Hey Ahin. How are you doing today? Thanks so much for joining me on the SaaS breakthrough podcast.
I'm great, David. Thank you for having me.
Yeah, I'm absolutely thrilled to have you on. I'm excited for today's episode. To start off, why don't you give us a little bit of background into Backblaze, your company, the competitors, the space you're in. I think you guys are really awesome. You're in a great space, you're doing some really cool things. Tell us a little bit about it.
Backblaze makes cloud storage that is astonishingly easy and affordable. Let me give you a little bit of our history. So our company was founded in 2007 by five founders, all of whom are still in their operating roles at Backblaze, which I think hopefully speaks a little bit to our culture and the type of company that we built. Our first product is a computer backup product. So for $50 per year per machine, we back up all the user generated data on your computer, including any attached drives. We're the leader in that market, have been so for a long time or also the lowest cost offering in a world where most companies have moved away from unlimited backup. We are truly unlimited as well as the most affordable. In the same way that Amazon.com was the thing that scaled out aws. Our computer backup product has enabled us to scale out our object storage.
Two years ago we released B2 cloud storage and if you're familiar with Amazon's s3, the largest storage thing inside of aws, then it's easy to position B2. B2 is a direct competitor to Amazon's s3. The biggest difference is we're one quarter of the price. Now most people hear that type of price difference and say, well, how can that be? That isn't sustainable and I need to trust you with that, with my data. At that point, we point out that over the last 11 years, we've earned over 600 petabytes of customer data from customers in 160 countries around the globe. In addition, we've actually published our financials, someone that, something that no other cloud storage provider has done, and we are very public that we are driving a 50 percent gross margin with our offering. Finally, of course, we've also disclosed that in the 11 years of our existence, we've raised a total of 5.3 million dollars, so if you believe nothing else, you probably ought to believe that we're running a sustainable business because we haven't had enough capital externally to do anything else. Does that make sense?
One hundred percent. That's an incredible description. I think first of all, congratulations to you guys and the entire company, the extraordinary success you guys have had. I think one of the major things that we'll dig into today that that I find very interesting is how you guys have not only survived but thrived in such a, I would say a competitive marketplace. You're up against very large giants in the space and you guys are obviously doing a great business, so we'd love to talk about that. I want to know a little bit more about when you personally joined the company so I can get a better understanding of, you know, maybe the team size at that time when you joined.
And so I joined. I, I only half joke, I'm two years old, which in the scale of Backblaze is, is still kind of like my rookie season, so I joined, two summers ago and at the time our team was around 50 people. We are scaling up pretty aggressively this year. We're, I believe just cleared 70 and we are growing very, very fast and as a, as a little bit of a plug, anybody that's interested in joining our team, we list all of our postings on our blog and our website and I'd encourage the listeners to check it out.
Nice. I'll make sure we link to that in the resource section underneath the podcast when we're done. But tell us when you joined at 50 people, what's the major pain points that company's facing specific maybe marketing.
It happens a lot in legacy businesses. So we have a couple challenges. And it's why I have a job which I'm incredibly grateful for, when you're a traditional more traditional startup and then is both, you know, how long your custom companies existed and also in your mentality, you have a lot of athletes that can do a lot of things and you're used to doing a lot of things, but as we've grown and scaled and become a global business, we've maintained that startup mentality in that we do a lot of things and we're running in a profoundly efficient team, but we need to put in processes, we need to put in tools that let us scale, if that's analytics, if that's the way we approach our business lines, if that's the way we think about actually segmenting our customers. All those things at some level require process and tools. And I think that was really the challenge we were looking at two years ago which was hastened by the public release of B2 and we're making great progress against our goals. And scaling out on all the things that we need to do. But one of my favorite quotes: but miles to go before we can sleep.
100 percent. I think, there's so much to be said about having those systems. Would you ideally have something like those analytic system systems, those business, I guess marketing systems set up prior to those points or do you think that there's some level that just needs like you just got to do whatever you gotta do to survive to get there and then you implement it or would you recommend that people do those systems first so they don't have to go back and try to like work through the weeds? Again?
