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In the wake of Thursday’s announcement of the merger, executives of the firms have begun the task of pulling together an entity with more than 4,000 partner MSPs, 50,000-plus customers and more than 300 employees.
July 29, 2017
Matt Nachtrab doesn’t have a ton of down time these days.
A week after being named chief executive officer at eFolder, the LabTech founder and former chief operating officer at ConnectWise finds himself presiding over a sprawling merger with Axcient, creating a combined company with the scale to be a top player in the data protection and business continuity solutions space.
In the wake of Thursday’s announcement of the deal, executives of the firms have begun the task of sorting out an entity with more than 4,000 partner managed services providers (MSPs), 50,000-plus customers and more than 300 employees – including more than 100 in research and development.
For now, Nachtrab said, the leadership team’s first order of business is to do no harm.
“We’re not rushing integration between the companies,” he told MSPmentor a day after the merger was announced. “Right now, it’s ‘don’t touch anything,’ don’t spook the partners; we’ve invited all of the employees to stay.”
The origins of the merger date back to February, shortly after Nachtrab joined eFolder as its chief strategy officer.
Axcient had been exploring options for raising money and connected with K1 Capital, which owns a stake in eFolder.
Principals at the private equity firm decided that, rather than a straight investment, a merger could be accretive to both companies.
A meeting was arranged, and eFolder founder and then-CEO Dr. Kevin Hoffman traveled from Denver, Colo., to Axcient’s headquarters in Mountain View, Calif.
“Kevin and our leader of the development group went to visit,” Nachtrab said. “They came back all excited and we started looking at numbers.”
From there, the technical experts from the two companies discussed product synergies, while K1 Capital helped negotiate the numbers.
“We were able to execute on it this week,” Nachtrab said.
Terms of the deal were not disclosed.
Hoffman launched eFolder in 2002 as a value-added reseller, then spun out a very early remote backup-for-files solution.
“It was an agent that ran on either servers or workstations,” Nachtrab said. “It was web based. They had a data center.”
In recent years, eFolder has purchased a number of companies to acquire increasingly innovative backup products.
Meanwhile, Justin Moore launched Axcient in 2006 and became a pioneer in disaster recovery as a service (DRaaS).
“Justin was always pretty obsessed with the recovery portion of it; testing the recovery, making sure you could spin back up quickly,” Nachtrab said.
Axcient’s end users are larger enterprises in need of more sophisticated DRaaS solutions, like very rapid, orchestrated backups.
Hoffman, the combined company’s chief technology officer, and Moore, the chief strategy officer, will work with the CEO to make sure the respective offerings are complementary.
“eFolder has some really good backup technologies,” Nachtrab said. “Axcient has this awesome recovery environment.”
One of the first product integrations will likely involve eFolder’s Replibit business continuity software and Axcient’s Business Recovery Cloud (BRC).
“There’s some advantages that the Replibit technology has over the BRC product, so we’re going to integrate,” Nachtrab said.
Conversely, Axcient runs much of its technology on the public cloud, while eFolder relies on three data centers.
The leadership sees an opportunity to learn from Axcient’s approach and deliver eFolder products more efficiently.
“When we grow, we have to order a new rack and someone has to come and install it; it’s pretty complicated financially to scale the data center,” Nachtrab said. “Axcient has found a way to leverage the public cloud.”
“It scales kind of seamlessly,” he continued. “There’s no buying equipment. It elastically scales as we sign up new customers.”
“Either way, our data centers will stay intact for a long time.”
Beyond that, the managers plan to reach out to partners for roadmap ideas.
“We’re going to meet with the partner councils of both,” he said. “I’m a big believer in strongly engaging them.”
“I can come up with a bunch of ideas by myself but usually they’re wrong,” Nachtrab added. “We’ll listen to what they need and try to get some near-term wins.”
Integrating partner programs is always a delicate dance and this case features disparate sales models.
“eFolder is way more channel-centric; they’ve always been,” Nachtrab said. “Axcient is very channel-centric but also has a sales team that goes directly to (end customers).”
Within hours of the merger’s announcement, competitor Datto issued a statement raising the specter of potential conflicts between Axcient’s direct sales operation and MSPs who partner with eFolder.
Nachtrab argues that eFolder’s MSP partners and Axcient’s direct sales side target different customers.
“There’s very little collision that occurs if your midmarket team is focused on larger customers,” he said. “The key is making sure that your direct team is targeting companies significantly larger than 100 employees.”
Nachtrab doesn’t anticipate huge demand for eFolder’s products by Axcient’s larger, direct customers, but he does see an opportunity for eFolder partners to sell Axcient enterprise solutions.
“I’d love to work with VARs and system integrators, and build a channel around that so that they could offer these products to their larger customers,” he said.
Two brands for ‘a while’
This week, Hoffman was at Axcient’s Mountain View offices, meeting employees and seeking to ease any jitteriness about the merger.
He and Nachtrab will continue to work out of Denver, and Moore will continue to be headquartered in Silicon Valley.
“I’m working with Justin on the rest of the business, outside of R&D,” Nachtrab said.
At this point, talk of combining the entities under a single brand is at the very preliminary stage, according to the CEO.
One key consideration: Axcient owns the “Axcient.com” domain, while eFolder user a “.net.”
“I’d like to do a market study,” Nachtrab said. “I’m kind of flexible. I think either way, both brands will survive for a while.”
To this point, much of the integration discussions have focused on the technological potential.
With the deal now final, the leadership team’s attention is quickly swinging to broader strategic concerns.
“This brings scale to both of us,” Nachtrab said.
“More than likely, we were the third or fourth player in the market with MSPs,” he continued. “Now were a contender and that scale will help us go at the market a little bit stronger.”
Send tips and news to [email protected].
Veteran journalist Aldrin Brown comes to Penton Technology from Empire Digital Strategies, a business-to-business consulting firm that he founded that provides e-commerce, content and social media solutions to businesses, nonprofits and other organizations seeking to create or grow their digital presence.
Previously, Brown served as the Desert Bureau Chief for City News Service in Southern California and Regional Editor for Patch, AOL's network of local news sites. At Patch, he managed a staff of journalists and more than 30 hyper-local and business news and information websites throughout California. In addition to his work in technology and business, Brown was the city editor for The Sun, a daily newspaper based in San Bernardino, CA; the college sports editor at The Tennessean, Nashville, TN; and an investigative reporter at the Orange County Register, Santa Ana, CA.
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