{"id":78942,"date":"2017-11-14T07:54:45","date_gmt":"2017-11-14T15:54:45","guid":{"rendered":"https:\/\/www.backblaze.com\/blog\/?p=78942"},"modified":"2021-08-03T16:17:37","modified_gmt":"2021-08-03T23:17:37","slug":"transparency-in-business","status":"publish","type":"post","link":"https:\/\/www.backblaze.com\/blog\/transparency-in-business\/","title":{"rendered":"The Decision on Transparency"},"content":{"rendered":"

\"Backblaze<\/p>\n

\n

This post by Backblaze’s CEO and Co-founder Gleb Budman is the seventh in a series about entrepreneurship. You can choose posts in the series from the list below:<\/p>\n

    \n
  1. “How Backblaze Got Started: The Problem, the Solution, and the Stuff in Between”<\/a><\/li>\n
  2. “Building a Competitive Moat: Turning Challenges Into Advantages”<\/a><\/li>\n
  3. “From Idea to Launch: Getting Your First Customers”<\/a><\/li>\n
  4. “How to Get Your First 1,000 Customers”<\/a><\/li>\n
  5. “Surviving Your First Year”<\/a><\/li>\n
  6. “How to Compete With Giants”<\/a><\/li>\n
  7. “The Decision on Transparency”<\/a><\/li>\n
  8. “Early Challenges: Managing Cash Flow”<\/a><\/li>\n
  9. “Early Challenges: Making Critical Hires”<\/a><\/li>\n<\/ol>\n<\/div>\n

    \u201cAre you crazy?\u201d \u201cWhy would you do that?!\u201d \u201cYou shouldn\u2019t share that!\u201d<\/p>\n

    These are just a few of the common questions and comments we heard after posting some of the information we have shared over the years. So was it crazy? Misguided? Should you do it?<\/p>\n

    With that background I\u2019d like to dig into the decision to become so transparent, from releasing stats on hard drive<\/a> failures, to Storage Pod specs<\/a>, to publishing our cloud storage<\/a> costs, and open-sourcing the Reed-Solomon code<\/a>. What was the thought process behind becoming so transparent when most companies work so hard to hide their inner workings, especially information such as the Storage Pod<\/a> specs that would normally be considered a proprietary advantage? Most importantly, I\u2019d like to explore the positives and negatives of being so transparent.<\/p>\n

    Sharing Intellectual Property<\/h2>\n

    The first \u201ctransparency\u201d that garnered a flurry of \u201cwhy would you share that?!\u201d came as a result of us deciding to open-source our Storage Pod design: publishing the specs, parts, prices, and how to build it yourself. The Storage Pod was a key component of our infrastructure, gave us a cost (and thus competitive) advantage, took significant effort to develop, and had a fair bit of intellectual property: the \u201cIP.\u201d<\/p>\n

    The negatives of sharing this are obvious: it allows our competitors to use the design to reduce our cost advantage, and it gives away the IP, which could be patentable or have value as a trade secret.<\/p>\n

    The positives were certainly less obvious, and at the time we couldn\u2019t have guessed how massive they would be.<\/p>\n

    We wrestled with the decision: prospective users and others online didn\u2019t believe we could offer our service for such a low price, thinking that we would burn through some cash hoard and then go out of business. We wanted to reassure them, but how?<\/p>\n

    This is how our response evolved:<\/p>\n\n\n\n\n\n\n\n\n\n\n
    We\u2019ve built a lower cost storage platform.<\/em><\/td>\n<\/td>\n<\/tr>\n
    <\/td>\nBut why would anyone believe us?<\/td>\n<\/tr>\n
    Because, we\u2019ve designed our own servers and they\u2019re less expensive.<\/em><\/td>\n<\/td>\n<\/tr>\n
    <\/td>\nBut why would anyone believe they were so low cost and efficient?<\/td>\n<\/tr>\n
    Because here\u2019s how much they cost versus others.<\/em><\/td>\n<\/td>\n<\/tr>\n
    <\/td>\nBut why would anyone believe they cost that little and still enabled us to efficiently store data?<\/td>\n<\/tr>\n
    Because here are all the components they\u2019re made of, this is how to build them, and this is how they work.<\/em><\/td>\n<\/td>\n<\/tr>\n
    <\/td>\nOK, you can\u2019t argue with that.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    Great, so that would reassure people. But should we do this? Is it worth it?<\/p>\n

    This was 2009, we were a tiny company of seven people working from our co-founder\u2019s one-bedroom apartment. We decided that the risk of not having potential customers trust us was more impactful than the risk of our competitors possibly deciding to use our server architecture. The former might kill the company in short order; the latter might make it harder for us to compete in the future. Moreover, we figured that most competitors were established on their own platforms and were unlikely to switch to ours, even if it were better.<\/p>\n

    Takeaway:\u00a0Build your brand today. There are no assurances you will make it to tomorrow if you can\u2019t make people believe in you today.<\/em><\/div>\n

    A Sharing Success Story: The Backblaze Storage Pod<\/h3>\n

    So with that, we decided to publish everything about the Storage Pod. As for deciding to actually open-source it? That was a “thank you” to the open-source community upon whose shoulders we stood as we used software such as Linux, Tomcat, etc.<\/p>\n

    With eight years of hindsight, here\u2019s what happened:<\/p>\n

    As best as I can tell, none of our direct competitors<\/a> ever used our Storage Pod design, opting instead to continue paying more for commercial solutions.<\/p>\n