That's an interesting question and if I had to give a specific answer, I would say get there and do the work and your output and your business will help you define your requirements, but I never mean that and I think Backblaze has done a really good job with that. The problem is taken too literally. Marketers think that's an excuse for getting lazy. Right? Which is, you know, free tools, kind of more affordable tools can get you a long way, but you need to stay organized. You need to know that this thing is going to need to scale and how that's going to happen. But I think the most important thing is to do the work, to grow a business that's profitable because that can help you understand the marketing staff that you need.
Yeah, I love that. I love that you're defined by, you find the KPIs needs based on what's happening so not the other way around. Just defining points that you don't really know, are these the right points to define now until you actually have the need. So let's jump back over to the kind of the first topics I was talking about which was coming in. You're coming in two years ago, you're coming into business, been around for awhile, but there are large competitors in the space, obviously people that you compete with and when you say their names, you know, possible prospects, leads and stuff like that, they know them. What are you doing, especially when you're coming in to really try to understand or find a space for you guys to be in the marketplace. How do you do that? How do you carve out your own stuff?
Yeah, and forgive me for for, hopefully not sounding too high minded or MBAish, but the number one thing we do and that we're having a lot of success on is being customer focused, which sounds like a profoundly vacuous thing to say, so let me give you a more detail. We market and build our product and run our entire business around what customers can do, what problems we're going to solve for customers. I think generally in tech and certainly in cloud storage, there's a saying that most of the marketing and products are positioned around speeds and feeds and that means metrics and features that you just almost vomited out as opposed to what a customer can do. You know, so one of the things that gives us a huge advantage is our pricing, right? The marketing guy should have a much higher minded differentiation and we have some really interesting capabilities, but it's shown through our pricing, which is we have one price for storage, half a penny per gigabyte per month. That's it. There's no fine print. Virtually every other cloud storage offering either has a very complicated pricing table that says, well, for your first 100 gigabytes, it's this price, but then it goes down with scale, but then the scale resets every month. Amazon, Google and Microsoft all require you to use a pricing calculator to try to predict what your price, what your bill is going to be. There also a bunch of clouds, storage providers to say, well, we're going to go simple, but please ignore these two pages of fine print behind our pricing table, which by the ways is where they're burying a lot of these prices. Backblaze has made a very conscious decision to say, you know, that's not how customers are going to solve the problem. That's not how they're going to adopt the cloud, but by giving you one simple easy to understand price where you don't need to negotiate, right? That's the other thing. We just tell you what our price is, half a penny a Gig for storage, one penny for download, which by the way is about one ninth of Amazon. That's what it is, so you can rely on that pricing. You can run your financial models and you don't have to worry about getting surprised at than any given moment. And so being that customer focus, which also includes being transparent helps us compete against the giants.
I want to talk about transparency in a bit here, but I want to ask you this question. Do you think that, you know, pricing is determined by almost like business operations part of the company or that should be heavily involved with the marketing team and pricing should be part of how the marketing department looks, you know, at the marketplace itself?
Yeah, I think again, it sounds high minded, but in a perfect world, it's a partnership. If, if I think about kind of operations and finance and marketing as the, you know, the actual positioning but also sales at the end of the day, our sales team are really the ones on the front lines. And at Backblaze one thing that was done and embedded into our culture and long before I came here, but it was one of the most attractive things to me is that partnership, that relationship up and down the line, we are unified about creating a price that is easy to understand, a fair price for the service that we offer and totally sustainable for what we're trying to do. And again, I'd point out our over decade long experience in the industry, right? Because if you can get those three things, like a customer knows what she's going to pay, she can predict what she's going to need and she has, can rely on Backblaze being around tomorrow, then all of a sudden cloud storage becomes very, very usable and not some jargon filled esoteric thing. We like to say we help cut through the fog of the cloud.
I love that. I think it one, it shows a very deep understanding of your user. Like where they mentally are, what their feeling of their journey, their fears and beliefs and systems. But also that you guys, and I say you guys as a company probably just generally from the founders, had built a great culture of, you know, we want to be simple, we want to be customer focused in these values, have kind of drift into everything, all these departments. And it sounds great and I see so many great companies have those values, those pillars and values be the thing that kind of grows all the other departments. So, you know, hats off to you guys for having that. You mentioned something before about transparency, transparency right now especially, you know, open startup, stuff like that, is really big and oftentimes it's a really great marketing play in your market specifically, why did you guys choose transparency as a pillar of values and then also as a content strategy, what did you see with it that you thought really stood out for you?
