Datadobi
  • Home

Exclusive Interview With Gleb Budman, CEO and Co-Founder of Backblaze

"We have about 80,000 HDDs and we buy between 1,000 and 2,000 per month."
By Jean Jacques Maleval on 2017.05.17

AddThis Social Bookmark Button

CEO and co-founder of Backblaze, Inc., Gleb Budman, 43, was formerly at SonicWALL, MailFrontier, Excite@Home, Kendara, netRelevance, A.T. Kearney, GE and AttackPost. He got in 1999 an MBA, Global Business, Technology, Entrepreneurship at University of California, Berkeley, Haas School of Business. Main hobbies are several sports in the mountain He has a 4-year daughter. He speaks Russian.

StorageNewsletter.com: With your new offering at $0.02/GB you're now trying to compete directly with Amazon S3, Microsoft Azure and Google Cloud. What is your strategy to compete with such giants?
Gleb Budman: First of all, just to clarify things a bit, we have the unlimited backup offering at $5 per month. It's aimed at consumers and businesses but it is specifically a laptop/desktop backup. On Backblaze B2, we do compete with Amazon, Google and Microsoft on the infrastructure. From the pricing perspective, we lowered the cost down to 2 cents per gigabytes for downloads but storage is actually only half a penny per gigabytes. So the main differentiator today between Backblaze and all the others is price. We are one fourth the price of any of our competitors on storage, one fourth the price on download bandwidth and upload is free. We spent ten years building the lowest cost infrastructure. So as long we can continue to provide that less costly offering we have a good answer.

Could the price be even lower in the future?
It will always go lower, as the price of storage goes down. I fully expect prices to continue dropping in the next 2, 5, 10 years. We already placed our 'half a penny plan' aggressively so we don't have a lot of margin for ourselves, but as storage pricing costs goes down we will also adjust our pricing down.

Financial funding continues to be only $5 million raised in 2012. Do you have plan to raise more?
We talked about it when we started the company and we talk about it every six months or so just to decide whether to raise or not. For 5 years, we said no, then we made the decision to take some funding, and then in the 5 years since we always said no. Right now we are talking about it again because B2 has a lot of opportunity and we're seeing a lot of demand. So we can keep building the business on its own without raising funding but we could go faster and bigger if we raise funding.

So when will you raise money?
I think it's possible that we will make such a decision in the fall or in the spring.

What are we talking about? A $10, $20 million raise?
Probably, yeah.

Is an IPO something you're thinking about?
We talked about where to go from here and certainly at some point we will have to provide a return even to our current investors, even separates from raising new funding. We may at some point try to go public, but it's not next year or the year after, we'd have to get to more scale before that happens.

You could also find an acquirer.
We could but it's not something that we trying to do. We want to keep focusing on building the company. When it gets to a big enough scale that it could go public, it will be a nice choice to make between going public or finding a new investor who will buy all the existing investors or simply use the profit of the company to buy the existing investors and make them happy.

What is the revenue of your company after ten years of activity?
So we're doing yearly about $20 million run rate.

What is your net income?
We don't publish that income but in general we try to run it around break even. If we're generating profit that means we're not investing enough, and if we're losing too much money then we have to raise funding. So we try to run a company where we take all the money that we make and reinvest it.

How many employees?
About 50.

What is your salary? Because from my understanding your company has a special way of dealing with salaries.
We actually did something that was unusual. The 5 people who started the company together and the two additional people who came a little bit later, but still very early on, all went without salary for a while when we started the company. So for the five of us who started it, we went with no salary for a year and a half. Then, when we had the means to give ourselves something, we started with the minimum wage. The way that we structured it was that all seven of us make exactly the same amount of money. So we went zero, then minimum wage, then two times minimum wage, and so on. It kept going up but we always kept it the same for all the seven of us. Today it's market rate.

But you have enough to live?
Yes, it's been enough to live on for a few years now. It's based on what you would expect the people in those positions to be making if they went and got a job somewhere else.

