5 million employees.
It’s also generating revenue in a range that Voccola characterized as “well over” $20 million but less than $50 million, while growing at around 100 percent year over year. “It’s a great product, but as importantly it’s a great company,” Voccola says.
Day made a strong impression on Voccola when the two first met some three years ago. “We liked his vision. We liked the approach he has to building businesses. We also liked what from a product perspective he was doing and looking to do,” Voccola says.
A subsequent 2016 deal between the two companies made Kaseya majority owner of IT Glue and defined a series of steps toward the eventual goal of a complete ownership stake. “The execution schedule has gone according to plan,” Voccola says. “Every milestone got hit.”
Purchasing IT Glue is the latest step in an unfolding campaign by Kaseya to build the industry’s most comprehensive and tightly integrated platform for MSPs. “Our goal is to provide a platform that has every type of functionality that an MSP needs,” Voccola says.
Earlier this year, Kaseya released its first appliance-based BDR solution in partnership with the former Unitrends Inc., and then merged with that vendor two months later. In September, it acquired security and compliance vendor RapidFire Tools and added a compliance management system based on RapidFire Tools technology to its RMM solution.
Weeks after that, Kaseya purchased Spanning Cloud Apps LLC, a maker of cloud-to-cloud backup solutions for software-as-a-service products. That transaction came six months after Kaseya introduced a backup solution for Office 365 that it developed in partnership with Spanning.
Unitrends, RapidFire Tools, and Spanning all continue to operate as independent subsidiaries of Kaseya, just as IT Glue will. In a September interview with ChannelPro, Voccola stated emphatically that allowing acquisition targets to continue doing business in the ways that made them worth acquiring in the first place is an important priority for him.
“I’ve seen firsthand, throughout my entire career, incredibly innovative, single-product, single-focused companies that I’ve started, run, and owned get destroyed by big companies, because the big company gobbles it up and tries to fold it in and doesn’t allow it to still continue to keep its innovative spirit, its innovative culture, its innovative identity,” he said.
Kaseya’s most recent acquisition news comes amid an ongoing wave of mergers, purchases, and alliances by managed services software vendors building increasingly expansive offerings. Unlike the IT Glue deal, however, most of those other transactions have revolved around security. Earlier this month, for example, ConnectWise purchased security vendor Sienna Group LLC to augment its in-house cybersecurity training capabilities. SolarWinds MSP, for its part, announced outsourcing agreements with two managed security service providers in September, while Continuum bought security vendor CARVIR in June.
