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With 917% revenue growth over the last five years, Backblaze has just secured itself the 128th<\/sup> spot on the list of the fastest growing technology companies in the United States. The journey has been exciting but could have come to an abrupt end at various times. Let me share a bit about how we grew and what we\u2019ve learned.<\/p>\n In 2007, Jeanine had a computer crash and begged Brian for help recovering her files. She had no backup. He could not help.<\/p>\n Five of us talked about this experience and realized that 100% of photos, movies, and personal and work documents were going digital. But with fewer than 10% of people backing up<\/a> their computers, eventually all of these digital items would vaporize. We quit our jobs and started Backblaze to solve the impending disaster.<\/p>\n While we had previously raised VC funding for startups, we decided to start Backblaze differently, committing to each other that we would work for one year without pay, and to put a bit of money into the business. This would effectively be the seed round.<\/p>\n After five years of steady growth, we decided to raise<\/a> our first VC round.<\/p>\n From the outside it seems like a simple, beautiful exponential growth curve up and to the right. From the inside, the challenges along the way don\u2019t fit onto a single page. Probably not into a book either. Paul Graham has a fantastic chart of this experience he calls the \u201cStartup Curve<\/a>.\u201d<\/p>\n I thought of many issues we might have: not getting the product\/market fit right, not being able to build the product, not being able to attract customers, running out of cash. And some of these bumps, such as finding that many of the expected ways to find customers don\u2019t work<\/a>, we actually did run into.<\/p>\n But others, such as the distraction of almost being acquired<\/a> or the massively impactful challenge of a flood in Thailand<\/a> were harder to predict.<\/p>\n Despite the challenges, there were two things that kept the company succeeding: 1) focused, determined, hard work, and 2) luck.<\/p>\n The day of our initial beta launch on June 4th<\/sup>, 2007, we had glowing articles<\/a> in TechCrunch and Ars Technica. People were signing up in droves and it was thrilling. But a week later the servers were bored\u2014no one was showing up to the website. The initial external excitement vaporized and what happened next was all of us having to put our heads down and plow forward. Day after day we needed to do the small things required to build the business, that over time, add up to growth.<\/p>\n And then there was luck. We planned to store data on Amazon S3. Since we couldn\u2019t afford it, we designed our own storage. Not only did that end up being a huge boon to us as it dramatically reduced our costs, but open-sourcing our Backblaze Storage Pod<\/a> design hit a nerve and one million people read that blog post. It helped put us on the map.<\/p>\n Early on, the data center asked us to commit to a quarter of one cabinet for one year. At the time that was a $12,000 commitment and we negotiated it down to six months to reduce our risk. Now we have over 100 petabytes<\/a> of data stored in over 100 cabinets, adding three cabinets of equipment every month, and committed for several years. Sometimes growth sneaks up on you.<\/p>\n From 2009 through 2013 we\u2019ve grown revenue 917%. That was good enough for 128th<\/sup> place in the 2014 Deloitte Technology Fast 500\u2122 in the United States\u2014just beating out Facebook in the 129th<\/sup> spot.<\/p>\n To qualify for the Fast 500, a business had to earn over $50K in revenue in 2009 and over $5 million in revenue in 2013. We obviously exceeded those numbers. (While we don\u2019t disclose revenue, Backblaze is in double-digit millions of dollars in revenue.)<\/p>\n In the same period as Backblaze has grown 917%, it is estimated that 55% of companies failed<\/a>. Mortality rates are even higher in the information technology space where Backblaze resides, and over the years, multiple online backup companies and services have folded.<\/p>\n There is a saying I\u2019ll paraphrase: businesses don\u2019t fail because they are unprofitable; they fail because they run out of cash.<\/p>\n Bootstrapping a company, especially a capital-intensive one, meant we constantly had to watch cash-flow. Initially we were “afraid of customers” because a large influx of new customers meant having to buy another $10,000 Storage Pod, for customers who would pay us $5 per month. Eventually it would make sense, but for the first year we would be cash-flow negative. We came up with one simple way to solve this cash-flow challenge<\/a>, but without raising capital, sometimes you have to make the tradeoff that things that make sense in the long run aren\u2019t feasible because you won\u2019t make it to the \u2018long run\u2019 if you run out of cash.<\/p>\n I\u2019m honored that Backblaze has received this Fast 500 award and there has been a lot that we have learned. Here are four key takeaways:<\/p>\n I don\u2019t mean a \u2018green\u2019 business; I mean a business that can last. A business can\u2019t be high-growth if it\u2019s out of business. Aim toward a model where customers support the company, even if at times you decide to raise funding. If customers are the cash engine, your business won\u2019t be at the whim of the funding markets.<\/p>\n Some companies are a flash in the pan\u2014founded, launched, and acquired in a year. There\u2019s a draw to this quick-buck approach. But most successful companies take years to build. Work on something you\u2019ll be excited to do for many years. It\u2019ll make the journey great, help overcome the bumps, and increase the chances of success.<\/p>\n A great launch or customer-win feels fantastic. Celebrate the successes, but don\u2019t fear the small steps. A business that makes $1 in revenue the first day and grows a mere 1% per day will only make $37 in revenue per day after an entire year\u2026but it will make $76,240,508 in revenue per day after five years.<\/p>\n When we started Backblaze, we wrote an entire wall of products and features we wanted to build. After seven years, we\u2019re still working on the first one. Solving the right problem takes focus and time, and doing that is generally much better than partially solving many different problems.<\/p>\n Today is one of those exciting \u2018success days’ when we celebrate an achievement. But this growth is looking in the rearview<\/a> mirror. And tomorrow it\u2019s time to get our heads back down and charge on.<\/p>\n","protected":false},"excerpt":{"rendered":"Start<\/h2>\n
Financing<\/h2>\n
Challenges<\/h2>\n
Successes<\/h2>\n
Growth<\/h2>\n
Balance<\/h2>\n
Takeaways<\/h2>\n
Build a Sustainable Business<\/h3>\n
Plan for the Long Term<\/h3>\n
Work a Day at a Time<\/h3>\n
Stay Focused<\/h3>\n