 From the Silicon Angle Media Office in Boston, Massachusetts, it's The Cube. This is The Cube. I'm Paul Gillan. There is a cloud computing giant, a unicorn company based in Norwalk, Connecticut, and it employs 750 people. It's one of the leaders in cloud backup and business continuity. Now getting into the network market, chances are you've never heard of it. It's called DATTO Incorporated, and the fact you haven't heard of it is actually by design. It's a unique characteristic of DATTO's marketing strategy, its channel strategy, and it's a company that's growing like a weed right now, so we want to hear a little bit more about, learn more about DATTO. Matt Richards is joining me today. He's the Vice President of Product Marketing at DATTO. Matt, thanks for joining us. Thrilled to be here. Thanks for having us. Tell us about the business model. How have the company, you've been around for 10 years, how did the company get started, and what do you do differently? Easy story to tell, actually. 10 years ago our founder, Austin McCourt, who tells the story about starting the company because he was afraid he couldn't get a job, and he built out of that a business, a very successful channel-focused business on business continuity and disaster recovery. And the special sauce for DATTO is really the channel. The managed service provider is our path for delivering all of our products out to end customers. We built a series of business continuity devices, and I brought them with me just to show. Those devices offer full-blown local backup and business continuity in case you lose a server or you might lose a drive on a workstation. You can always jump over to these devices with a virtualized backup or push it all the way up to the cloud in case, for example, your office is under water and you need to continue work. Now, a lot of people go into a coma when they think of backup, but you guys do something that's quite different. Technologically, your special sauce isn't just your channel strategy, it's also technology bringing the market. How does this work that's different from other backup devices? So this device is based on something we call inverse chain technology. So when we take a backup, instead of taking a single backup and then a series of incrementals, we take that first single backup, and then the second backup we take is actually a fully formed, is a fully formed backup image. So instead of doing a backup chain where when it's time to boot that backup chain, you have to reconstruct it over time, and then you have to take the initial image and apply each of the backup images. Instead, what we have is a fully constructed image that we can boot immediately right on the device or in the cloud. So that's built on what we call inverse chain technology, which is built over the top of ZFS. So essentially, if my server goes down, I can reboot or I can fail over to your device and continue to run my operation off of your device and even to your cloud service, I understand. That's precisely it. So the idea here is that if you lose a server, we can be booted within six seconds, get you up and running locally. And if that perhaps isn't available, for example, the office is under water, we can boot you in the cloud again within those same six seconds and have a virtual instance of whatever server or workload you need to protect in the cloud. Of course, that's the disaster side. Not everything is quite so terrible. Sometimes you just accidentally deleted a file. So we have other mechanisms on the local device and also in the cloud where you can do simple file restores as well. Just to find that folder you accidentally deleted the other night. Now, that has been quite a growth story. Tell me about the scope of your operations right now and how quickly you have grown. Well, this has been a big year for us. We just added, yesterday, our ninth office already in 2017. So we have nine offices around the world and nine data centers, over 750 employees at this point. We're headquartered in Norwalk, Connecticut, but we have offices in Monroe, Connecticut, Boston, Rochester, New York, Portland, and then in the UK, Singapore, Australia. And you've built data centers in many of these places as well. Also data centers. It turns out, of course, like so many, we have data residency and governance requirements that require data to stay in region. So yes, exactly, both for latency reasons, for those disaster scenarios, but also for data residency requirements. We have data centers built in region. And unlike many cloud companies, I understand you don't use the Amazon cloud or you use very little of the Amazon cloud. You essentially have built out your own private captive infrastructure. Essentially, yes. For data, part of it was initially, of course, to get started working with the Amazon cloud, of course. But we very quickly started building on our own cloud. And we have a build facility for all of our devices, too. So we build, since we're already building thousands of devices out of our own build facilities, building our own servers, is not additionally difficult. And we already have the skills and high quality build capabilities. So we leverage those for our own data centers. And we've built them out all over the world. Another thing that's unique about Datto is your distribution strategy. You are solely focused on channel partners. You don't sell directly to end customers. And that's part of your DNA, I understand. Is that right? Absolutely true. One of the things we often hear on the company, and it's really instilled in the culture, is partner first. Do what's right for the partner. In some cases, some of our practices, our business practices, are really