Acronis CEO Ezequiel Steiner On Blockbuster EQT Deal, Crowdstrike Outage And Competing With Kaseya

Acronis CEO Ezequiel Steiner says his company's acquisition by European private equity behemoth EQT is going to accelerate MSP growth.

Acronis CEO Ezequiel Steiner said a deal for private equity behemoth EQT to take a majority stake in the MSP cybersecurity and backup provider powerhouse is going to result in across-the-board increased investments that will lead to accelerated MSP sales growth, said Steiner.

“It really goes into the whole company,” said Steiner of the investment from the deal. “I believe in balanced organizations. Obviously we're a product company. So innovation is at the heart of the company. So R&D will definitely be important, but we will also accelerate our growth in in recruiting new service providers and providing more value to our existing (20,000) service providers.”

The company will also use the cash to provide additional investment in its data center operations, said Steiner. “Obviously as we grow we need to keep investing heavily in our data center operations to ensure proper service to our customers,” he said.

Acronis was already firing on all cylinders so there was not any single part of the business that especially needed the additional investment, said Steiner. “The company was already operating quite well,” he said. “So there was not one area of the business that didn’t have enough money to operate.”

Steiner said he expects EQT, which has a whopping $268 billion in assets under management, to provide additional management “brain power” to grow the business. “They will support the company with that level of knowledge, understanding of the broader market and best practices, benchmarking, etc.,” he said. “I expect them to be very helpful. But from a market strategy, product strategy and execution of the plan they will rely on us.”

Steiner, who came off an all-hands worldwide call announcing the deal, said the investment marks a “great day” for Acronis. “Everybody here is extremely excited for the future of the company, and for how much we can do for our partners and for the level of recognition we have received for all their hard work,” he said.

Steiner’s final message to MSPs: “There’s a lot more coming. It is going to be very exciting. They are the center of our universe. They are key to the future of the IT industry, the key to the success of not just their customers but of the whole economy. I believe in the MSP model! I believe we can really help them and we’ll be doing our best to serve them!”

Below is an edited transcript of the conversation with Steiner.

How significant is the EQT investment and what does it mean to MSPs?

We are extremely happy with this transaction. It’s a great firm! I had the opportunity to work with them in the past. And so I know them well. I know the partner that is responsible for this investment very well. There’s a reason why we chose to go with EQT rather than the other options that we had. We had many (options) by the way. The reason is we trust them. They bought into our ideas and into our plans. We are operating as Acronis. This is Acronis continuing to operate as Acronis now with EQT as the majority owner. We are not going to change.

At the same time obviously we have a bigger backer now. We have all the resources that come with it. Not that we lacked resources before but it's even more and more is better in this case!

We will continue operating with our (MSP) partners as we have before. Our partners are the center of our universe. They have always been the center of our universe. Acronis has always since day one been a partner-centric company. We never do business direct. We’ll continue doing that, investing in our partners and investing in Acronis. We will keep doing that now with a little bit more resources than before.

Do you look at certain percentages in terms of how you might use the increased investment?

It really goes into the whole company. I believe in balanced organizations. Obviously we're a product company. So innovation is at the heart of the company. So R&D will definitely be important, but we will also accelerate our growth in recruiting new service providers and providing more value to our existing (20,000) service providers.

We will invest in our data center operations because obviously as we grow we need to keep investing heavily in our data center operations to ensure proper service to our customers.

The company was already operating quite well. So there was not one area of the business that didn’t have enough money to operate.

Will you use the increased cash to invest additional R&D into artificial intelligence capabilities? Will AI become a bigger part of the Acronis story?

First of all, for a company our size, there are very few companies that I can think of that invest as much money as we do in R&D. The percentage of revenue that we invest in R&D is well above the benchmarks of the industry.

We already have that but yes, of course, with more resources, we will keep investing more in R&D. We have been investing a lot in AI in the last two to three years. We have accelerated that in the last year. And it goes basically into making the life of our partners easier, helping them do their job.

