CEO Magee Talks ConnectWise Exit, AI, Security and Competition

ConnectWise CEO Jason Magee addressed a media Q&A at IT Nation Secure 2024. Here are some of the topics he addressed that are covered below:

MSP tools platform vendor ConnectWise CEO Jason Magee recently celebrated his fifth anniversary leading the company. He stepped up to the top job in 2019 when ConnectWise was sold to private equity firm Thoma Bravo.

But Magee wasn’t a PE company insider installed at the top of ConnectWise to take it in a different direction. Not even close. As ChannelE2E reported at the time, Magee had already been running the company’s day-to-day operations for several years and was a natural successor to founder and owner Arnie Bellini who stepped away from the top job at the company after the sale.

Under Magee, ConnectWise has maintained its dedication to its MSP community through its events, the Evolve peer groups, its investment in Service Leadership, and more. It’s one of the aspects that distinguishes ConnectWise in the market of MSP tools providers.

Magee provided his perspective on ConnectWise, its strategy, the MSP market and more during a media Q&A at IT Nation Secure last week. We have excerpts of that interview here. But first some background.

There are three leaders in the MSP tools platform market – ConnectWise, Kaseya and N-able (in alphabetical order here). And there are plenty of growing challengers that offer the key tool sets MSPs need in their platforms – RMM (remote monitoring and management) and PSA (professional services automation) and increasingly, cybersecurity, specifically MDR and XDR.

All these providers are facing challenges in the months and years ahead. The three leaders in the market began with on-premises platforms and have transitioned to cloud-native platforms for their MSP partners. In addition, every MSP faces the challenges and the opportunities that come with the rise of two mega trends in the market – cybercrime/cybersecurity and artificial intelligence.

ConnectWise is also at a different crossroads. Five years has passed since Thoma Bravo acquired the company (for $1.5 billion, according to ChannelE2E’s estimates at the time. Here’s where we got that number.), putting it in the time horizon for the PE firm to be looking to sell the company now and looking for a price of at least $4.5 billion. But the market right now hasn’t been favorable to PE firms looking to exit. It’s unlikely Thoma Bravo could get the multiple it wants on its purchase price by selling ConnectWise right now. The PE firm could combine ConnectWise with another company to increase the value, or it could invest and wait for the market to improve, or it could take ConnectWise public in an initial public offering. Right now the trajectory is unknown.

Meanwhile, recent reports have said that rival N-able is up for sale and that rival Kaseya has also hired a new CFO.

Here's what Jason Magee said during the media Q&A at IT Nation Secure.

Private Equity, a New CFO, and Any Plans for a Sale

Jason Magee said that the company’s new CFO is focused on building the company to reach a new milestone of $1.5 billion in revenue, but declined to put a timeline on that number saying it was a multi-year plan. Companies of that size have different challenges than companies of $500 million in revenue. The new CFO will be focused on those challenges.

“I need to make sure as we scale and bring on more customers and more things to help us get there that we’re not losing the partner-first touch. It’s about partner success. As we add more people and more partners, things get more complex. We’re trying to build and make sure we are in a good place so our partners don’t experience growing pains or any of the operational challenges that come with scaling the company,” Magee said.

Magee said the new CFO’s background really excelled when it came to operational maturity and growing and scaling a company.

Later in the media Q&A, Magee said that Thoma Bravo’s exit timing would have nothing to do with ConnectWise reaching revenue milestones of $1.5 billion or $2 billion.

“I’m going to build a company that is operationally sound in all facets that our partners want to be on this journey with and the rest will come. I have my multi-year game plan in place that will get us to certain milestones and if something comes along the way, then it’s going to come along the way – two independent things.”

AI, ConnectWise Sidekick, the Microsoft Partnership and Copilot

When asked about AI and ConnectWise’s partnership with Microsoft, following the guest keynote at IT Nation Secure by Microsoft, here’s what Magee had to say:

“Automation, productivity improvements, and timesaving technologies is what ConnectWise has always done. This is the next evolution, and we call it ConnectWise Sidekick. Using AI and machine learning and hyperautomation (a term ConnectWise uses to refer to AI combined with automation), whether it’s workflow RPA (robotic process automation), AI is the next leg of the journey to make MSPs and TSPs more productive, efficient, and it leads to more profitability. MSPs are able to reinvest in their companies and themselves and upskill their talent because they are making more money to the bottom line.”

On Microsoft – Is it a Partner, an Ally or a Competitor?

Magee said that ConnectWise views Microsoft as a great partner. Microsoft offers a host of great technology. Magee said that ConnectWise takes that technology and makes it better and easier to consume for MSPs and TSPs.

Kaseya 365, Discount Pricing and Whether it's Disruptive

“Disruptive? I don’t know if it’d be disruptive,” Magee said.

“A bundle or package is nothing new. We’ve had packages with aggressive pricing for probably since I even started 13 years ago. I’m not sure that this is really anything new. But anytime you do things like that it gets people’s attention for sure,” Magee said. He also may have hinted to a competitive offering later this year.

“We have some really cool stuff that will come out later this year on the Asio platform. But again, bundles, packages, pretty sure every vendor has their flavor of it.”

The Importance of Cybersecurity for MSPs

AI seemed as much a theme at IT Nation Secure as cybersecurity this year. ChannelE2E asked Magee whether he is seeing more MSPs embrace offering cybersecurity to customers and whether more customers are demanding it.

“Cybersecurity is hugely important…There’s still a lot of MSPS that think antivirus is good enough. And, I hate to say it, they’re mistaken. You’ve got to have advanced protection. It’s a huge growth opportunity for managed service providers, but it’s not just about growth. They need to be doing it for themselves and their customers. Otherwise they are at risk. The threats are only going to continue to increase at a faster speed than we are accustomed to. The threat actors are using tools around automation and AI.”

The ScreenConnect Vulnerability and How ConnectWise Did

“I’m proud of how the team handled it for sure. I’d say extremely proud, actually. Inside the company we treated it as if it were more than a vulnerability, right? Because for others it wasn’t just a vulnerability.

“So we had active war rooms with touch base calls depending upon the situation or new information and so on, on a worst case, hourly basis for days on end.

“What it showed us is that our incident response plan is in pretty good shape. And then we had lessons learned on how we could improve from that point forward.

“But yeah, I thought the team did extremely well. And you know, it was great to see the community aspect come together. But yeah, we did well.”