Yeah, I'd love to take credit for it. The truth is, has just been a principal of this company from the founding team from the founding days. So very early on when the five founders got together for Backblaze, it all worked together in various iterations before it was, you know, a very high minded thing of let's build the company that we want to work at, but they have and it turns out we all want to work there, right? So internally a culture of respect and trust and honesty, which then radiates to the outside. Now years ago when our CEO, you know, really started our blog and members of the marketing team and engineering team, supported it, have supported and continue to, the decision was made to, to try to be transparent mostly because that's what we could afford to do, being transparent in your communications is free notionally. And what we found is by creating an enduring effort around that transparency, doing it in everything we do, over 11 years, it actually has generated a very traceable, positive ROI for us. It's incredible.
That is incredible. I think using the blog and stuff like that, it's probably a great way to do it. And let's, let's actually switch over to tactical things in marketing. What are, since you've joined experiments or initiatives with that that have actually stood out, maybe it was the blog, like you just mentioned, what has really stood out as far as like little marketing experiments that you can point to and say, hey, that was a great direct ROI?
We do all the traditional stuff. It's amazing to me the value of multivariate testing for an ecommerce experience. Things that I would have sworn to you wouldn't work and do work, things that work six months ago don't work as well anymore. So we do all that stuff, but what I think about as an experiment, and it really is more of a mental experiment for me because everybody already knew it at Backblaze was the amount of effort we put into our social. One of the members of the marketing team is our director of marketing Yev runs our social and a significant part of every day is dedicated against that. You know, most of my peers and colleagues that I talk about, we laugh, well we have a social guy and he's off doing stuff and drinking caffeine, but you look at Backblaze in social efforts and our CTO, you'll find him deep on Reddit threads and in Slashdot and other very, very in the weeds communities, but you see us with a real heavy presence on Twitter and candidly you'll see us wherever our customers are and we take that kind of approach. So what's the experiment? You know, that's a lot of resource for very small team to be putting in and at some level it's got to pay. And, but you, when you look at it, and again, it's phenomenal because these are all public record stuff. You can look at our Twitter feed, you can look inside of Reddit side of slash data orders and you see conversations happening about storage where people inside that conversation will actually reach out and pull you up and when Backblaze isn't even involved. And that's every brand marketers dream. But you look at our Twitter feed and you see customers signing up for our service, last fall one of our major competitors on the consumer side for computer backup, announced they were exiting the market and that's where a lot of these efforts, you can just see the tangible payoff. We picked up a very significant amount of our competitor's customers because backways was there every nonpaid review, now on the Internet has us listed as number one. And again, a large part of that is just being where the customers are, being willing to answer questions and being invited back because if we mess something up or something's not going right, we just admitted, which leads to a bunch of scary moments. Right? You, you, you don't want to admit that maintenance is taking longer than the maintenance window, but it turns out when you do, you earn, earn trust. And that trust has literally delivered payback for us.
So you guys have brought the transparency aspect, the simplicity aspect, the voice and community onto social. Can you talk about, and maybe a, just an example of what you're doing on social? I mean, you're saying you're having conversations talking about the maintenance windows and I think those things definitely work. Are you like, are are people reaching out to people that have just generic questions? Like there's just a mention search for anyone that's mentioning cloud storage and you're reaching out to them to have conversations. Are you running ads to get people to your page and then giving them great content? Like what's a, is there an example of a campaign type that you've done in social? Because I think, you know, I think you guys have done an exceptional job. Obviously getting direct ROI, positive ROI from social is something that most companies don't have. Like you said, it's, most people are just like, hey, we're doing social because we know we have to, but there's no real direct ROI.
Yeah. So we, you know, we, we do, we have done and will continue to do Twitter paid ads and on Facebook, all the flavors in paid advertising and that's fine. We get it. We get a kind of direct response relationships from that, but our social efforts are really focused around, again, this sounds too high minded but, but it's focused around being organic inside of conversations and so if it's someone is adding us because they have backup core story, great. We're there, we're answering questions. We definitely, if it's like a really easy customer support type question, we're very happy to answer on Twitter. We're also very comfortable saying, Hey, this is very complicated, here's a link like file a ticket, our chat team, our support team is available on chat and email and we need to get this done. You know, and then we also make it a point again to bring that customer focus. The other day a customer added us and Dropbox business because her computer blew up and she was so happy that she was actually backed up. We take those opportunities to do thank the customer for a business. Say, Hey, we're so happy we were there for you. All that stuff because that's what backup does. But we also definitely avoid anything but complementing our competitors because customers don't want to hear, hear people be petty, right? They want to, they want solutions, they want answers. They don't want a lot of spin. And again, I give all the credit in the world to our team and Yev specifically for being able to thread that needle. It's not easy and again, it leads system hair raising moments, but, but at the end of the day, it's the thing that pays us back.