How many customers do you have for your low cost, $50 per year unlimited storage?
On the backup side, we have hundreds of thousands. We have the consumer business and then we have the business side of the backup, which is still laptop and desktop backup, still the same price point, but it is for businesses. One of the interesting thing here is that, for the whole lifetime of the company we have allowed businesses to sign up but we have not really marketed it or sold it because we didn't have a product that we were happy with. Despite that, the business side grew faster for us than the consumer side, and so what we've done for the last year and half is invest heavily in a complete revamp and we build a new version of that product line. We just launched that in January and it is a new product that does laptop and desktop backup for businesses. That one is growing very quickly. On that side we have over 300,000 paying customers.

Do you want to focus on end user or to go through distributors and OEMs?
We mostly go direct. We do have a channel program where we have over 10,000 partners, and we want to make that program more robust because one of the interesting things with the business backup product is that it works better for resellers and MSPs.

Do they use their own brand name?
No, it is not a white labeled product. It's labeled Backblaze and most of them say that they prefer it that way because Backblaze has a good reputation in backup. So they can tell their customers "I am providing you with a really good service" and the customers often know about it.

Who are your biggest partners?
Most of them are not big brands, they're mostly MSPs and resellers. They provide services and support for hundred companies that are 20 people each. It's outsourced IT as a model mostly. We don't have OEMs.

Because it can take days to recover an entire HDD, how many customers per year asked to receive an USB key or a disk drive from your company to get their data back?
First, you can download your data but it takes a long time if you have a lot of data and you don't have a very fast internet connection. So you can do that, but you can also have us Fedex you a USB key or a HDD. In that case, you can return it to us and if you do that within 30 days it's free. I think we are the only one in the industry that offers that and it's a really popular service because that way people can do a full recovery on hard-drive and it's free for them do to that. We get about 4,000 customers a year that choose to recover their data by having us send them a drive. One of the nice things with that is, if they choose to do that, it still takes a couple days to get the HDD, but they can also go to the website and download the files, they actually are working on right now and that happens very quickly. So they can get the files that they want immediately by downloading them while they wait a couple of days to get a HDD with all of their data on it.

Do you have an idea to accelerate the customers' bandwidth? Could you de-dupe and compress the data with your algorithms on the user's computer before sending them for example?
Right now we deduplicate and compress on the backup site not on the store side. But it's an interesting idea, it's basically the same thing that we could do but in reverse.

Because of that, the first time you want to backup you disk drive with Backblaze or later get back all your data, you wait for several days.
Depending on how fast the internet connection is, sure. For the regular costumer, it might easily take them a week or two to get backed up, maybe three depending on how much data they have and how fast their connection is. We could potentially send them back the de-duplicated, the duplicated and compressed data and have that undone in reverse. It's an interesting idea but it will only speed things up by 20% or something, it's not going to be ten times faster because a lot of things that takes a lot of space are movies, photos and music which don't compress very much. Moreover, most people have some duplicate files on their systems but it's not five times as much. So for most part if they want their data back fairly quickly getting the HDD is the best option, if they just need some files having them just get the files they need by downloading them works well.

How many customers do you have for your new $0.02/GB offering B2 Cloud Storage? Does it compete with Glacier?
It does not, no. Glacier costs about the same amount for storage but if you use Glacier for anything then it can become very expensive. If you want data out of Glacier it can become very expensive and take a long time. Our B2 is a real-time service, so people can actually use it not just for backup but also for hosting, they can use it for their origin server, for a CDN.... When you and I met about a year ago here in Paris, we were in beta, hadn't yet launched, had no partners for the service and we were just getting close to doing our public launch. Now we have over 15,000 users for the new B2 service. We have 20 or 30 different partners including Synology, Qnap, CloudBerry for server backup, Retrospect, Duplicity, HashBackup... there's bunches of different companies now that have integrated it so that their customers can use the service. It's an area that is new for us, a year ago we hadn't even launched the service, but it is growing very quickly.

