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Disclaimer: I work at Backblaze with Yev. > we realized that we didn't need to be charging that much for downloads To be totally clear, Backblaze can keep goi

Disclaimer: I work at Backblaze with Yev. > we realized that we didn't need to be charging that much for downloads To be totally clear, Backblaze can keep going lower. Backblaze buys bandwidth at about 2/10ths of 1 cent per GByte right now, and it drops by maybe 10% per year. The only reason we don't go lower faster is that we are trying to "ease into" this. Internally we are afraid of hitting a tipping point and attracting too many customers using the outbound bandwidth too quickly. The Backblaze network capacity is currently built out for an extra 500 Gbits/sec or so of outbound bandwidth that we aren't using (ready to sell to customers), and it takes time (a few months) to provision more bandwidth. Sometimes the bandwidth providers have to trench to our datacenter which takes like four months. So if we drop the price too low too fast and enough customers show up that would require a total of let's say 600 Gbits/sec capacity in less than 30 days, we might not be able to keep them all super happy and we might get a black eye. So we want to "ease into" this to continue to provide top notch service while we figure out how much of a market exists for inexpensive outbound bandwidth. The ALTERNATIVE strategy would be to massively over provision, but if not many customers show up then we have wasted money. Since Backblaze is profitable and not funded by Venture Capital, we do not like wasting money. :-)

froindt 9y ago
Thank you for being so open about the operations at Backblaze. It's really refreshing to see some considerations that go into making decisions like this. It's very easy for people who have little to no expertise in a domain go on about how X company should do Y and it wouldn't be a big deal, when lots of times it would be.
- brianwski 9y ago
  > refreshing to see some considerations that go into making decisions like this Most businesses over a certain size figure out their "COGS" (Cost Of Goods Sold) which is what it costs to produce and sell their product if the scale goes through the roof. Then they decide what the "margin" is (the mark up that we get to keep ourselves). And there is your price. Some premium products are based on super high markups/margins, but in competitive areas the margin is usually lower than 50%. The MOST competitive areas (like food in supermarkets like Safeway) get as low as 20% margin. Now, the COGS doesn't include salaries of certain people in the company like the software engineer's salaries to produce the service. The reason those aren't included is they only write the software once, then you can sell it an infinite number of times. So the margin/markup goes into paying the software engineer's salaries. So the margin isn't ALL "profit we keep in a big swimming pool and swim around in". Programmers like me learn all of this in the first year of running their first startup company, so it isn't a secret. :-) I think the business majors learn in their freshman year of college.
thathappened 9y ago
I noticed you use cogent, aside from some peering with Verizon and others, are you sure your transit capacity is available by cogent and he? Had issues at choopa and only peer with them
- brianwski 9y ago
  We have a minimum of two separate bandwidth providers into each datacenter. Depending on which datacenter your data is in, it is some combination of: Cogent, AboveNet (now called "Zayo"), Wave, Century Link, and maybe one or two others?? The reason we always have two separate bandwidth providers is that any one provider is basically guaranteed to be offline at least 5 minutes a year, and there is a 30% chance any one provider will be offline for two hours once a year. But it is highly unlikely TWO providers will be offline at the same time at any point. We have three separate datacenters, but any one file you store will be in one datacenter. We have two datacenters in the Sacramento region (about 30 miles away from each other) and one datacenter in Phoenix. So depending on which datacenter your file is in, your network path might change to use a different provider. We are also adding brand new datacenters in 2018 in new regions (like Europe) so that will probably mean new and different network providers.

froindt 9y ago

Thank you for being so open about the operations at Backblaze. It's really refreshing to see some considerations that go into making decisions like this. It's very easy for people who have little to no expertise in a domain go on about how X company should do Y and it wouldn't be a big deal, when lots of times it would be.

brianwski 9y ago
> refreshing to see some considerations that go into making decisions like this Most businesses over a certain size figure out their "COGS" (Cost Of Goods Sold) which is what it costs to produce and sell their product if the scale goes through the roof. Then they decide what the "margin" is (the mark up that we get to keep ourselves). And there is your price. Some premium products are based on super high markups/margins, but in competitive areas the margin is usually lower than 50%. The MOST competitive areas (like food in supermarkets like Safeway) get as low as 20% margin. Now, the COGS doesn't include salaries of certain people in the company like the software engineer's salaries to produce the service. The reason those aren't included is they only write the software once, then you can sell it an infinite number of times. So the margin/markup goes into paying the software engineer's salaries. So the margin isn't ALL "profit we keep in a big swimming pool and swim around in". Programmers like me learn all of this in the first year of running their first startup company, so it isn't a secret. :-) I think the business majors learn in their freshman year of college.

thathappened 9y ago

I noticed you use cogent, aside from some peering with Verizon and others, are you sure your transit capacity is available by cogent and he? Had issues at choopa and only peer with them

brianwski 9y ago
We have a minimum of two separate bandwidth providers into each datacenter. Depending on which datacenter your data is in, it is some combination of: Cogent, AboveNet (now called "Zayo"), Wave, Century Link, and maybe one or two others?? The reason we always have two separate bandwidth providers is that any one provider is basically guaranteed to be offline at least 5 minutes a year, and there is a 30% chance any one provider will be offline for two hours once a year. But it is highly unlikely TWO providers will be offline at the same time at any point. We have three separate datacenters, but any one file you store will be in one datacenter. We have two datacenters in the Sacramento region (about 30 miles away from each other) and one datacenter in Phoenix. So depending on which datacenter your file is in, your network path might change to use a different provider. We are also adding brand new datacenters in 2018 in new regions (like Europe) so that will probably mean new and different network providers.