Backblaze CEO On Using AI, Partners, Price To Compete In Cloud Storage
‘One reason customers choose Backblaze is because if they want to build, say, the best AI app, they need access to GPUs wherever they are available. So they put their data in Backblaze, and then it's available to all the different GPU providers,’ says Backblaze CEO and co-founder Gleb Budman.
The global cloud storage market is huge. Analyst firm Fortune Business Insights, for instance, valued the market at $132 billion in 2024, and estimated it to grow to $161 billion in 2025.
Backblaze is determined to grab its share of the market. The San Mateo, Calif.-based cloud storage and data protection technology developer, which was founded 17 years ago as a way to help consumers back up their PCs, now enjoys annual revenue of close to $130 million.
Backblaze CEO and co-founder Gleb Budman told CRN that his company, which three years ago held a successful IPO despite only raising $3 million in private equity funding, has become a strong force in the industry thanks to its promise of low storage costs combines with no egress fees in most cases.
[Related: Storage 100: The Digital Bridge Between The Cloud And On-Premises Worlds]
However, he said, success today comes not from the company’s cost structure, but instead stems from its architecture which lets businesses take advantage of data stored on Backblaze to work with any application on any cloud, Budman said.
Traditional cloud providers are “walled gardens” in that they lock customers into using only their services, he said.
“But increasingly, customers want what we refer to as ‘Cloud 2.0,’ which is where they get to choose which providers they use for different parts of the tech stack,” he said. “To do that, you need your data to be able to go to different providers. It has to be connected to the providers with egress that’s affordable. It's got to be somewhere where it supports open cloud environments. None of the traditional cloud providers do that.”
Backblaze does, however, Budman said. “One reason customers choose Backblaze is because if they want to build, say, the best AI app, they need access to GPUs wherever they are available,” he said. “So they put their data in Backblaze, and then it's available to all the different GPU providers.”
There’s a lot going on at Backblaze and its quest to provide cloud-based storage from businesses’ most sophisticated applications. Here’s more of CRN’s conversation with Budman, which has been lightly edited for clarity.
Define Backblaze. How do you describe the company?
Backblaze is a cloud storage company. We make incredibly easy-to-use, affordable cloud storage for a variety of use cases. That’s it in a nutshell. It’s pretty straightforward.
When you say affordable, what do you mean?
I mean it’s very affordable. We’re about one-fifth the price of traditional cloud providers. We have case study after case study where customers talk about saving hundreds of thousands of dollars after switching to us. We compete with services like Amazon S3, Azure Blob, and Google Cloud Storage. And versus those services, our storage alone on a per-terabyte basis per month is a third, a fourth, sometimes a fifth the price point. Also, cloud vendors charge crazy high egress fees. We don't charge egress fees for up to three times your entire storage capacity in a month. And we make egress completely free if you work with one of our partners, companies like Cloudflare or Fastly or Digital Ocean or others. We also have other places where we save customers money, so when a customer using a traditional cloud provider switches to Backblaze, they’re gonna see their bills drop typically by about 80 percent. …
Customers who use Backblaze for backup and ransomware protection and archiving love it because when you're doing the recovery, you're just getting the data you want back. You're not egressing it 20 times back. So for them, there’s almost always no egress fee. If they have a security or ransomware incident, they can get all their data back, and it's free. For customers who use this for AI or for other applications like streaming media where they're distributing the data multiple times via one of our partners, it’s typically free for them as well. That’s a big contrast with traditional cloud providers.
What type of customers does Backblaze work with in terms of size or type of businesses?
We started helping very small customers, and we still help tons and tons of small customers. For many, it doesn't cost them anything because they're under our 10-gigabyte free tier. It's free. However, we've been increasingly moving up-market in supporting larger and larger customers. We recently announced that we have 115 customers that pay us over $50,000 a year for their storage. Just this last quarter, we announced that we signed two roughly $1 million dollar multi-year deals with customers. … Everybody is dealing with the fact that storage is growing. They need to protect it. They need to store it inexpensively. They need to use it in different ways. And we built a great platform for that.
