Tiger Talk: Austin McChord

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A. Sue Weisler

Austin McChord ’09 at the new Datto office in downtown Rochester.

Austin McChord ’09 (bioinformatics) started his computer data backup company Datto Inc. out of his parents’ basement in Norwalk, Conn., in 2007. This summer, Datto opened an office in downtown Rochester as part of New York state’s START-UP NY program, which offers a zero-tax rate for 10 years to businesses that create jobs. Here are McChord’s thoughts on how he created the business and opening a branch in Rochester.

I came up with the idea for the company while I was at RIT. I brought it up with my academic adviser during the fourth year and we talked about it, and he didn’t really think there was a good opportunity for someone to build physical appliances in their basement and sell them to consumers. But nothing really gets me excited more than proving someone wrong.

I thought that online backup was starting to become a big deal and I was like, it’s kind of silly they don’t make a network-attached storage appliance that backed up data off-site. So it seemed like a very achievable thing to do. I spent a lot of time in the basement working at it.

It wasn’t until February of 2008 that I really felt I had something that resembled a real product. I put it up on a website and said, ‘this is for sale,’ and of course nothing happened. No one bought anything because no one went to the website.

I realized that I had to market the product in order for it to succeed. So I started contacting prominent tech blogs and basically emailed and bugged them every day until finally they wrote about my product. That got the first sales of the business.

I came up with a different product idea and I decided I wanted to bet the farm on it. It was an idea of two mass devices that would sync to each other no matter where they were on the planet. I thought the best way to market that would be to go to the Consumer Electronics Show in Las Vegas in January 2009. My parents agreed to fund the trip with money they had saved to help me with a down payment on a house. There was also a pre-requisite there that I had to finish my degree at RIT, which I did do through taking online classes.

A major nationwide retailer was interested in carrying our product and they said, ‘Hey, can you send us a couple of pallets of this? We want to test market it in the Midwest region.’ At that point, we hit a wall because I was hand-assembling these things in a basement and there was no way for me to produce a couple of pallets. That was a huge turning point for the business because we realized that selling direct to the consumer market was not possible from a basement.

I had run up about $80,000 in credit card debt because in 2007 anybody could sign up for any credit card. I maybe had a week or two left of money to meet payroll for my friends who were working for me, so we were very, very close to going out of business.

We had been approached by these IT service providers. They were saying, ‘Hey, we should be your resellers.’ We decided to make this leap and sell to this channel because I figured we were at the end of the road anyway and hopefully this will save us. It turned out that was a really smart move and we got a lot of traction very quickly.

What it did was change our focus. Rather than trying to sell to individual small companies, which is a very large category that feels nearly impossible to reach, we instead were selling to businesses called managed service providers. That is what put the company on its incredible growth trajectory. We still have that focus today.

RIT has been incredibly supportive, helping us with the office in Rochester. A second piece is RIT’s co-op program. Many of our development team is from RIT, almost two-thirds, and they have come through co-ops that we then hired on as full-time staff.

I have a lot of love for the city of Rochester. It is very rewarding to have an ability to contribute and to bring jobs to Rochester. It also helps that Rochester has a pretty fantastic talent pool we can put to work. The reality is that RIT trains some really smart, technical people who have helped us build a lot of the innovation that has separated us from our peers.

About Datto

• Datto Inc. provides hybrid cloud-based on-site and off-site backup, disaster recovery and business continuity services for municipalities, small- and medium-sized businesses, and organizations in education, health care, retail, law and financial services.
• The company is based in Norwalk, Conn., and has more than 300 employees. The majority of them are in Norwalk, but others work in Monroe, Conn., outside of London, Toronto, Sidney and now Rochester.
• In 2013, Datto marked its fourth consecutive year of high double-digit annual growth, with revenues approaching $50 million annually.
• The 12,000-square-foot office at 40 Franklin St. in Rochester opened this summer as part of the START-UP NY tax incentive program. The program made it an easy decision for Datto to come to Rochester. Datto is committed to creating about 70 jobs in the next 18 months.
• Datto was named to the Inc. 500 list for the third consecutive year, ranking No. 314 overall, No. 5 in security and No. 1 fastest-growing privately owned company in the state of Connecticut.

Advice

“My advice to students, especially those wishing to become an entrepreneur, is to just do it. Sometimes your best asset can be having no idea what you are doing.”