3 ms·

$10 million/year in revenue in the 6th year doesn't sound like a VC-compatible growth rate.

n00b101 13y ago
> $10 million/year in revenue in the 6th year doesn't sound like a VC-compatible growth rate. Interesting point. Come to think of it, online backup services have existed for a long time, I remember using a similar service at a previous job 6+ years ago. I recall that it was quite expensive and certainly not unlimited. I seems clear that Backblaze was able to get to $10 million revenue by competing on price - dirt cheap pricing. And the dirt cheap pricing was made possible by not paying salaries, running a "data center" in an employee's apartment, building servers from ultra low cost hardware components, violating residential zoning laws, oversubscribing storage capacity, etc. One can only wonder what kind of sacrifices were made in terms of physical and network security. I wonder how many of their first customers realized that their backups were sitting in someone's apartment ... somehow I doubt it was disclosed at the time? The problem with this kind of business model is that it is effectively a small business owner mindset. $10 million revenue after 6 years of toiling away ... at $5 per month, this means that they have something like 2 million users ... considering all the other backup solutions available (including far more secure solutions), it seems quite possible that their growth will stall or slow down as their target market is going to be relatively small and already saturated and you can't go much lower than $5 a month to continue competing on price alone. Incidentally, I noticed that their website actually says "as low as $3.96 per month" ... so they are continuing to push the limit on price. I'm not sure that a price war / race to zero is the optimal strategy for this business ... this is like trying market the world's cheapest helmet or life vest - how many people would seriously want that?
- davmre 13y ago
  FWIW, the $10 million number is annual revenue. So they'd only need about 170k users at $5/mo ($60/year) to be making that much.
  - n00b101 13y ago
    Doh. That's true. My mistake. I suppose 170k leaves a lot of room for more users.
jimbokun 13y ago
Wasn't that the point of the article?

> $10 million/year in revenue in the 6th year doesn't sound like a VC-compatible growth rate. Interesting point. Come to think of it, online backup services have existed for a long time, I remember using a similar service at a previous job 6+ years ago. I recall that it was quite expensive and certainly not unlimited. I seems clear that Backblaze was able to get to $10 million revenue by competing on price - dirt cheap pricing. And the dirt cheap pricing was made possible by not paying salaries, running a "data center" in an employee's apartment, building servers from ultra low cost hardware components, violating residential zoning laws, oversubscribing storage capacity, etc. One can only wonder what kind of sacrifices were made in terms of physical and network security. I wonder how many of their first customers realized that their backups were sitting in someone's apartment ... somehow I doubt it was disclosed at the time? The problem with this kind of business model is that it is effectively a small business owner mindset. $10 million revenue after 6 years of toiling away ... at $5 per month, this means that they have something like 2 million users ... considering all the other backup solutions available (including far more secure solutions), it seems quite possible that their growth will stall or slow down as their target market is going to be relatively small and already saturated and you can't go much lower than $5 a month to continue competing on price alone. Incidentally, I noticed that their website actually says "as low as $3.96 per month" ... so they are continuing to push the limit on price. I'm not sure that a price war / race to zero is the optimal strategy for this business ... this is like trying market the world's cheapest helmet or life vest - how many people would seriously want that?

davmre 13y ago
FWIW, the $10 million number is annual revenue. So they'd only need about 170k users at $5/mo ($60/year) to be making that much.
- n00b101 13y ago
  Doh. That's true. My mistake. I suppose 170k leaves a lot of room for more users.

jimbokun 13y ago

Wasn't that the point of the article?