Cloud Computing

Datto jumps into Dropbox territory

Connecticut-based Datto Inc. wants it all. Founded in 2007, Datto has made its name in hybrid backup, recovery, and business continuity. It’s done pretty well; last year the company gained a $1 billion valuation and founder/CEO Austin McChord was listed on Forbes “30 under 30” list. But that’s not enough.

The company believes the File Sync & Share (FSS) space – the one currently occupied by Box, Dropbox, Microsoft’s OneDrive, Google Drive and a host of others – needs another competitor, one targeting SMBs directly. And so the company this month announced the release of its latest product; Datto Drive.

Datto Drive is built on top of OwnCloud – an Open Source FSS technology and company that’s had a partnership with Datto for a while. Aside from comparatively low pricing - £10 [$15] per month, per organisation, with unlimited users – the company is also offering the service free for a year to the first million SMBs that sign up.

New markets

File Sync and Share services are ten a penny, why jump in to an already overfull market? “We agree that the File Sync and Share market is a crowded one and File Sync and Share products are looked at currently as a commodity,” says Andrew Stuart, EMEA Managing Director at Datto. “It’s not really about taking share away from other FSS providers; Datto is taking a different approach to the market by offering pricing that is ideal for small businesses.

“Datto has a unique history of disrupting established markets, offering a less expensive, more innovative, reliable product. We were successful doing this in the business continuity/disaster recovery market and we’ll look to do the same in the File Sync and Share space.

“It’s really an evolution for us in how we protect the data of small businesses. Datto’s mission is Total Data Protection - protecting data no matter where it lives. We believe it’s essential in an increasingly data-driven world that all the data in all SMBs must be protected.”

Competing with the big boys

Stuart claims Datto Drive has feature parity with some of the big boys on the market – IDG Connect has tested and it seems to be on par – and is a “service which will disrupt players such as Box and Dropbox in the small business market”.

What really sets Datto’s approach apart is impact on the bottom line. “We are competing on the price. Most companies charge by seat whereas Datto is offering a terabyte per domain.

“When small businesses look at the current File Sync and Share options, there are services out there that cost approximately £10 [$15] per user, per month. This can add up quickly. Datto is offering enterprise-grade File Sync and Share at that per month, per domain, which is a significant cost saving for the average SMB.”

Stuart says by leveraging its own 200+ PB Cloud for storage, rather than the likes of Amazon Web Services or Microsoft Azure, Datto can significantly drive down the cost and offer such a low price. It must be a smart move; Dropbox recently announced it was ditching AWS and moving hundreds of Petabytes of data onto its own servers in a bid to reduce costs.

MSPs and a profitable Unicorn

Datto doesn’t do direct sales, instead focusing on its Managed Service Providers (MSP), and the company’s latest service can be a catalyst for its channel partners. “We’re giving our channel partners the opportunity to offer a new solution to SMBs”, says Stuart. “It was estimated that 40% of SMBs in the UK don’t use MSPs, and we see Datto Drive as an opportunity for our MSPs to grow their client base and also introduce other technologies that sit within our Datto’s Total Data Protection solution”. Stuart also hopes the “price tag of free” promotion will help generate some early excitement for the product and the company’s partners.

While SMB-focused FSS and channel partners aren’t sexy, Datto still recently joined the $1 billion-valued “Unicorn Club”. It’s not got there through glamourous funding rounds a la Magic Leap or headline-grabbing disruption like Uber, but the company is reportedly profitable, something rarer than duck’s teeth. While Stuart speculates as to whether or not we’re in the midst of a tech bubble, he at least partly agrees with Adyen CEO Pieter van der Does’ comments about the desire to become a Unicorn “driving the wrong behaviours”.

“It’s interesting that many of the companies in the ‘Unicorn Club’ are nowhere near profitability. Austin McChord, the CEO bootstrapped Datto when he first started the company from his parent’s basement, and I think Datto is a bit of an outlier in that the company is profitable and we invest approximately 15% of our revenue in R&D.”

Additional reading:

Dropbox trades more blows with Box in a fight to the end

Box CEO zones into safe sharing

Dropbox bets on scale, speed and UXP to sync for success


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Dan Swinhoe

Dan is a journalist at CSO Online. Previously he was Senior Staff Writer at IDG Connect.

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