N-able CEO Pagliuca On Competitive Upheavals And Leveraging AI To Make MSPs More Secure
“So we're focusing on the MSP partners: If we do what's right by them, from a product, from a community point of view, that's what we focus on. All that other stuff kind of takes care of itself.”
N-able President and CEO John Pagliuca said the company is primed to take share from its competitors as it leans in with AI to build better features and deliver on security in a battle for the hearts and minds of MSPs.
“At N-able, we like to be partner obsessed and competitor aware,” he told CRN last week. “So we're focusing on the MSP partners: If we do what's right by them, from a product, from a community point of view, that's what we focus on. All that other stuff kind of takes care of itself.”
The suite of ITSM tools that Burlington, Mass.-based N-able sells competes directly with larger MSP-focused professional service software providers such as Miami-based Kaseya, and Tampa-based ConnectWise. Additionally, several smaller players have entered the market, with HaloPSA taking on N-able’s N-central ticketing system and NinjaOne targeting its RMM tool.
[RELATED: ConnectWise MSPs Want A Better Product]
“Competition is a good thing. It keeps you on your toes and makes sure that you're doing the best that you can,” Pagliuca said. “But for us, we're partner obsessed.”
In its second quarter (ended June 30) publicly traded N-able posted quarterly revenue of $119.4 million for year-over-year growth of 12.6-percent. Net income for the quarter was $9.5 million and earnings per share $.05. The company has a market cap of $2.3 billion. N-able shares closed Thursday at $12.41.
During an August earnings call CFO Tim O’Brian raised the company’s full year revenue outlook to $464 million, representing 10 percent growth from 2023. Pagliuca said N-able’s Cove data protection product and the company’s security suite are winning customers.
He told CRN that those are the areas where he sees N-able differentiating with AI as well.
While developers are using AI to improve features on core products, Pagliuca said AI’s power to spot anomalies and flag them is on display with security.
“We're going to leverage AI to make our products and our customers more secure. Things like anomaly detection, drift from configurations. And so if we see drift we can flag that. There's a bunch of anomalous things that we can take a look at to say, ‘Hey, look, here's the perfect state. If it's drifting away from the perfect state, [there’s the] potential for a bad guy to get in.”
Here is what Pagliuca told CRN. It has been edited for length and clarity:
What’s your take on the change of leadership at ConnectWise?
I mean this genuinely, Jason's a really good human being. We wish him the best. He’s a class act. He did a lot to move the industry forward.
He really, genuinely understood the ethos of an MSP. What they built in ConnectWise, from a community point of view, it's noteworthy.
I pinged him separately and privately, and I said, ‘Hey, I tip my hat off to you, man. So good luck to the future.’
But look, with any type of change, there's a reason why change was made, right?
So there is a little bit of uncertainty. And obviously it introduces a new chapter in their history. They believe that Manny is the person. I don't know Manny. From what I can see he has about 30 years of experience, so he obviously understands software.
I guess it's to be determined to what level he'll understand the MSP community.
It took me years. Frankly, I've been in the industry for 12 years, in the MSP industry, and it took me years to understand that.
At N-able, we like to be partner obsessed and competitor aware. So we're focusing on the MSP partners: If we do what's right by them, from a product, from a community point of view, that's what we focus on. All that other stuff kind of takes care of itself.
So every business at scale has multiple priorities.
At the end of the day, you can only have a top priority. And so they just decided to buy a bunch of stuff with this, with SkyKick, with Axcient, right? I personally think it doesn't scratch the MSPs’ needs. And now they have this leadership change. By the way, it's not just Jason. Other parts of the leadership team are brand new.
What does that mean? That means their priorities are going to need to be a little bit more internal-focused, inward-focused, figuring out where the restrooms are and what the business priorities are. By definition you need to do that as a new leader, right?
They're also going to need to integrate these two companies and figure that out. So they're going to be doing a lot of inward-focusing at ConnectWise.
Meanwhile, our focus, our number one focus, is going to be external, on the MSP partners. I was part of an acquisition. We put Logicnow and N-able together many moons ago. I know firsthand that when we did that our top focus turned. Our eyes turned inward, and we paid for that and our customers felt that.
So you are staying the course, it sounds like, keeping your eye on the MSP, as it were, rather than the competition?
We didn't call an emergency meeting or say we need to change plans or change strategies, because Jason's no longer at the helm there.
Competition is a good thing. It keeps you on your toes and makes sure that you're doing the best that you can. But for us, we're partner obsessed.
So tomorrow, we have about 2,000 people signed up to attend our annual partner meeting, and that's going be a lot of the message.
So for us, it's about making sure that the products are the best there are. Making sure that way we’re helping these MSPs is the best it can be, because the best will succeed in this industry.
And honestly, it's a huge opportunity in front of these folks and all these MSPs and it's a huge opportunity for anyone that's servicing these MSPs.
For the MSP that's in the arena, so to speak, I say, ‘You're not a commodity. We're going to give you the best tools.’ And so when people tell you, ‘Hey, it's about the products,’ it's about some of the products. It's how the products make these folks more efficient, more secure, and then giving them the business know-how.
What’s really a cool nuance to this business is that it’s a partnership. It’s providing the technology, but also it’s giving them the business know-how to help them move their agendas forward. Helping them with their cloud business model. Helping them with their cybersecurity business model. Helping them push those businesses forward and help drive margin to the bottom line.
