Kaseya and ConnectWise Are Less Different than Meets the Eye
Or so it appears now that Kaseya says it’s an API-first vendor. Plus: what security startups can learn from INKY’s sale to Kaseya and the view from Bain on agentic pricing and AI in managed services.
Until quite recently, explaining the difference between Kaseya and ConnectWise to industry outsiders was one of the easiest things I did. Both companies sought to provide MSPs with all the software and services they need to run a business. ConnectWise did that by integrating with a big, wide, deep ecosystem of third parties. Kaseya did it by integrating chiefly with itself at a depth, it argued, no collection of ecosystem solutions could match.
All of that remains fundamentally true, yet I find myself musing in the wake of a recent interview with ConnectWise CEO Manny Rivelo and this week’s Kaseya DattoCon event at how much blurrier the distinctions between the two top market leaders have become. Consider:
Both companies are building a new family of more capable APIs. Kaseya, in fact, is all but defining itself around them.
“We are going to become an API-first company,” said CEO Rania Succar (pictured above) during a Tuesday DattoCon keynote. “Think about the impact this will have on how third parties will integrate with Kaseya as an open ecosystem. And think about the opportunities you’re going to have to build on top of the Kaseya platform so you can deliver custom solutions to your customers.”
Parse that carefully. Kaseya has had APIs forever—former CEO Fred Voccola told me multiple times across multiple years that it would be “suicide” for a company like Kaseya not to, given how choosy MSPs are about the software they use.
But Succar didn’t call Kaseya under her leadership an API company. She called it an API-first company. And then, even though she didn’t have to, she invoked the word “ecosystem” and preceded it with “open.”
That all sounds very different from Kaseya past and at least a bit like ConnectWise present. Especially now that ConnectWise, while still committed to an open ecosystem, has begun integrating its own software with products from carefully chosen ecosystem partners at a deeper, quasi-Kaseya-esque level.
Both companies have specific goals in mind for their new APIs. ConnectWise is using them to strategically fill gaps in its portfolio. Kaseya, per something Succar hinted at in an August interview, is using them to accommodate the needs of big MSPs with customized, multi-vendor solution stacks and hefty software budgets.
“We have some very large MSP partners that use a lot of our products, but they don’t use all of them, so they want the ability to leverage our API to connect with other products,” says chief product officer Jim Lippie (pictured), meaning products from other vendors. “They also want our APIs to be able to do things from a customized perspective that we’re never going to be able to do for them.”
Hard to say for sure, but those new APIs might also play a role in the AI partnerships Succar discussed with me back in August and that Lippie hinted at this week.
“There are a lot of conversations in progress with a number of potential partners in this realm,” he says. “I could say a few things, but it would give too much away.”
Neither company is barring other uses of its new, more robust APIs. Per Rivelo, for example, anyone can use the ones ConnectWise is creating for partners like Proofpoint. They’ll just have to do the work that entails on their own.
Succar’s reference to an “open ecosystem,” meanwhile, suggests that Kaseya’s new APIs will be similarly available to companies other than the mega MSPs they’re designed for. Heck, in theory, even Slide could use them to create interesting integrations.
Will they, though? Will other outside vendors follow suit? What happens if they do and displease Kaseya somehow along the way? I posted something about this topic on LinkedIn earlier this week, and someone replied with the comment “actions speak louder than words.” Exactly right, and I’ll be extremely curious to see how Kaseya’s actions in the months ahead bring its API-first vision to life.
Two more similarities between Kaseya and ConnectWise
Neither one is surprising, but both are worth noting.
1. They’re both investing in agentic AI. They’ve been serious about generative AI for a while, of course. Now they’re unleashing autonomous, agentic functionality too. ConnectWise will apparently announce something along those lines in about a month during its IT Nation Connect conference. Kaseya stole a march on them this week by previewing its Digital Workforce, a collection of “digital specialists” due to begin shipping on a limited basis next spring that will handle tasks like password resets, user onboarding, and monitoring backups, networks, and SLA compliance.
“They think, they assess, and act just like a top-tier technician would,” said Paul Burke, Kaseya’s vice president of engineering, during a DattoCon keynote. Except, he added, “they never sleep, they never take breaks, they learn from every interaction, and they’re already experts in your environment,” because they have access to all of your customer data. They’re also ready immediately whenever you need them, no hiring cycle required.
