Additional sources have confirmed ConnectWise Capital‘s investment in Quosal, a tool that allows VARs and MSPs to develop customer business proposals and source IT products from distributors. Sources say the move may be announced at the HTG Peer Groups Spring Conference here in Dallas. The move continues to intrigue me for multiple reasons. Here’s the update… plus some speculation.
I’ve already explained why the ConnectWise Capital-Quosal relationship looks like a smart move. But now the broader MSP industry seems to be echoing that sentiment. Prime examples: Multiple MSPs attending the HTG gathering tell me they’d applaud a tighter ConnectWise-Quosal relationship.
Meanwhile, HTG Founder Arlin Sorensen declined to speculate if the ConnectWise Capital-Quosal deal has happened, but Sorensen says he sees the business logic behind such a potential move. He notes that Quosal has growing acceptance across the HTG membership base. HTG Peer Group members have already standardized on ConnectWise to better share business information. There’s no such HTG standardization mandate for Quosal, but the tool has a good following within HTG, Sorensen added.
Of course, the potential ConnectWise Capital-Quosal relationship could strain some software partnerships in the market. A few examples:
- Relations between ConnectWise and Quotewerks, another quoting tool, could become challenged I believe.
- Relations between Quosal and Autotask, the ConnectWise rival, also could become strained. I believe Quosal had been scheduled to sponsor and attend the Autotask Community Live conference in May. But I think Quosal is no longer on the event sponsor list.
Evolving Market
But let’s not get caught up in the old ConnectWise-Autotask debate. To the credit of both Autotask and ConnectWise, both companies spend less time talking about each other in the market these days. The growing theme in the managed services software market is coopetition — cooperating even as you compete. It’s happening with ConnectWise and Kaseya. And it may soon happen in the IT product sourcing market.
If APIs remain open and if products gain tighter integrations, then MSPs are the winners. Of course there’s always the risk of some mud slinging from salespeople on opposite sides of the fence. But on paper, I think the ConnectWise Capital investment in Quosal makes sense. Sources indicate official details could emerge within the next 24 hours or so. I have yet to reach ConnectWise and Quosal for official comment.
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Posted In: Acquisitions | Finance | Mergers & Acquisions | MSP Mergers and Acquisitions
Tags: Arlin Sorensen | Autotask Community Live! | ConnectWise Capital | Kaseya | Quosal | QuoteWerks
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Wasn’t there also a strain in relations between LabTech and AutoTask after the investment by ConnectWise Capital, as well?
Bobby: Good point.
But on the other hand, LabTech was a small emerging company in 2010 that was just getting started. So there wasn’t much of an Autotask relationship to strain. Also, LabTech has since invited Autotask to at least one event (perhaps more… checking).
If you look at the moment ConnectWise Capital invested in LabTech vs. CC’s alleged investment in Quosal, I think Quosal’s business is a bit more mature/established than LabTech’s was. But that’s just an educated hunch. Could be wrong…
-jp
Hi Folks: Connectwise Capital confirmed the deal yesterday. I will be back soon with a related video interview. stay tuned…
Hi Joe,
If you were ConnectWise and could buy into or own a portion of a quoting tool vendor that integrated with you, wouldn’t you?
That’s what Autotask did. They bought VarStreet outright (I believe). ConnectWise invested some capital in Quosal. Quosal apparently needed the cash and was willing to accept outside investors. As we all know, you don’t get cash for free, so there would obviously be something that ConnectWise gets in return for their capital investment, percent of profits perhaps, or maybe so that they could steer the course of development. Of course, whatever the arrangement is, ConnectWise Capital would want to get back their investment and more at some point.
Arnie Bellini, CEO of ConnectWise approached us with an offer for ConnectWise to invest in QuoteWerks back in 2008. We are financially sound and had no need to accept outside investors at that time and we graciously declined. When the upstart Quosal came on to the scene around that time, we already knew that there was a good chance ConnectWise would end up buying or investing in them.
This is not the first time ConnectWise has invested in a ConnectWise vendor partner that has a competing ConnectWise vendor partner. They invested in Labtech which has a competitor Kaseya. Both Labtech and Kaseya integrate with ConnectWise and ConnectWise continues their relationship with Kaseya allowing them to integrate and exhibit at their conferences. Arnie is pledging the same for us, and I applaud him for that.
Despite the hype of the press release, way more ConnectWise customers use QuoteWerks than Quosal (and for good reason) and I don’t imagine that is going to change anytime soon as long as we are able to participate in the “coopetition” you mention. I agree that as long as the APIs remain open, this coopetition only serves to benefit the MSPs.
And just a quick note about HTG members and Quosal. It is our understanding that the majority of HTG members use QuoteWerks, which aligns with Arlin’s statement that “Quosal has growing acceptance across the HTG membership base”.
John C. Lewe IV
President, Founder and Lead developer – QuoteWerks
John,
Thanks for taking the time to share your perspectives. Sorry I haven’t been in touch directly amid travel to/from Kaseya Connect and HTG Peer Groups conference. But I do look forward to talking.
There’s one other item about open APIs that MSPmentor will work hard to track across the software industry, and I’m not just referring to ConnectWise APIs. In addition to the API pledge, I hope vendors are able to offer a level playing field for API service and support issues. In other words, when API-related integrations break from time to time, the vendors publishing the API need to make sure that response times are fair and equal for all of the partner vendors. Though I can certainly see fixes arriving first for API integrations that involve the broadest set of mutual customers.
Again, my thoughts are not directed at ConnectWise. They are meant to blanket the managed services software industry. Open APIs = great. Open APIs and a concerted effort to deliver equal response times to API issues regardless of vendor affiliation = great as well.
Thanks again for reading, John, and for taking the time to share your thoughts.
Joe Panettieri
joe [at] NineLivesMediaInc [dot] com
Hi Joe,
I look forward to speaking with you too. You bring up another great point about fair and equal response times for reported API issues, and I agree with you completely that this would be another important aspect of the Open API approach.
John C. Lewe IV
President, Founder and Lead developer – QuoteWerks