That's actually a great point. I mean, having, having the ability to have those great conversations, without, like you said, saying anything, I'm not no offense, but that causes some type of, you know, a doubt or something like that on your company that are they really saying this because they genuinely care or are they saying this for marketing? And I think so much of like just actual conversations has to be from a place of like, hey, we just care about you as a person, not just a prospect to, a lead to us or something like that. That's really powerful.
And I think it also turns out that, that your, your audience, then we'll jump in when, when necessary. Right. And so an example I would give is one of our competitors in the computer backup space of both for businesses and for consumers, they claim to have unlimited data backup for all of your files, for all of your files, except when you read the fine print, it turns out they don't think videos are files. So when we get those kinds of questions online, you know, one of their customers is super disappointed because their computer crash and it turns out their videos weren't getting backed up and will get added at that. And at that moment we could either take a pot shot, which candidly I usually want to do. Thankfully the team doesn't, doesn't let me, but you can just present, here's what we do. We back up all your user data by default and you can exclude if you want, right? And that's what you can do when you are truly unlimited, when you are committed to backing up your customers' data. These other games on file types and all that are really driven by being focused on your financial model as opposed to the customer. And don't get me wrong, we're for profit business and we're very public about that, but we have figured out how you can do it and maintain at a 50 percent gross margin. We can run our service and support all of our families on that gross margin. So that's what we're going to do.
I love that. A real focus on the customer and not just saying that as marketing lingo or spin, it's we genuinely do. And it causes everything that you guys do from the voice, the language, how you talk to people all comes from that unique value. And I love that. What about Marketing KPIs? What are you guys looking for? Maybe, maybe you can put that specifically to social. Are you looking for specific numbers or when you're just talking to let's say your director of marketing, you know, what are you looking for on a weekly or monthly basis for KPIs?
Yeah, so I mean, at the end of the day that is where we get profoundly clinical. At the end of the day, I want to know about what incremental revenue at what margin we're driving. And over time I want to know what our churn rate is on our customers because if I have all those things I can do lifetime value.
Is that, are you looking at that by channel?
By channel, and, and even at times by campaign, which is something you get to do when you're at scale, which gets to your, one of your earlier questions. So we, we are very, very happy that we are looking at that and I say looking because, you know, it's not always that clean or that easy, but that's how we shape our funnel. And if you take that list and at the end of the day dollars and cents matter, and dollars and cents over time, if you can make that argument, then it gets away from all the hand wavy marketing stuff. Well, it's about the brand. Well, the brand, either better support customer retention or what are you doing? So that's what we look at now, that's all well and good, but the real world is a much dirtier place. So then we go up the funnel, okay, well what are dollars and cents there? At the end of the day, you buy from our website. Okay, so that's a conversion rate on our website. Okay. Conversion rate on a website then how many visits do we get? And when you sell something like cloud storage sometimes while you can absolutely self serve a lot of people want to talk to a salesperson for whatever reason. And again, at Backblaze we don't force you to, our pricing is available. You can get started. But you know, if you want to talk to sales, okay, cool. We need to be able to trace that funneled down through sales, their conversations and what that customer was worried. Again so then you build up, okay, how are we driving traffic? And that's where the social metrics come into play. It's funny, our, Yev the head of our social efforts, he actually really dislikes when I talk to him about engagement and those true top of funnel metrics, because again, engagement likes favorites, his thing is that's not the point, right? The point is we are out there, we are doing these frontline things to help support avoid tickets. And it's not just, you know, lowering the tickets for our support, but the fewer times a customer needs to reach out to our support is directly correlated to their satisfaction, which I could put differently. That is, if you have to open a ticket with, with one of your vendors, you're kind of annoyed, right? If you can get that fast answer, if you can find it, you're happier and those customers invariably end up sticking with us the longest.
