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Thought Leaders in Cloud Computing: Austin McChord, CEO of Datto (Part 6)

Posted on Monday, Feb 17th 2014

Sramana Mitra: You have probably seen maybe 30% of Internet traffic to homes in the U.S. is due to Netflix?

Austin McChord: Yes.

Sramana Mitra: Could that be a lever that pushes the ISPs and the carriers to do something about the level of connectivity or the quality of the connection?

Austin McChord: It’s an interesting component but there’s a lot of things that Netflix has done to make their service delivery reliable. As to whether or not that’s pressure for them, the tough part is that so many of the ISPs are also content providers themselves, competing with Netflix. They’re very slow and uninterested in becoming a utility which provides the service of the Internet and are instead looking at ways to slow the adoption of Netflix because they would rather have people purchase their content. In the case of the cable companies, or even AT&T U-verse type of system, they’re distributing content services, which are direct competitors to Netflix. It’s almost competition and it’ll be interesting how that plays out over time.

Sramana Mitra: Interesting. Even though there’s a pain point developing in all that, that’s not a field where we see a lot of startup activity. People don’t do ISP startups anymore. That’s just not a reasonable entrepreneurial venture.

Austin McChord: Yes, I would agree with that.

Sramana Mitra: You are a savvy entrepreneur. If you were to start a company today, where would you look? What are the other white spaces that you see from your vantage point?

Austin McChord: I would actually tell people not to be so afraid of building physical things. There’s a lot that can be done to help businesses save money and execute processes better. I know this is on a general level but I would look at those areas versus looking for something in the the social and consumer side. The challenge of that software is that it’s hard for them not to be a fad because you’re competing for somebody’s time. Facebook or Snapchat are competing for my time out of the day in order to get that interaction; so they compete with everything else I do. In our case, we don’t face that because we’re helping a business. We’re helping somebody do something. Hopefully, helping them put less time towards doing something. I feel like it’s much easier to create and be successful in that space than it is to compete against everything else that exists in my day for my time.

Sramana Mitra: It’s a very interesting way to put it. The B2B businesses are problem-solving businesses whereas the B2C businesses, except for e-commerce, are often entertainment businesses.

Austin McChord: Yes, they want time.

Sramana Mitra: Entertainment, by definition, is buying for your time. There’s the other problem with these B2C businesses where it’s an all or nothing game. It’s a bit of winner takes-it-all situation, except for e-commerce.

Austin McChord: In the social space, you need the network effect in order to succeed. That’s why you end up with an all or nothing.

Sramana Mitra: Thank you for your time.

This segment is part 6 in the series : Thought Leaders in Cloud Computing: Austin McChord, CEO of Datto
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