So for example, if you are an MSP technician, we will help you prepare a report for your customer of what happened in a way that your customer can actually understand it in natural language. We will automate certain activities for MSPs, help you create scripts, using natural language, help you secure the infrastructure of your customer either automatically or using natural language conversing with the system.

So a lot of investment is going into AI for Acronis, and also in our internal operations. We are using AI to facilitate and provide a better response time quality to our customers.

Are those generative AI breakthroughs you spoke about on the horizon?

Some of them are already in the product and some of them are coming within the next few months.

What are the ones that you would single out as the most important coming in the next few months?

I would say our EDR (Extended Detection and Response security) functionality. We're complementing that with AI.

The problem with EDR is that it's complex. It's much more complex than the typical endpoint protection solution like a traditional endpoint protection solution. And so for some of technicians of our MSP partners, it is just too complex or it just takes a lot of time to go through all the events understand what's going on which ones you need to take care of and which ones are not important.

There are a lot of events right that EDR generates, and that is cost for the MSP. What we're going to do is bring into the EDR solution some sort of Copilot for the sea of events to be handled in an efficient way. Therefore you're going to be able to protect your customer and at the same time do it in an efficient way so that you don't waste a lot of cycles in just going through a lot of things that are not meaningful.

The first version of that is coming in the next few months.

How did the global IT outage with Crowdstrike impact Acronis and what do you see as the fallout from that event?

We don't use CrowdStrike internally so it didn't affect us in our operation.

What happened with CrowdStrike is a very, very difficult moment for the whole industry. I think that it really made some companies rethink their internal processes to ensure that that it doesn't happen to them.

At Acronis we take pride in our internal processes and try to do the best for our customers and our partners. Obviously no company ever can say this is not going to happen to me. But we do our best.

I think that this is going to be a good thing for the industry because it's a wake-up call for whoever was not doing their best with these internal processes. It shows how important it is.

It also reinforces the concept of how important being able to restore to a previous state before you had the blue screen scenario.

This shows how important it is to be able to restore to a previous state! We have been saying this for years: that security without backup is not enough or backup without security is not enough. It shows how both need to be there and how both need to be integrated so that if you suffer from a security issue you can recover from a security issue fast and lose as little time as possible.

Does this incident make the backup/cybersecurity focus that Acronis has had much more important for MSPs?

This is not just us. If you look at the NIST (National Institute of Standards and Technology Cybersecurity Framework) it clearly says in their NIST security framework that you need to be able to restore.

You need this part of the puzzle. Otherwise you're just not completely securing your infrastructure. So if you want to be a complete security company providing cybersecurity you need to be able to offer this. If you want to offer the whole thing you just need this. If you are an MSP and you want to really protect your customers, you need to be able to provide both the cybersecurity portion and the backup and disaster recovery to your customers. You cannot believe that you are (secure and ready to recover quickly) if you're not doing both,

In our case, we provide everything integrated from one single pane of glass. It’s natively integrated. It could not be better!

How do you see the MSP market developing in the next few years with the advent of AI?

My view of the market is that MSPs are in essence the future I cannot foresee a future where MSPs don't become more and more prevalent and relevant in the market.

IT is so complex these days. There is no value in an SMB company or a midmarket company or even for enterprises or departments in having their own internal experts.

MSPs will because of this economic reality become the center of all IT that will be provided to these customers. So there is no way- no way- that this is not going to happen! This is going to happen.

So the question for us as the IT software industry providing technology to these service providers is how do we help them efficiently offer these services and protection to their customers.

Efficiency is really the key word here because they are professional services organizations and efficiency is what drives the bottom line. So we need to as an industry step up to the challenge because they have a lot of work. They have a lot of companies that need their help to be protected. And it's not always easygoing for them to hire the technicians they need to scale the way they need to provide these services.

So we as an industry supporting the MSPs need to be able to give them the tools so that they can in turn provide this protection.

Are there specific markets you feel like you are underpenetrated in that this will help you make progress in as a result of the EQT investment?

There are markets that are very mature from an MSP point of view and markets that are more or less in the middle and markets that are hugely underrepresented in the MSP landscape. An example of this would be Japan.