Does Backblaze actually own its own storage infrastructure?
We do. We started the company 17 years ago as a computer backup company. Our original plan was to help people back up their computers, and that is still a service we have today. It's about half the company today. Our plan was to put all the data from that service onto Amazon S3. But we did the math and realized we were going to lose money on every single customer based on what Amazon was going to charge us. So that wasn't going to work. We looked at it and thought we would maybe buy equipment from EMC, NetApp, Dell, or somebody, and then run our own infrastructure on that. But those systems were about $1,000 per terabyte, and a hard drive was $100 a terabyte. Then we thought if we can just figure out how to plug a hard drive into the internet, the math should work. So that set us down this path of designing our own servers, writing our own cloud storage file system, and building all the whole infrastructure as a service platform. We published a blog post in 2009 called Petabytes on a Budget, which was all about how we came up with building an infrastructure platform that was dramatically more affordable than Amazon S3 and dramatically more affordable than the servers you would buy from the providers. We now build and run a multi-exabyte cloud storage system that services over half a million paying customers, storing hundreds of billions of files, and we run that whole operation.
It's a very big market. Just the infrastructure-as-a-service part of cloud storage, according to a recent IDC report, is approaching $100 billion. It's a big market with space for lots and lots of players. We see the traditional cloud providers like Amazon, Google, and Microsoft, or companies that are doing things on-premises and looking to use the cloud. And so pretty much across the board, whether it's the traditional cloud providers or others, we are, generally speaking, dramatically less expensive because we built a very efficient cloud storage platform. We're very easy to use.
Traditional cloud providers are ‘walled gardens.’ They try to have you locked in to only using their services. That's what we kind of refer to as ‘Cloud 1.0.’ But increasingly, customers want what we refer to as ‘Cloud 2.0,’ which is where they get to choose which providers they use for different parts of the tech stack. To do that, you need your data to be able to go to different providers. It has to be connected to the providers with egress that’s affordable. It's got to be somewhere where it supports open cloud environments. None of the traditional cloud providers do that. One reason customers choose Backblaze is because if they want to build, say, the best AI app, they need access to GPUs wherever they are available. So they put their data in Backblaze, and then it's available to all the different GPU providers. Customers use Backblaze for streaming media and other application storage scenarios because they want to use Cloudflare or Fastly or Akamai or different CDNs (content delivery networks), or sometimes multiple CDNs, and they need their data to flow to these different providers. We have this unique capability, unlike traditional cloud providers, where we support open cloud ecosystems.
How about competition with other smaller cloud storage providers?
There’s lots of people that do something in cloud storage. We've been cloud storage innovators for 17 years. We built this from day one focused on building the best cloud storage platform, and we're, generally speaking, less expensive, more scalable, and easier to work with than the other providers. Some examples of innovation that we've done include being the first company after Amazon to offer object lock, which is key for ransomware protection. We were the first cloud storage, ahead of the other providers and also ahead of Google and Azure, to offer object log for ransomware protection. We also recently introduced shard stash which enables customers to update their data up to 30 percent faster than with Amazon. It's really important for backup use cases. When Veeam, Commvault, Rubrik, and others back data up to a cloud, they chop those files into really small pieces. It’s important to get all those small pieces uploaded quickly to get your data protected as fast as possible. Our unique patent pending approach uses shard stash to both be faster and cheaper than the ways other providers design their upload caches. It's innovation like that that lets us offer customers better value and a better price point.
What is Backblaze doing in terms of its own AI technology and in making data available for AI use?
