Datto raises $594M in first day on NYSE

More than 10 million shares of Datto changed hands on the New York

Stock Exchange in the span of a little over an hour on Wednesday, as investors grabbed at their first opportunity to own a piece of Connecticut’s fastest-growing digital company of the past decade.

Datto backs up data and files for smaller businesses that sign up through office technology integration firms, with the company having been based in Norwalk since its 2007 launch by founder and board member Austin McChord.

Datto shares shot up $5 above their $27 initial public offering price after the morning bell, then settled to trade at about $28 in the mid-afternoon hours. Security software giant McAfee was expected to price its own IPO later in the day Wednesday.

McChord joined CEO Tim Weller on Wall Street Wednesday morning to ring the opening bell of the New York Stock Exchange. Shares traded for the first time under the “MSP” ticker symbol, an acronym for the “managed service provider” middlemen through which Datto offers data backup.

McChord reflected Wednesday on the arc of the company, from days working out of his father’s civil engineering firm offices in Wilton to today as Datto employees continue filtering back into its Norwalk headquarters in the Merritt 7 Corporate Park. He said more will follow, both home-bound Datto workers as well as new hires now that the company has ready access to the public markets. Datto plans to use much of the $594 million in gross IPO proceeds to pay down debt.

“It’s been a whole series of starting lines — early on for me it was, ‘Oh man, what does that first day in a real office look like?’” McChord said during a Wednesday interview over Zoom, speaking from the New York Stock Exchange.

“Then we had the starting line of, ‘What’s it look like to work in a venture-backed company?’ It’s a lot of ‘day ones’ in that sense. Today is the biggest starting line there is out there, in that Datto is now trading on the Big Board.”

Datto has 1,600 employees today split between Norwalk, New York City, Boston and Rochester, N.Y. among other locales. McChord offered no projection for the company’s hiring plans — it lists 100 openings today, half of them in Norwalk — but suggested Connecticut will remain central to its staffing plans post-IPO. He said that many Datto employees continue to work remotely during the COVID-19 pandemic, but that the company aims to return to more normal operations while holding out the option of flexibility for employees that want it.

“I would see us as an aggressive hirer in Connecticut. ... There’s incredible talent in Connecticut and we’ve got an amazing team that knows where to look and how to find them,” McChord said. “There is a huge desire for people to go back to the office and to be together. This is a close-knit team and to have space to be together — whether it’s to celebrate or have a meeting or brainstorm or design and build — we’re going to need space in order to do that in the future.”

The adds are needed as more small businesses look for a sophisticated backup provider beyond Google Drive, iCloud and other platforms, whether as a hedge against unanticipated disruptions like the mass power outages in August, or more nefarious issues like ransomware attacks in which hackers gain access to information systems and lock away key data. In October, the firm that provides statistics for use by DraftKings, FanDuel and other fantasy football sites.

“Cyber attacks have been on the rise all throughout 2020 — it’s not like the hackers decided to stay home and not hack [systems],” McChord said. “That’s been powering Datto’s continued growth.”

McChord remembers well Datto’s own splash in national headlines with regard to a hacking case, after the 2016 presidential election when Hillary Clinton’s campaign for the White House was derailed after revelations of her use of a personal email server. As part of its investigation, the FBI obtained thousands of Clinton emails that had been backed up on Datto servers.

“If anything, the original event kind of galvanized us,” McChord said. “Our product did exactly what it was supposed to do.”