Japan is actually a great market for Acronis overall but from an MSP point of view it's really not that well served. And so we're working together with the leading system integrators and technology companies in Japan to change that and show them what it means to become a service provider.

We are training the local players on how to become a service provider, giving them the right tools and helping them to understand how to run an MSP business not just from a technical point of view but also from a business point of view. We are doing a lot in terms of education to help markets like Japan to become more mature in the use of service providers.

What is the message to potential MSPs that you will be recruiting as you move to accelerate sales growth?

It's about the value that we provide to the MSPs. The fact is when they start working with Acronis they usually start with a couple of customers with one or two services that we provide. Then you see how very quickly they realize the value of the platform – how much more efficient they are with those couple of customers. Then they see how much more efficient they are if instead of using only one of our services they use multiple services because then they can replace all these other companies they were using for those other services. So now with just one single solution they can offer all these services to their customers. That is a huge efficiency gain for them- a huge efficiency gain. So they quickly realize that! That is the value that service providers that are not working with Acronis are missing out on. It is the efficiency that we bring to their business.

Do you look at Kaseya as your primary competitor and what is the biggest advantage you have over Kaseya which earlier this year announced Kaseya 365, an all-in-one solution for MSPs?

Companies have different strategies. So I'm not bad-mouthing anyone, but our strategy is to offer one single solution natively integrated that offers all these services.

Kaseya and other companies have grown through adding services through acquisition. They acquire companies and their products and they kind of bundle them together. You are basically buying different products even if they are bundling them for one single price.

So you buy from Kaseya but you get Datto backup, Kaseya RMM, security from the company they acquired and so on and so forth. That is one way of doing things. That is their strategy.

Our strategy is to provide a seamless natively integrated solution that can offer all these services with just one product. That is where the efficiency comes from – not from buying everything from one vendor even though they are multiple products. That doesn’t increase your efficiency. You increase your efficiency by having one single product that does all these things from one single product. That is how we differentiate.

Do you think that native integration with security and backup and disaster recovery is increasing profitability for your partners versus other solutions?

We have done some profitability analysis with our partners. It goes into education – how much time your technicians spend learning about all these products. So education is one.

Updating only one agent in the endpoint – not multiple endpoints – (is another example). (That means) less blue screens.

You don’t have multiple agents at the endpoint competing for resources. There is only one. We tested the whole thing. So there is less conflict between different solutions.

The fact that you have a single pane of glass on all your infrastructure and know exactly how your infrastructure is protected and with a switch you can increase the protection layer to add another layer of protection.

You don't have holes in your protection so the system protects you up until here and this other one protects you here. What happens in the middle? With Acronis everything is tied together. So there are huge efficiency gains, increasing the workloads that a technician can manage by 40 percent compared to using a different vendor or different products for different parts of their service.

How important is scale going to be going forward in this MSP market?

We have about 20,000 service providers that are actively using our platform today to protect their customers. We have many more that are using it a little bit here and there but there are 20,000 that are using it actively on a daily basis to protect their customers. We already have scale. We are one of the leading vendors in this market and we’re just taking the market by storm.

What is the biggest thing you get from EQT in terms of helping to grow the business?

From an operational point of view I think they are a source of a lot of brain power. They will support the company with that level of knowledge, understanding of the broader market and best practices, benchmarking, etc. I expect them to be very helpful. But from a market strategy, product strategy and execution of the plan they will rely on us.

How do you feel about the EQT investment and what was your message to the team?

It’s a great day. We did have a worldwide meeting. Everybody here is extremely excited for the future of the company, and for how much we can do for our partners and for the level of recognition we have received for all their hard work.

As you look back on this three years from now what will be the ultimate economic impact of this investment?

Definitely accelerated growth but I don’t like to make predictions. I believe strongly in what we are doing here and our participation in this industry. We will just keep pushing ahead aggressively. That is what we love to do!

What is your final message to MSPs?

There is a lot more coming. It is going to be very exciting. They are the center of our universe. They are key to the future of the IT industry, the key to the success of not just their customers but of the whole economy. I believe in the MSP model! I believe we can really help them and we’ll be doing our best to serve them!