I love that and I think you have nailed it as far as, you know, the importance of social and you want to have those metrics. I think as marketers were like, we want to see numbers and stuff like that. But sometimes it's so much bigger than just, hey, we got five likes on this where you can't really see the tangible results, but you know, the power that's happening. So I love the way you phrased that. And I think you did a really good job of explaining what you guys are looking for from those KPIs. And now I'm going to ask you, I guess in the past two years, looking back now, what do you think has been your biggest win in marketing?
Our biggest win marketing was when this competitor, so the company is called CrashPlan and they still try to service the SMB market for computer backup. But when they abruptly announced their exit from the consumer market, all of these efforts, and again, the metrics are all good and nice, but all these efforts paid off in a three day period. Our team kind of went into hyperdrive and it was a nice reflection of all the things we had set up. We got a great blog post up that still ranks, as you know, for CrashPlan migrations. And, and again, it basically said, hey, sorry to see a competitor go, we're here. We have a 15 day free trial. Hope you'll give us a shot. Um, kind of much more flowery than that. But we got that up. So we were there when people were looking. Our social team was in every audience you could imagine. We were able to, because it was such a sudden and big deal in the industry, we, we had a bunch of press inquiries, well, because our teams on the same page, we're singing from the same song sheet. We could, we could divide out those press inquiries and, and get back to them quickly and again, you see very literal results from that which are every nonpaid review site has BackBlaze his computer backup rank number one, full stop and that has been able to directly tie that to significant growth increases 50, our organic growth rates have increased by over 50 percent because of the efforts made in that time period and the tip of the spear and the primary drivers are sociable.
That's incredible. But I guess it was good timing for, for that competitor, but it sounds like everything just worked out great. All kind of came together to give you not just short term sales results, but it sounds like longterm benefits across the board from that. What about, moving forward, looking forward, where do you see you guys going in 2018, changes to marketing? What are you guys doing to stay competitive and relevant?
Yeah, and sometimes you just, you feel like you're holding onto to the rollercoaster ride ex just we are in, again to you forgive me for the cheesy tech term, but we're in hyper growth. We, in our internal financial plans, we put up the, the, our revenue growth, the revenue growth and it is a literal hockey stick and this isn't some nonsense that we're trying to pitch for fundraising and so we're just making up numbers, this is what we at, our numbers internally actually show. So it's an incredible place to be, which means that our fundamentals are working. So what do we need to do? I think we need to get a lot better at conveying to customers how they can use B2. It is a transformative thing for the cloud. And again, it's a story that's reoccurred every time in tech that every time the price of a technology drops, new use cases emerge, right? It's, it's pretty simple supply and demand type stuff. Well we are the most affordable cloud storage on the planet by large, large gap. We had the most affordable storage and importantly we have the most affordable download price, which means we aren't locking you in, we are not charging you with tax to actually use your data, that transforms the way people can use the cloud. One quick example is, Austin City Limits, which is a great concert series on the, Austin, Texas Public TV station called (inaudible) they have over 40 years of concert footage that used to be on tape. I mean, these are true American treasures, right? I mean 40 years of concerts in the US and they were on tape. Tape degrades, tape gets coffee, spilled on it, tape gets lit on fire, right? It's, it would be a tragedy if that stuff was lost, because of Backblaze pricing, we actually are more affordable than archiving to tape and we're the first cloud that actually is more affordable. And so Austin City Limits through our services, has migrated off of tape and into the cloud. And now, not only are their archives safe, now their archives are digitized, so they can do things like open up new forms of distribution because it's right there, it's readily available, so in 2018 and beyond, it's a lot more about tapping, demonstrating customers, hey, this is how more affordable cloud storage can solve your problems and if we can do that we're going to be just fine. And it's a gift that the market is giving back ways. I hope everyone else selfishly I hope they keep talking about feeds and speeds because we're going to stay customer focused and I think our business results are evidence of that being the right path for us to be on.
Do you think that's video case studies, like going out and filming these stories and making them a real type of story that you can talk about? Or is it more just like talking about examples of use cases?