“It changes the entire game of how we look at labor,” says Lippie.
2. They’re both investing in email security. ConnectWise is doing so through its partnership with Proofpoint. Kaseya has now done so by acquiring INKY for an undisclosed sum.
“Customer feedback told us that people weren’t happy with Graphus, our existing email security platform,” Lippie says. INKY CEO Dave Baggett isn’t surprised.
“We had competed against Graphus for a long time and sort of had a similar view,” he says. “INKY is a step above.” Partly because it leverages AI to a degree Graphus doesn’t, he adds, partly because it’s better at detecting threats, partly because it’s better at blocking the threats it detects, and partly because it requires less administrative overhead.
“You can go in and dial all the settings, and there’s probably a thousand settings, but once you set the thing up you’re not having to chase different new threats. You’re not having to make rules,” Baggett says. “The AI just takes care of it.”
From Lippie’s standpoint, the solution “checks all the boxes” a modern email security solution should, including encryption, DLP, spam filtering, and more. From the standpoint of a Kaseya partner, furthermore, the price is right, at least if you have a subscription to Kaseya 365 User, the security solution Kaseya introduced a year ago at DattoCon. INKY’s now included in that offering at no extra cost.
Graphus, meanwhile, is headed for oblivion, though not right away and not abruptly enough to inconvenience existing users. “We will be announcing an end-of-life campaign for it, but we’re going to give people plenty of time to put together a migration plan,” Lippie says.
Three things about Kaseya that were true before DattoCon and remain true now
1. They still want your love. As they have for a while, but with what feels like more urgency since Succar joined the company.
“It’s incredibly important to us that every interaction you have with Kaseya is frictionless and delightful,” said Succar in her keynote.
Why that’s so important isn’t hard to guess either. As Lippie freely acknowledges, dissatisfaction with billing, contracts, and other matters is the number one reason many MSPs opt not to buy from Kaseya.
“We want to make sure that everyone has a great experience and that we knock down that barrier to doing business with us,” he says.
“We’ve been working hard at this and we’re starting to hear from you that it’s working,” Succar said Tuesday. Totally anecdotal, I know, but it does seem like I’ve heard words to that effect from wary but hopeful partners a few times in recent weeks.
2. They’ve still got at least one more Kaseya 365 SKU in the works. Kaseya 365 Endpoint debuted at Kaseya’s Connect event last April, Kaseya 365 User followed at DattoCon 2024, and Kaseya 365 Ops reached market at this year’s Kaseya Connect.
Succar’s predecessor once said there would ultimately be four editions of Kaseya 365, and you didn’t have to be a pattern recognition genius to expect the last of them to ship this week during the latest big conference on Kaseya’s calendar.
Except it didn’t. It’s a measure of how serious Kaseya is about customer satisfaction that the company delayed that launch and the revenue sure to accompany it in order to give partners a few things they’ve asked for first, including a replacement for Graphus and a single pane of glass for managing Kaseya’s Datto, Unitrends, and other backup solutions, which a new unified Cyber Resilience Platform due to ship next April will provide.
And if you’re wondering what’s in that final K365 SKU, so am I. We’ll probably (though not definitely) find out next April at Kaseya Connect 2026.
3. MCP still looms large in their AI product strategy. Just as Succar said it would in August. According to Lippie, in fact, the Digital Workforce relies on MCP, as will a forthcoming genAI tool called Cooper Coach. The first release, due to ship in January, will let technicians ask questions about IT Glue via natural language prompts. Support for the rest of Kaseya’s portfolio, starting with Autotask, will follow over the course of the year.
What won’t ship next year or any year beyond that, according to Lippie, is a natural language interface like Slide’s based on Anthropic’s Claude. “We feel really confident in our strategy right now that leverages everything inside the existing Kaseya ecosystem without having to expose our data to third-party models,” he explains.
INKY’s advice for security startups: Think platform
There are no hard and fast rules about these things, but Kaseya normally tells the media what it will be announcing at a major show like DattoCon one to two days in advance. Word of the INKY acquisition, however, reached me less than two hours before the opening-day general session commenced. I now know why.
