Small and Medium businesses have been hit hard over the past couple years. From the pandemic, to retaining and recruiting top talent, to most recently dealing with supply chain challenges, inflation, and more. These changes have left businesses to rapidly change their business models to keep up with the ever fluctuating landscape.
Harry Brelsford of SMB Nation sits down with Jamison West to chat about the ever shifting landscape in the SMB space, consolidation, merges and acquisitions, and what they see for the future.
Video Transcriptions
Jamison West
I was thinking about buying it, but the checking account balance was a little low.
Harry Brelsford
Aaron, what are you hearing out in the community on the acquisition? What do you think?
Jamison West
You know, every time you see a big, so the two conversations I've seen predominantly, one has been the natural knee jerk reaction of a lot of folks who are customers, which usually the loud ones are the ones that are panicked. When there's probably no immediacy to panic about right. And then you see everybody else kind of jump in and say calm down. Nothing's changing tomorrow. A bit all that, you know, threats of I'm jumping ship. And I said it's been there's been that that ordinary chaos when a large, large acquisition happens, which, for me, that's almost just entertainment value on social media in light, because that's been interesting to watch. And the larger side, the the concern that that I hear most frequently from people or who are really thinking about things in the industry, I don't even know if I fair to call it a concern. It's just that notice that we're going from a three party system to a two party system. Like, what does that mean competitive landscape, but does it look to the smaller players? Does BMS survive business? That probably not, you know, like the PSA? I can't imagine would. So it's like, that gets kind of interesting. So like, like, stepping back and saying, what's the what are the ramifications of something like this over a one to three year period, as opposed to freaking out about tomorrow, which has nothing to do right. So it's interesting.
Harry Brelsford
Yeah, yeah. No, this boy never a dull moment in our space. What was a barracuda just got acquired. I'm not as familiar with that. When did you catch that one fly by?
Jamison West
I mean, barely. It was it. The the rate and size of the consolidation message has been out there for a while, but it just feels when this happens. You just you feel it? Yeah. Wow. Okay. It's serious. You see a lot of MSPs rolling up and P firms are coming in in a pace that's never been matched. before. It's just it's, it's frenetic. Very late.
Harry Brelsford
Yeah. On the on the emotional side of selling related to your book, do you think internally at Datto or at Kasaya? And maybe you've had private conversations? Maybe not? The news is so fresh, but does that mess with your hair, I work for Datto. My head is a little shigley. Right. Now, does that affect you the thinking these big mergers? Like oh, my goodness, where do I fit? No, I
Jamison West
suspect the folks who are tied to the sale, but because you know, the book that that I wrote is really focused on small business, they when you kind of get executives and shareholders and equity folks stakes like that at the top levels of a company that size of data that sells for 6.2 billion with a B? Probably not. They've been thinking about this, they've been planning it this is this was this was this is a it's a it's a game at this point, right with the money. It's the folks who are the I think the reaction from that perspective that comes as more from people who are extraordinarily bought, bought into the culture, and I don't really have commentary on the culture Datto versus Sam. But there's a lot of folks who I know a lot of folks that both companies and I don't see them as similar culture. So that'll be a really interesting, there'll be a really interesting challenge to bring the organizations together. In my opinion, the culture is certainly different. And that
Harry Brelsford
that's difficult. Yeah, yeah, no, no, that'll be the story to follow. The Of course, I don't have visibility into the cap table over a data but I'm wondering if my friends are going to be made whole and taken care of so you know, that's that's a lot of money floating around and I'm, I'm assuming what, what was the young kid that started that? Oh, I forgot it. names?
Jamison West
Oh, yeah, back in the day. So Datto Yeah,
Harry Brelsford
I used to talk to him. But he seemed like he was generous. The point I'm making is, I'm assuming he had a fairly decent cap table to take care of the people that made him.
Jamison West
Absolutely, absolutely. So I mean, that Oh, and when M and data went into the acquisition of AutoTask, and there's there were just a, it was a good. Everybody was always taken care of right across those. That was my that was that was my perception from the outside. I don't have visibility either. But if you look at the folks from data, who's stuck around and, and, and are from AutoTask, I should say that stuck around and I'll make Datto a stronger company. It was. Yeah, I mean, there is I think, not unlike, you know, all the things already did it connect wise when they were going through acquisitions, right, there's, there's there was a fair amount of sharing, and it was a lot of, there was definitely, definitely some play within the outcome. Right. So that in that, in that, that helps, that always helps keep people around. And those golden handcuffs work. So
Harry Brelsford
yeah, yeah, no, kid. Well, I prediction coming out of this is that, you know, now the industry is back to your point about concentration and a couple big players. They're getting so big now, the big two, for lack of a better word. You know, there's only a couple people out there that can then acquire them. And I've spent a lot of time with IBM over the years. And IBM is always kind of looking for a new home. Right? They, they, they they sometimes miss right? I mean, they did pretty well with the Lotus acquisition and Lotus Notes and so on. But they've had a few misses along the way. I think Red Hat's been okay for him. But you know, it's either ServiceNow or IBM. I mean, it's gonna take a big company to acquire the big two, you know, I'm saying we're, we're running out of buyers, man.
Jamison West
Yeah. So you gotta kind of wonder what the valuation of sale would be after the that kind of acquisition. And they don't a lot of other companies too, right. I mean, there's a lot of Cassia acre, say a company. There's a lot out there. And so, yeah, it's getting it's getting kind of stunning at this point. Like, what, like, we're getting into the you're getting into the greater than $10 billion valuations. You're right, it's limiting. Not only companies much bigger out there.
Harry Brelsford
Yeah. Who would have thought it back in the old early SBS user group days with Steve banks, right. We're sitting there on a Thursday night who we couldn't even imagine what we just saw.
Jamison West
No, absolutely. Because the companies that we were going to with PSAs had a back back then already had 35 staff, right. That was the big company. The big one.
Harry Brelsford
All right. Well, Chambers said we'll talk to you next time. Good luck, and stay healthy.
Jamison West
All right. Thank you. Thank you later. Bye.