Yeah. Hey, that's a, that's a really, it's funny that's a leading question and one that at 1:00 we are talking about how we're gonna execute the videos. You know, what I find is these things all need to knit together and this is again why marketing, where we should earn our paychecks. I think you need, when you highlight the customers getting that very traditional, think of it as a pdf or a one page or just a case study, you need that thing, but then you can bring it to life by by translating that into videos and the two mediums are very different, but you want to be able to tell very complimentary stories. At the end of the day, it's about a customer and let's also be honest. Yeah, when I can say Austin City Limits uses B2 that anybody that loves music perks up and says, wow, I should check out B2 as well. It's a beautiful thing for backways, But we also want to make our customers successful and yeah, we, we, we're, we're a great vendor where we're enabling a bunch of use cases, but let's also tell their story. Make sure that their stories coming through because they have a business to run and if we can help them do that, then our relationship is going to stay strong over the years. And so I think for all those reasons, video is an essential component of how we convey our customer success.
Totally. I could see you guys doing some really powerful videos where, you know, it's just about them, their story and then in these moments of, hey, we almost, almost moment of disaster, you know, you guys came in and were able to save the day because I think there's like, it's hard to talk about storage, but when you can show it, like what, what would happen? Like you said when you talked about it, what would happen if you lost all this beautiful footage of these great concerts, the emotion behind it. I could just see it being so powerful, but, uh, really excited to see what you guys do with that. I'm sure you'll do a great job and looking at the time here, I do want to jump over to our lightning round questions. These are just some short questions that I'll ask, if you just want to give me the first advice that comes to your mind. The fastest advice. Really helpful. Really Fun. You ready to get started? Let's do it. Alright. What advice for early stage SaaS companies starting marketing would you provide today?
Make money and it sounds, that sounds flip, but that's what we're here to do, right? So how, go get the customers and keep them happy.
What marketing skill do you think is vital for teams to improve and build on today, marketing team specifically?
It's lightning round, I'll give you two. Analytics because again, we all have the ability to be number driven. A skill 2 is diversity and I mean that by diversity of thought. You should be able to draw lessons from other industries and channels to whatever you're doing.
Those are great answers. I love that. What's the best educational resource that you'd recommend?
I should've saved my second, a second one then. For me, professional wrestling. Was having dinner last night and realized over the last 30 days I've watched over 24 hours of professional wrestling, that's the WWE in case you're wondering. That is excessive. However, that is a medium that I find to be the pure storytelling in the US. Certainly today and I think on the planet. I don't need everyone to tune in to the greatest royal rumble, which was in Jetta, two weeks ago. But finding that story, finding those resources is something every team needs an answer for.
That's incredible. I haven't heard that one yet, but I totally understand. As a kid who watched WWE, I know what you mean by the stories. I know what you mean about the marketing that they put behind it how they're continually evolving and you almost, you connect with those people even though they're just. It's just basically a business. It is a business.
Soap opera, call it what it is.
All right. What about your favorite marketing tool you can't live without?
Google analytics. I wish I was more interesting than that. But you know, if you have nothing else, you have the numbers on your site and that, that is our support if you want it a little more interesting, I would say Spotify. Again, for me, another channel I turn to for ideas and inspiration is music. And so that's, that's really important to my both my creative and scientific process.
Love it. And this last one, you may have mentioned already, brand, business or team that you admire today?
Brand business or team that I admire. I can't say wrestling again. I wish I knew all these questions ahead of time. I think, wow, okay. I need to come up with something more. Oh my goodness. It's trite, but it's local. The Golden State Warriors and from a and let me really emphasize the team nature. They have built a culture of respect and transparency and leadership, you know, and you see it in what Steve Kerr and the players do, what they do for the community, but you see it in the front office. If you haven't read Rick Welts, who was the president of the organization, read or heard anything he's done, I'd recommend taking your time out of your day. He's one of the best leaders in the business today.
As a Cavaliers fan and very hurt still from last year, I'm not in love with that answer, but I think you're probably right. That's probably a great business team to look at and definitely we'll have to check out those materials, but I just want to thank you personally for jumping on the show. You've provided a ton of great content. A lot of lessons learned from being in your position. Again, congratulations to you guys. It sounds like you're doing an amazing thing. I love your values very similar to our values, so I definitely respect what you guys are doing, the transparency, the customer centric focus, and I just wish you guys continued success, so thank you so much for jumping on here. (...)