“We signed the deal at 1:30 a.m. yesterday,” says Baggett.
To be clear, he shared that fact on Wednesday. Which means that when he took the stage at about 9:50 a.m. Tuesday morning to discuss the sale, he was speaking on very little sleep and with little to no rehearsal about a transaction that had closed just over eight hours earlier.
I’m pretty sure I would have been incoherent. Baggett wasn’t. Email security demands constant innovation, he said, because attackers are smart.
“Some of them are really smart, they’re creative. I often say if these people were gainfully employed, we’d already have fusion power, so we need to stay up with what they’re doing.”
That’s one, relatively obvious, lesson for Baggett’s fellow security founders from the INKY deal. The thinking behind his decision to sell the company presents another: it’s challenging these days to grow a blockbuster business around a stand-alone, single-function security solution.
“I wouldn’t say I completely question the viability of independent solutions, but certainly it looks like the window’s closing,” Baggett says.
For one thing, as Syncro’s CEO has noted here recently, you’ll be competing with the likes of Microsoft and Google and unlikely to outclass either one of them purely on the basis of product functionality. “They’re not going to let a big opportunity go by them,” Baggett says. “They’re all reading Clayton Christensen. They all know about the Innovator’s Dilemma, and they’re not going to be surprised by the two guys in the garage.”
You’ll have some serious competitive disadvantages against them, moreover, even if your tech is better. “You don’t have anywhere near the marketing budget,” Baggett says. “In many ways, startups don’t have the sophistication of larger entities. We don’t have the many years of relationships to leverage.”
If your target market is managed service providers, furthermore, you’ll be working against the platformization and vendor consolidation trends driving would-be buyers toward sourcing more security software with tighter integrations from fewer suppliers. “You really need to be able to offer an MSP a complete solution,” observes Baggett, who sees only one route for independent vendors to realizing that goal.
“Become a platform,” he says. Assuming you can stomach the cost, that is. “It’s really, really hard and it’s a lot of capital investment. It’s a lot of time,” he warns.
All of which leaves single-function security startups with one big question to answer, he continues: what’s your objective? Looking to build yourself a nice little stand-alone lifestyle business? “Sure, there’s plenty of room for that,” Baggett says. Looking to build something that sells or IPOs for big money?
“That’s getting harder. That’s looking a lot less likely to me, personally,” Baggett says.
Which is why his company is now part of Kaseya.
Bain on agentic pricing and AI: Get started, people
I predict this won’t make you nearly as happy as it made me, but one of the mainstage speakers at DattoCon this year was a pricing expert.
To be fair, that undersells his expertise. Prasad Narasimhan Sulur of Bain & Co. (pictured right opposite Kaseya chief community officer Gary Pica) is an expert on pricing, managed services, and private equity who wrote his master’s thesis about AI. This guy I needed to meet.
Thankfully for me, he agreed to make some time. And it turns out I’m not crazy in his view. Per this post from last year and this much more recent one, agentic AI will soon scramble some of the managed services world’s most bedrock pricing assumptions.
“In today’s world, it’s very easy to have the discussion based on number of employees, because that’s representative of the size of the organization and a proxy for the level of the work you’re going to be doing for the company,” Sulur says. “But you can imagine in tomorrow’s world there could be successful companies that need a lot of technology but don’t need a lot of people.”
Mostly thanks to the AI solution you sold them, moreover. Stick to per-user pricing and there will be an inverse relationship between what you’re charging and the value you’re delivering. Sulur, like other experts I’ve consulted with recently, sees promise in compensating for that conundrum by embracing a hybrid pricing model combining something per user with an outcome- or usage-based component, assuming you can figure out a practical formula for measuring that latter element.
“How do I measure usage?” Sulur asks. “How am I going to measure outcome?” There are no easy answers, he notes, which is why you should begin experimenting now.
“It’s one of those things where if you don’t do anything now or two, three years from now, it probably doesn’t matter,” Sulur says. “But it’s going to shift, and when it shifts, if you haven’t already done the work to prepare for it, it’ll be more difficult for you to make the switch.”
Now’s a good time for MSPs to start establishing AI practices too, according to Sulur, while the M&A wave already creating MSP giants is merely in the third or fourth metaphorical inning.
