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Leveraging Amazon To Build a Cloud Storage Business: Nelson Nahum, CEO of Zadara Storage (Part 4)

Posted on Thursday, Mar 10th 2016

Sramana Mitra: Was there any segmentation of what kinds of customers were finding your product attractive?

Nelson Nahum: First of all, before the customer, I would like to tackle the question of the business model. We created a great technology. We found out that Amazon really liked what we do because it’s enterprise storage and it brings additional functionality to the Amazon cloud. Amazon doesn’t really OEM, but they offered us a cloud that is connected to them. Any customer of Amazon can be a customer of ours.

We said, “This could be very good. We can put in a small cloud and get the first customer.” This is how we got the first customer. We promoted the storage inside Amazon. There weren’t really a lot of options to use storage there as opposed to storage on-premise where anybody can buy from any storage company. The market is much more crowded today and it’s much harder to differentiate. Back then, the only options were either Amazon storage or us. Then people started finding us.

Sramana Mitra: It sounds like your business model was a regular subscription SaaS business model.

Nelson Nahum: Yes.

Sramana Mitra: What was the sales model? How were customers finding you?

Nelson Nahum: That was a good one. Our VP of Sales and I were sitting together and he said, “When I need to sell regular storage to people, I can go to LA, take the Yellow Pages, and start calling people. In the cloud, it’s a little bit different. How will we know who is in Amazon?”

First of all, the customer can be spread all over the world. Second is, it’s not enough to call people from the Yellow Pages. This is when we started working on the marketing side—creating blogs and doing search engine optimization. Frankly, these were new for us. This is how we got the first few customers that, in many cases, were companies that we didn’t know existed. We have customers in Brazil and Nigeria.

Sramana Mitra: What are some other interesting strategic moves that you made in building this company?

Nelson Nahum: There were two important moves.The first strategic move was to connect to Amazon and be in a place that nobody else is in. After the connection to Amazon, we connected to Azure as well. We partnered with data centres like Equinix. In previous storage companies, you sold storage to enterprises, and this is now a really crowded market. It’s big but it’s very crowded. I think that by doing this partnership with the cloud providers and offering storage there, we succeeded in getting out of the crowd and getting the first few customers to come in.

At some point, we said, “We need to grow. Now that we have enough customers and we have a good product in Amazon and Azure, how do we move forward?” So our second strategic move, from there, was move to back to the traditional on-premise business, but to offer it as a service. This happened a year ago when we were already bigger and had more capability to do more of the traditional marketing in a way that we would stand out in the crowd.

Sramana Mitra: It’s a very unusual move. The fact that you were able to convince Amazon to do that with you is a very unusual and a very differentiated strategy.

Nelson Nahum: Amazon is a great company. There are many companies that will not allow us to do that but they are in the process of conquering the entire world. They are very innovative in terms of how they treat partners. Traditional big companies are very secretive about their customers. They don’t want to share anything, but they don’t have many partners. Amazon has a different approach to that. They have a lot of partners. At the end, they benefit a lot.

Sramana Mitra: Where are you now?

Nelson Nahum: We are now in a good place. We have more than a hundred customers. We are growing 200% year over year. Things are going well. We are 47 people in the company. Our next milestone is to become a much larger company.

Sramana Mitra: Are you a $10 million company? Can you give us a range?

Nelson Nahum: Yes, around that range. Because our business model is subscription, it’s not only the revenue that counts but also the bookings and long-term contracts.

Sramana Mitra: Great execution and a masterful move on the Amazon strategy. It was nice talking to you.

This segment is part 4 in the series : Leveraging Amazon To Build a Cloud Storage Business: Nelson Nahum, CEO of Zadara Storage
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