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Building a Sustainable, Capital-Efficient Business: Backblaze CEO Gleb Budman (Part 7)

Sramana Mitra: Where are you now in terms of the scale of the company? Are you doing over $10 million?

Gleb Budman: We’ve crossed over $10 million a year and a half ago or so. It’s still growing quickly. We now store over 150 petabytes worth of data for customers, which is about a fourth of data that Facebook stores. It’s a pretty significant scale. We’ve done over 10 billion restores. We’ve also helped a lot of customers in getting their data back. The big opportunity for us now is this new offering. We certainly still are going to keep focusing on the pure $5 a month unlimited backup. It’s a good growing business. It provides the revenue and cash flow for the business. >>>

An Emerging Success Story from Indiana: Fathom Voice CEO Cameron Weeks (Part 6)

Sramana Mitra: You brought this person on as CEO?

Cameron Weeks: No, I’ve always been the CEO of Fathom. We brought him in a very senior role as a Vice President. He was essentially supposed to come in and run sales and marketing, and control the revenue side of the company, which I agreed to. I’m a product person. I’m not a sales person. He ends up doing some terrible things and really underperforming on the job, and hiring a bunch of people into his sales team who were unaccountable. They ended up fudging some contracts to inflate what sales was doing.

Sramana Mitra: Yikes!

Cameron Weeks: For lots of reasons, we were slow to discover those issues. It took longer than it should, which puts us in a really terrible position. Revenues were inflated by about $2 million above where they should be. We’ve invested money into different resources based on those >>>

Building a Sustainable, Capital-Efficient Business: Backblaze CEO Gleb Budman (Part 6)

Sramana Mitra: Content marketing is actually an extremely effective method of customer acquisition, but not everything converts. There’s content and then there’s actual conversion. The tricky thing is to make content marketing convert. There’s this brand awareness that does very well with content marketing and not in every category does content marketing convert into actual dollars. That’s the trick of content marketing.

Gleb Budman: Of the million people that read that first blog post, only a small percentage of them actually signed up for this service. If you get enough of a community there, they share and they spread it. That, over time, helps out. One of the unexpected benefits for us with the content side of things is that for the first eight years of the company, we offered unlimited online backup. That was the only thing that we offered. For a lot of the people who read our blog post, it wasn’t even a relevant thing. They were interested in the blog post but there was nothing for them. They were techies and perhaps were on Linux. >>>

An Emerging Success Story from Indiana: Fathom Voice CEO Cameron Weeks (Part 5)

Sramana Mitra: But your target customer strategy was local. That’s how you were getting these customers, right?

Cameron Weeks: That’s how we started. It was local. Once we had established the client base in the local market, we found a very well-established channel partner. They go by the term telecom partners. We found that were these partners in the world that helped broker, negotiate, and recommend telecom solutions for companies. It would range from one-person firms to very large multinational companies. We quickly tied ourselves to that world and became a part of those partnerships that were out in the conferences and events. For the next several years, that was our sales strategy. We ended up with hundreds of them that would, every day, sell our products for us. That allowed us to grow very quickly without having to dramatically increase the office.

Sramana Mitra: Did you raise further financing after the initial money from Frank?

Cameron Weeks: We have. Fathom took on an investment in 2010. Then we took on additional investment in 2013. Then in 2014, we took another one. So we’ve done three rounds at this point in time. We picked up some other VC firms along the way. >>>

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 >>>

An Emerging Success Story from Indiana: Fathom Voice CEO Cameron Weeks (Part 4)

Sramana Mitra: From whom did you raise $500,000?

Cameron Weeks: We got lucky. We say that this company is very blessed. One of the partners that came in was actually a VC firm from California called Small World Group.

Sramana Mitra: Is this Frank Levinson?

Cameron Weeks: Yes, you know Frank?

Sramana Mitra: Very well, actually. How did Frank find out about you? >>>

Building a Sustainable, Capital-Efficient Business: Backblaze CEO Gleb Budman (Part 4)

Sramana Mitra: You started this in 2007?

Gleb Budman: Exactly.

Sramana Mitra: You self-financed it with your colleagues?

Gleb Budman: We did. It was definitely a long, crazy journey. Five of us committed to a year without salary. That would be the seed round. We then had two more people who joined us. We call them demi-partners. They weren’t complete co-founders but they did join very early on. They also committed time without salary, and they also put a little bit of money into the company.

Sramana Mitra: All of you had worked together before? >>>

An Emerging Success Story from Indiana: Fathom Voice CEO Cameron Weeks (Part 3)

Sramana Mitra: It was kind of off-the-cuff basically.

Cameron Weeks: Yes. As we were running the web company, we were doing that.

Sramana Mitra: By the end of 2008, you had sold the web company, right?

Cameron Weeks: Yes, it was closer to 2009.

Sramana Mitra: What happened in 2009? What did you do next?

Cameron Weeks: The next thing we did was we decided to focus on the telephony thing. It had been sitting there making money from day one. People pay their phone bill every month. By that time, we actually worked the kinks out of it. It was reliable and it worked every time. >>>