Building a Sustainable, Capital-Efficient Business: Backblaze CEO Gleb Budman (Part 5)

Sramana Mitra: You talked about the first newsletter that Amit Gupta got you into and you got several thousand sign ups from that. Is there a dominant segment type of users that stores their materials on your server?

Gleb Budman: It’s all sorts of people. Photographers are a large percentage because it’s completely unlimited back up. It’s one of the few places online where they can store their entire photo library at full resolution. They don’t have to worry about whether it gets down sampled. We have a very strong following of photographers, but we also have videographers, musicians, web designers, and software developers. We have a lot of writers that are on the platform who don’t necessarily have a lot of data but have data that they care a lot about. We also have a lot of genealogists, which was a surprise to me. When I thought about it, it made sense. These are people who spend a lot of time curating data that has been lost over the years, and trying to piece together their family history. It’s something where they want to make sure that that doesn’t get lost.

It’s a lot of people from all walks of life. A lot of people are fairly technical because it’s just the nature of those who understand that backup is important. In addition to the consumer side of things, we also have a lot of businesses that use us to back up their customers. We have a Backblaze for business offering. It’s the same price point. It just gives them a little bit more manageability for having lots of individual users using it. A lot of companies, churches, and organizations use the service as well.

Sramana Mitra: This blog post that went viral, what year did you write that? Was it in 2009?

Gleb Budman: The first one was in 2009. We’ve continued to publish them through the years. We’ve also published other ones that were also viral. One of the big ones we published is about the Thailand drive crisis. There was this period of time when there was flooding in Thailand. It turned out that half of the world’s hard drives were made in Thailand, which meant that overnight, drive prices doubled, tripled, and quadrupled. They became really hard to get.

In order to survive, what Backblaze came up with is something that we called drive farming where we went to individual Best Buys and Costcos. We had a map in our office of all of the retail stores in our area and where all the employees live. We had this process where they would drive to a store in the morning on the way to work, pick up some drives, and bring them to the office. Then we would do what’s called shucking where we would shuck the drive like an oyster because we were buying consumer drives that were in USB enclosures. We pop them open and put them into servers and continue to do this for weeks on end while drive prices were still too high.

By doing that, we were able to keep our cost low, continue to offer the $5 unlimited, and stay in business. It was this crazy process of doing that. We wrote a blog post about that. That was very popular. We also wrote a follow-up blog post that analyzed the prices of drives during this time frame.

Sramana Mitra: Intuitively, my sense would be that the photographers, videographers, and graphic designers would be big users. You’re saying they were, but I can’t imagine them being interested in articles about hardware design and storage.

Gleb Budman: I think you’re right. What happens is a lot of people don’t make the decision to back up by themselves. What they do is they have some trusted friend – some technical advisor or an IT consultant who does that. A lot of times there’s this techie friend that when our email doesn’t work or when we’re trying to decide which photo app to use, we go to them. By virtue of writing these articles that focused on storage, we attracted a lot of people in the tech community who were fascinated by storage. A lot of the technical advisor type of people became familiar with Backblaze and ended up recommending it to their friends, families, and co-workers.

Sramana Mitra: What kind of revenue numbers did you do in 2009? How did things ramp?

Gleb Budman: In general, we ramped up around the 50% rate. From 2008 to 2009, it was a huge jump, but in 2009, we were already in the millions of dollars in revenue. The interesting thing is we kept growing somewhat organically and with a somewhat content-driven approach, which we didn’t think was scalable. Then what happened was we kept trying to find ways to expand and grow in other ways. It turns out that we didn’t really think content marketing was a path, but it was more scalable that expected. About a year and a half ago, we put into place a more rigorous process where we have a whole schedule and calendar and process for it.

This segment is part 5 in the series : Building a Sustainable, Capital-Efficient Business: Backblaze CEO Gleb Budman
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