What is the average stored capacity by customers?
Average is a strange number. What we see is that there are a lot of people who store very little data, like 10GB, because all they're doing is using it to store some files they want to share with people. There are a lot of people who are storing between somewhere 1 to 3TB because what they've done is used the service to sync their Synology device or they're backing up a server with CloudBerry. Then we have costumers who are storing a petabyte because developers integrated the service into their applications.

On how many sites do you store your data?
We have two data centers. One is in California and one is in Arizona.

Is there replication between the two sites?
Not yet but we will offer that as a feature in the future. We're also starting to look into data centers in Europe.

In which country?
It is a big question right now. We're just on the early side of that but we hope to have a data center opened in Europe possibly by the end of this year but it's more likely to open next year.

I'm asking because in Europe people like to have a lot their data store in their country and there is different regulation.
Yes, and with privacy shield and the other local requirements for storage there are different reasons to put it in different countries. So we're trading off where we have costumer demand from versus affordability of the data center location versus regulations, etc. So we are kind of looking for a broad swath of Europe.

Have you ever lost one bit of customers' data?
On the backup side we had customer install the product because they think that their drive is going bad and as the drive is going bad so does our product. So when their drive actually die and they try to restore all of their data, they say: "I can't get my data." So we look at this and say "Well you installed it and then you backed up for a week but you didn't get all the data backed up so we can't restore all of the data because you only backed up half of it before your drive actually went bad." It's this thing where we feel bad about because we would have loved for the data to be all there but if the costumer never got all the data to us, we don't have it.

Don't you lose any bits?
Yes, those were no bits that were lost but it is still a bummer because sometimes we've had customers who sign up for our service but they don't install the application. They don't realize that part of what they need to do is install the software.

What is the total capacity you have between your two sites?
We have over 300PB of data, which is a difficult figure for most people to wrap their heads around. Dropbox said that they had 500PB maybe a year ago, Facebook I think said that they had something like 4 times that. So 300PB is certainly not the largest storage amount on the planet, but it's very meaningful.

How many HDDs do you have?
We have about 80,000 HDDs right now.

Do you use SSDs?
We use very very few SSDs. I keep wishing that we could use SSDs. When we started Backblaze ten years ago we said "Maybe in 2 years we will be able to use SSDs because the price will come down to where it makes sense". Now we're here ten years later and we still saying "Maybe in two years we will be able to use SSDs." There's a magic that happened about a year ago where Samsung came out with a 16TB SSDs. It was very expensive but it was the first time that there was an SSDs denser than a HDD. So, we're not there yet but hopefully.

How many HDDs do you buy per month?
Somewhere between 1,000 and 2,000.

Do you buy them directly from the manufacturer?
Usually we don't buy them directly from the manufacturer, sometimes we buy them on Amazon, sometimes from other retails or reseller channels. We go out and look for the best pricing.

Where did you learn to speak Russian?
I was born in Saint-Petersburg.

Your name does not sound really Russian.
It is actually, Gleb is an ancient slavic name. There's a story about a Prince Boris and a Prince Gleb where Prince Boris stabs Prince Gleb in the back. It is a very sad tale but it an old Russian tale.

But you are a US citizen?
I am. We moved to the US when I was 5 so I mostly grew up speaking English in the US. My parents spoke Russian to us, I spoke English back and then at some point when I was 13 I went back to Russia for summer and my Russian got a little bit better through that.

There are many Russians in the storage industry.
It does seem that way yes. There's Acronis, CloudBerry, etc.

Do you have a business card this time?
[Laugh] I thought about that from the last time we met and decided to keep tradition going, so I don't have one!

Read also:
Company Profile: Backblaze
With cheaper online backup service than Amazon S3, Microsoft Azure, Google Cloud, etc.
by Jean-Jacques Maleval | 2016.04.27 | News | [with our comments]

Articles_bottom