We're effectively providing the picks and shovels into AI use cases. There are lots of companies doing all kinds of things with AI. It’s hard to know which is the best path to take. But all of them need data. All of them are creating data, and need that data to be available and accessible. We’re providing a high-performance storage platform so businesses can get the data to office systems where it’s needed at an affordable price and connected with the different providers. That lets them use their data with CoreWeave, Lambda, and with others like Amazon, Google, and Microsoft. We have a customer that we just highlighted, Decart, who launched out of stealth. They were keeping their data with one traditional cloud provider and using that provider’s GPUs, but they also needed GPUs from another provider, and so they moved their data in that one. And then they said, ‘Well, what about next quarter where somebody else has the GPUs we need access to?’ So they moved all of their data into Backblaze where they can use their data with all of these GPU providers, and they've saved hundreds of thousands of dollars in the process.
Backblaze did its IPO about three years ago. Has Backblaze been profitable in those three years?
We are adjusted EBITDA profitable. One thing unique about Backblaze is, the five of us that started the company built two companies before. Both of those were venture funded, and both were acquired. But when we started Backblaze, we said we wanted to do this differently. We said we were going to quit our jobs, work together, and bootstrap the company for at least one year without talking to any investors, because we wanted to just focus on the customers, the product, and the culture. So we quit our jobs, we put a little bit of money in, we worked for an entire year with no salary, then we went for another half a year with no salary. Then we went for a year at minimum wage, and then for another year at two times minimum wage. We were really leaning into building this company focused on customers and product and culture and not on the vagaries of the venture markets. We actually bootstrapped Backblaze until just a couple months before the IPO on less than $3 million in outside funding. Most tech companies that go public raise and burn hundreds of millions of dollars before taking their companies public. We got there on less than $3 million, so we know how to build a profitable company. When we went public, we raised $100 million, and we said our plan was to invest behind two things. One, we wanted to increasingly move up market. We had this great self-serve motion for small customers, and we wanted to move up market with our sales motion. And the other was, we wanted to invest more in R&D, and become a larger company with better profits. And that's exactly what we're doing. We've roughly doubled revenue since we went public, and we were EBITDA negative. But we've been EBITDA positive in the last three quarters. And we've said that in calendar Q4 of 2025, not only will our EBITDA be about 20 percent, which is roughly double the previous year, but we're also going to get to free cash flow positive.
What part of Backblaze’s business is direct versus indirect?
We went on a little bit of a journey. We have self-service, and that still exists. Then we layered on direct sales. Then we layered on the channel. And we've been going through a go-to-market transformation. We hired a chief revenue officer, the first in our history, Jason Wakeam. about four months ago. He's changing the way the sales team functions. And he brought in a head of partner marketing and partnership, Teresa Dodson. In our latest quarterly call, we said one of the top three priorities with our go-to-market transformation is leaning in on channel and partnerships. We help resellers, MSPs, and other companies who want to ODM our offering. Backblaze is a great service for them. We have something called B2 Reserve, a packaged SKU of cloud storage that lets channel partners sell a one-year or two-year or three-year SKU with a fixed amount of storage. This fits their selling model well. And it's a natural component when they sell or renew a backup software offering using partners like Veeam, Commvault, or Rubrik. So for our reseller-type channel partners, this makes it easy for their customers to know all their data is protected in the cloud and protected from ransomware. MSPs can use the service. A lot of them use the service transparently, so their customers are not aware of what they're using on the back end. All they know is there's cloud storage. And because our service is about 80 percent less expensive than traditional cloud providers, MSPs can both be more competitive and increase their margin at the same time.
On the OEM side of things, our Powered By Backblaze offering enables companies to build Backblaze into their offerings. MSPs like that as well, because it allows them to build it into their services in a white label fashion.
[For example,] we just recently announced a partnership with Opti9, and we're launching a Canadian data region, in Q1. Opti9 is the largest Veeam MSP in Canada, and they've switched from their prior provider to Backblaze because they believe we're a better fit for their business. We're going to be the underlying storage for their backups and disaster recovery and security protections [with Veeam on the front end]. We believe that type of partnership can help other MSPs be successful in similar ways. And so one of the things we're looking at is modeling off of our Opti9 relationship to help other MSPs across the US, Canada, and the world.