geared towards doing what's right. Return policies. If you need replacement parts, we're going to send out the parts first. And then we're going to take the old parts back. As opposed to some folks who, for the business reasons, want to get it back, check it, make sure it doesn't work, and then send you the replacement part. Look, if you're an MSP, your customer has some downtime. That's lost business for them. That's a lost relationship for you. So we built our company on the assumption that your relationship with your customer is the most important thing. And however we can help, we're going to help. So what do you bring to the game that's different from a technology perspective that is particularly appealing to the MSP channel? And that gets into a lot of our cloud management capabilities. So each and every one of our devices, and this is our smallest all-flash business continuity and disaster recovery device we released last year. So part of what makes that so special, and what's unique to them is the cloud management capability, we call it our data cloud partner portal. And all of our partners log in. They access the portal, and then they can manage these devices. And we have interesting features in there, being able to manage, being able to access the store, all of the content you might need from a marketing perspective. We have all of the pricing materials, all of our marketing collateral, and also training, all available through the portal. It's one place for an MSP to go that binds all of our product line together. And it makes working with data that much easier. You need a support ticket, or if you have an issue, go to the portal. Need to know a little bit more about the product. Go to the portal. You need to buy replacement parts. Go to the portal. And big news this week for Datto, the acquisition of OpenMesh, a networking company, really buying you a big footprint in the Wi-Fi access point and the networking business. And also, with a very similar distribution strategy to your own, what does OpenMesh bring to the game? So OpenMesh is a fantastic company out of Portland, Oregon, became a Datto company announced just yesterday. And OpenMesh, and I have in front of me just the access point from them, they bring a line of access points and switches. So when we look at the market for networking, driven through MSPs to small and medium businesses, it looks a lot like the market for business continuity and disaster recovery did 10 years ago. And when we started down that journey, it was mixed management panels, integration, chaos, a combination of disks, tape, USB, or no backup at all for small and medium businesses. And an MSP managing that was comparatively difficult. Well, the parallel for networking is that's exactly what networking looks like today. We have multiple management panels. It's 2017, and yet we have systems deployed that can't be managed from the cloud. For an MSP, a truck roll is a disaster. A truck roll means lost money, it means lost time. So being able to manage all of those networking devices from the cloud is a really big deal. So when we met OpenMesh, it was pretty early on, very clear that this was a connection that we needed to make more significant than just a partnership. So this quickly moved to acquisition. And what we released yesterday was the data networking line. So we have a whole new line of switches and access points and our data networking appliance. So if you're an MSP, you can pick up this Edge Router UTM firewall, and you can pick up a switch, and you can pick up the access points and essentially, as an MSP, you can sell out a complete line of data networking products out to your customers. So are you going up against Cisco and Baraki now? We do tend to see them in the market, but this comes back to what the design points are, right? It's about being simple, efficient, cost-effective. It's about 24 by 7, 365 support. It's about doing the right thing for the MSP, and our line is designed specifically for MSPs. A lot of other products and features, a lot of other products in the market, they weren't really designed for MSPs. They were down marketed from enterprise designs. And you can tell, if you look at the portal, command line interface, I mean, it's 2017, and we're command line interfacing in over through the cloud. Like that doesn't, that's just two modes that don't work well together. Yeah, I understand with OpenMesh, you've also bought yourself into a large distribution network that has very little overlap with your own. How big is it? So they do have today, 90,000 deployed networks with over 300,000 deployed access points, and they have been in business for 10 years. So when data was just starting, OpenMesh was just starting. So this is proven technology, proven business, proven distribution channels. And for us, when we looked at what data brings and what we've learned in the market, and we looked at also the existing channel for OpenMesh, these are complementary channels that don't actually overlap right now. So there are also opportunities for our customers and our partners to be able to pick up data networking and some of the OpenMesh products under the data brand and still leave the OpenMesh business intact. And it's going to be running as a business unit following exactly the same practices it follows today. Getting back to your core business continuity services, I understand that you have kind of an unusual way of demonstrating to audiences the resiliency of your products. You call them disaster demos, what are they? Oh, the disaster demo. That's one of the most enjoyed aspects of our roadshows. We put on several hundred roadshows a year on various events and we bring with us