“In the third or fourth inning, it feels like you still have time,” Sulur observes. “The way it’s going to feel different once you’re in the seventh or eighth inning is I think customers get really sophisticated because they now have a lot of options.”
Specifically with respect to AI, he continues, where it already seems like there are more options every week. Just yesterday, in fact, tech and telecom provider UPSTACK announced its acquisition of Breakwater Cloud Advisors, a contact center AI transformation specialist. That came eight days after IronEdge, a Texas-based managed IT and cybersecurity solution provider with offices in five other states, announced the introduction of a managed AI service and a little over a month after IT services heavyweight Thrive introduced a managed AI service of its own.
“You’re going to be in a place where your business model won’t be as competitive if you’re just doing the things you’re doing today,” Sulur warns.
Especially if you’re doing those things the same way for everyone regardless of their vertical. The demanding clients you’ll be courting during the seventh inning stretch will want technology partners with industry-specific expertise.
“Customers are going to say, ‘OK, you want to be my MSP? What experience do you have in banking? What experience do you have in doctor’s offices?’” Sulur says. Answer those queries the wrong way, he continues, and you’ll have a tough time winning and retaining clients. Answer them the right way, and you’ll be positioned to transition beyond increasingly commoditized IT services into higher-margin AI business consulting.
“There’s an opportunity for you to move from the back of the house to the middle of the house or the front of the house by becoming the person who can help customers like a bank with their own customer service,” Sulur says, or with “deposit intelligence, lending intelligence.”
Or, alternatively, you can stay the course and wind up selling the IT world’s least profitable services to the business world’s least profitable customers.
“Five years from now, we’ll be talking about the bifurcation of the MSPs that made the jump versus the ones that didn’t,” Sulur says. Better to be among those that did.
Podcasting with Pica
Sulur spoke onstage with Kaseya’s Gary Pica during DattoCon. I got to speak with him the same day for the latest episode of MSP Chat, the podcast I co-host. You’ll find that interview here and all our many episodes here.
Also worth noting
Gemini Enterprise, from Google Cloud, is an agentic AI platform that unifies advanced intelligence, automation, and workflow transformation across an organization’s data.
Microsoft 365 and Office 365 Enterprise suites with Teams are back.
zofiQ, who you’ve read about here, now provides endpoint visibility from inside ConnectWise PSA and Datto Autotask via an integration with NinjaOne.
Zendesk’s Resolution Platform has a host of new agentic AI, employee service, and CCaaS features.
Barracuda’s new Barracuda Research unit is a centralized online resource for AI-powered threat intelligence, actionable reports, and real-world incident analyses.
Barracuda, in partnership with Capchase, also has a new financial services arm offering flexible payment options for multi-year contracts and upfront payments for resellers.
WatchGuard’s new Firebox M Series rackmount appliances aim to give MSPs scalable, integrated firewall and zero trust security.
CyberArk’s machine identity security portfolio now includes automated discovery, context-driven management, and new dashboard capabilities.
1Password and Browserbase have launched a new integration allowing AI agents to securely access web credentials in browser workflows without exposing sensitive data.
The security skills chasm at work: 54% of IT and security decision-makers surveyed by Fortinet cited a lack of security skills and training as one of the leading causes of breaches in their organizations.
Compliance is Cybersecurity, a new resource from Choice Cyber Solutions, seeks to make the heavy compliance lift lighter.
Netskope’s new Universal ZTNA enhancements include context-aware device intelligence and threat protection.
Object First’s new Ootbi Mini is a compact immutable backup storage device for small businesses and edge environments.
Apptega’s new Third-Party Risk Manager is designed to help organizations holistically manage vendor risk, automate scoring, and prioritize remediation.
TD SYNNEX has introduced an AI Infrastructure-as-a-Service offering that provides access to NVIDIA GPUs for partners without the need for hardware investment.
Pax8’s OneCloud Guided Growth framework is designed to help MSPs expand their Microsoft Cloud in security, data/AI, and productivity workloads.
Exclusive Networks and Vertosoft are partnering on U.S. public sector and commercial distribution.
AppDirect has attained AWS Advanced Tier Services Partner status.
David McKeough is the new CRO at Stellar Cyber.