Thought Leaders in Cloud Computing: Matthew J. Schitz, CEO of Symform (Part 3)

Sramana Mitra: What’s the revenue level of your company?

Matthew J. Schitz: Revenues we don’t release, I’m sorry. We’re a privately held company. But our revenues are significant. And they’re growing quickly. We’re growing at 50% quarter over quarter right now.

SM: Just give us a range. Is it a $50 million company, a $100 million company, a $200 million company?

MJS: We’re under $50 million. We just introduced the service for commercial purposes less than a year ago. So, we’re ramping as we speak.

SM: Let’s change direction a little bit and discuss the space. You have deep domain knowledge in cloud storage and backup based on what you’re doing with Symform. Talk to me about how you see this market. It’s a very crowded market, and there are numerous players. How do you look at the market? How do you segment it? Where do you see your competitors and peers, and what are they doing? What’s interesting? What are some of the innovations you’re watching?

MJS: It’s an enormous market, one of the largest IT markets. It’s a fast-growing market, actually the fastest-growing IT segment.

SM: What is the projected number now for cloud storage?

MJS: Electronically stored data by 2020 is 35 trillion petabytes. If you do the reverse math on that at any sort of assumption of what cloud storage costs in a percentage market penetration, which varies by research, today it’s pegged at anywhere from a $10 billion to $20 billion market. By 2020, it’s a multiple of that. But you’re right, it’s a noisy market. There are lots of subsegments and lots of people out there offering cloud storage. There have been traditional subsegments. If you read them left to right, it would start out with file sharing, the Dropbox sort of model, and then there’s actual cloud storage where you’re storing larger amounts of data than simply sharing a few files, and then backup. You could actually back that data up. And then full disaster recovery, so that you could recover from a disaster. Those lines have started to blur so that to play in the space, you’re going to be offering pretty much all of the above. You could also slice the market by target customer.

There are some people on the high end doing enterprise-level storage solutions. The other end of the spectrum would be consumer level, including low-end consumer-level offerings. In between you’ve got pro-sumers, SOHO, SMB, departmental enterprise and then full-blown enterprise. We have focused from the high-end consumer through pro-sumer, SOHO and SMB. That’s what we believe are the first adopters of cloud storage and backup. It’s the bulk of the market and the fastest growing subsegment of the market. That’s where we play.

What we’ve got that’s uniquely compelling is better performance, better security, and [we’re] up to 10 times less expensive.

SM: So, Amazon, Dropbox, and who else do you see as your primary competitors in that space?

MJS: The public company, the pure play public storage and backup company is Carbonite. Our closest competitors would be Carbonite, Mozy – that’s owned by EMC – those two would be the closest. Dropbox and Box.net are more focused on file sharing and collaboration, but they’re also moving into full cloud storage and backup.

SM: Amazon is competing in that, right?

MJS: Yes, but Amazon sells on a wholesale basis, so you write to their API. They’re not so much an application as they are selling wholesale storage. We compete a lot less with Amazon. We’re actually outselling cloud storage and backup subscriptions. We have user subscriptions. We have server subscriptions. We also sell subscriptions on network attached storage devices.

SM: Based on the current state of the union of the cloud storage market, where do you think some of the gaps and opportunities for entrepreneurs are? Is the market already far too crowded and over served?

MJS: I think there are tons of opportunities. It’s one of the largest markets, and it is the fastest-growing market. There are some structural issues with the market. For example, backing up data to a centralized data center has inherent problems. Number one, data centers are super expensive, and it’s only getting more expensive with the cost of power and cooling, and so on. It’s not a sustainable model. Number two, data are growing so fast that if you do the math, at 44-fold increase by 2020, data centers already use about 2% of the electricity in the U.S. You can’t build and power enough data centers to hold data by 2020. The paradigm has got to change. You physically can’t do it. You’d have a data center on every street corner. They’d be like Starbucks. And I don’t think people are going to turn their power off at home to power all the data centers needed.

The excess disk space that you and I and every user in the world have sitting on their own desktops or their own servers dwarfs the capacity in data centers worldwide. So, we’re a very similar company to Skype.

This segment is part 3 in the series : Thought Leaders in Cloud Computing: Matthew J. Schitz, CEO of Symform
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