what's called a disaster demo kit. And over the years, let's see, we've created some thermite and we lit them on fire. We have, well, we attempted to cut them with chainsaws. We've gone after them with shotguns. We've dropped them in liquid nitrogen. That one was fascinating because the machine stops working in a very interesting way and its ability to flip zeros and ones because when it gets too cold it can no longer do that and it's a fascinating to watch it fail. And the whole point is taking a PC and destroying it, taking a workstation that you're working and showing and destroying it. We of course like to do that in creative ways. Generally with the approval of the fire department, apparently not always, especially in other countries from time to time. But then we drop, after we drop the workstation in and we destroy it and we bring up an image on something like this, then we'll drop this in and destroy it and demonstrate that our cloud can also pick up just where this device or your original server left off in the first place. So pretty powerful demos, but also a lot of fun in a room for a bit of creativity. I also understand that you do something unique with the ransomware epidemic that a lot of companies are struggling with right now. You actually, there's actually a feature of your products that is uniquely tuned for ransomware. Well, there is. Just released a couple of months ago in our flagship product, the Cirrus line. And these are small in a one terabyte to 120 terabytes for you rack version. So we have the little ones which I brought with me and then the large ones. In every one of those, we scan every single backup image as we'll take a backup image on the device and we'll push the deltas from the workstation or from the server to the device and we'll construct a backup image and then we'll test that image, every single one. And what we're doing is we're looking for the signs of ransomware and what that means is, is there are the files that ransomware attacks? Are those files still there? If you lost all of a sudden all of your doc files and JPEG files within a few hours, like that's likely ransomware. People don't tend to behave that way and delete every file. It's not a certain thing, but generally that's one of those indicators. There's some MFT table magic and also a test for entropy because encrypted files appear random. So therefore more random than a file with structured text, therefore we can also do that test too. So there's a number of tests we'll pull to check and see if ransomware is infected and if we do we notify the partner because again, that partner can then reach out and proactively tell the customer that they may have a ransomware problem and help them fix it immediately. And that's much better than the fire alarm essentially going off at the customer calling in a panic about how they have a ransomware attack to an MSP. Helps them build a stronger relationship. Now you don't sell direct to customer. So if someone's watching this interview and wants to buy a Datto products, how do they do so? So Datto products, there's information of course at Datto.com always available. The alternative is to, there's a little request a demo. So go to Datto.com and click request a demo. Then from there, we will connect you with our team who will connect you with a managed service provider in your area that offers Datto product. We also encourage folks, MSPs in the audience are otherwise too to join us at our roadshows. We do them all around the country. Chances are there's one coming to your area this year and we'd be happy to have you there too and talk through more of this. But if you're going to get Datto, you're going to get an MSP along for the ride. Going to get an MSP along for the ride. It's core to the business. You've raised a hundred million dollars. What's next? What are you going to be doing this year? So that's, this year is a fascinating year. We're spending a lot of this year. We've grown very fast and we have a fantastic MSP channel. And a lot of what we're doing this year is about hardening the products. It's about improving the capabilities of the products, improving the responsiveness of our support organization. For example, we've had an award-winning support team, but we can always do better. So this year is a lot about hardening our existing product line. We have over 50%, actually, I think it's closer to 75% of our company that actually is either in support or engineering. And that's about engineering and developing these products. So this year is a lot about hardening, improving the experience for partners and improving user experiences. I'm going mobile in some cases and also bringing our new data networking line to market. And for us, this product line is a global opportunity for us and it's a big one. So we're also spending, when not working on the core, product lines, the continuity product lines or back up a five product line in the cloud, we're also working on integrating OpenMesh products deeper into our product portfolio. Again, all back to single cloud managed product line available from Datto, push through MSPs. Well, it's been a great growth story. The ability to diversify your business, the way you've stuck to your knitting with your distribution strategy. Good story for Datto, good story, I'm sure for the state of Connecticut and continued success. Well, thank you very much. I'm looking forward to this year and honestly can't do it without our partners and our partner network. So if any of them are out there, thank you for your help. We made 2016 was a phenomenal year and 2017 looks to be even better, so. Datto.com, D-A-T-T-O. Thanks for watching, I'm Paul Gillin, this is theCUBE.