The industry has grown up.
What you just said there about helping them with their cloud journey, helping them with cyber, it almost sounds like you're talking about N-able helping the MSP along with their own digital transformation?
I call it evolution, because it’s not all at once. It’s not a transformation like a butterfly. It's an evolution for them, but also with their customers.
Several years back there were a bunch more servers and wiring closets and now there are a lot more SaaS applications. There's somewhat of a hybrid phenomenon going on now.
A lot of MSPs built a lot of data centers. Now they're rethinking some of that and repurposing some of that and they're pushing some of that more to hyperscalers. I think some of that will get kind of repatriated back to some of their own data centers.
So it's part of the MSPs’ digital evolution, but also their SMBs’ digital evolution.
I want my MSPs to be customer obsessed as well. So they need to be very mindful of what's going on in their customers’ environment. That's pushing more to this hybrid world, pushing more to this cloud world, but pushing towards this more cybersecurity kind of focus of the world.
I was talking with some MSPs who said the market is going to change quickly in the next 18 months. Vendors are going to have to be nimble to keep up. They see AI accelerating that transformation. Where do you see N-able fitting into the conversation?
My advice to people on AI in general is, I don't think AI is going to take your job. I think the person who's leveraging AI will take your job.
Same is true for the MSP community, and the same is true for vendors that supply the MSP community. So if you're not leveraging AI, an MSP that's leveraging AI will take your customers.
If I'm a solution provider and I'm not leveraging AI, someone that is leveraging it will provide a better solution, period. I don't think that's for dispute. I think that's a fact.
Here at N-able, we're already leveraging AI in a bunch of different ways. Our developers are leveraging AI. Our sales and marketing teams are leveraging AI to be smarter about how to touch and engage and give customers what they want. And then our products already have AI in them, our mail security offering.
So going forward we're going to leverage AI in two ways:
We're going to leverage AI to make our products and our customers more secure. Things like anomaly detection, drift from configurations. And so if we see drift – and there's a bunch of anomalous things that we can take a look at to say, ‘Hey, look, here's the perfect state. If it's drifting away from the perfect state, [there’s the] potential for a bad guy to get in.’
This is a potential for drift. They’re not configured right. We’re noticing some type of anomalous activity or detection.
So number one, it's to make our customers and their customers more secure.
Number two is to make these folks more efficient, right? So helping them, even with their knowledge base, leveraging them and allowing them to use natural language to actually go query their RMM, or all of their tools they use, so that they can use natural language.
Think about how you use Google versus ChatGPT. Think about how many steps, the different steps, it takes. So the old world, I hate to say it that way, with Google, is you search. You have to sift through a bunch of garbage, go through a bunch, a couple of things, then maybe find it. You're four or five clicks away.
Think about the time and cycles that run with ChatGPT. It packages you up an answer and gives you something that's actionable. That's where we're heading as well so that the MSPs can drive this efficiency and get action, as opposed to mucking around with a bunch of different search capabilities.
We’re using it to make them more efficient, and it's also to make them and their customers more secure. That's how we're leveraging AI.
You’re building AI into your products. You’re advising partners to get on board and start using it. But is this really happening in the marketplace? How should MSPs be looking at this?
AI, specifically for the MSP community, is probably still at that beginning part of the “Gartner Hype Cycle,” and people are probably starting to creep into that ‘trough of disillusionment’ where they're writing ‘AI’ on the board, and not really sure how to leverage it.
It's a little early for a lot of the MSPs. We are hearing some of the folks using it in some of their tools and some of their search capabilities. I think it's important for a couple of different reasons, from a strategy point of view. This is why our ecosystem strategy is important.
We at N-able do not believe that we can be the be all, end all for MSPs. With new technology we want our MSPs to embrace it and we're supporting them embracing that.
So our ‘ecoverse,’ our ecosystem – we call it an ecoverse – is very much a hybrid of our powerful solutions, but then easily integrated products. So if there is a cool, narrow, AI type of tool that's out there that can help an MSP, we're going to integrate with them and help the MSPs move their agenda forward.
That's different than some of our competitors.
Some of our competitors are doing more like the Apple tactic where it's like a closed network. ‘No. This is my stuff. I’m not gonna let you play with it,’ right?’
We don't believe that's good for the community. And so we're very much more supportive of an ‘ecoverse’ kind of play.
Number two, this is more of a code of honor, so to speak.
We're pledging to folks on how we're going to use information. We're being really transparent on the use of that information. And if MSPs are going to opt in or opt out to leverage that so they can use the collective intelligence, they need to be part of that. So we're doing everything, I'd say, above board, very transparent with the MSPs, I'd say the right way.
I'm not suggesting others aren't doing it the wrong way. But I'm saying we're making sure that we're taking the high road and being uber-transparent with folks in how we're going to leverage their data to have a better overall experience.
So I'm not going to speak specifically to what's going to happen at ConnectWise. I don't know, but what I can tell you is that when you acquire a bunch of different things, there's a bunch of leadership change, all this change by definition, there will be more of a focus on organizing internally as opposed to [keeping] your eye on the prize of the customers.
And that's why we continue to be customer obsessed and competitor aware.