The second in a series of interviews with online storage leaders, this time it is David Friend, CEO of Carbonite. Carbonite is about to release a new consumer desktop backup product, which is the subject of this interview.
David Friend, CEO of Carbonite
What is Carbonite?
Simple. Our slogan is “Backup for Everyone.” We will back up your whole PC for less than $5/mo, no matter how much data you have. And it is simple. One-click install, then it just works quietly in the background any time you’re connected to the Internet. When the little Carbonite lock icon on your PC’s system tray is green, it means that you’re completely backed up.
This is the fifth company that I have co-founded with my technical genius partner, Jeff Flowers. We love consumer products, because when you get them just right, they just fly off the shelves, so to speak. You don’t have to go out and sell each one.
Where did you get the idea for Carbonite?
About a year and a half ago we got the idea that there is probably a very big market for backing up consumers’ PCs. Personal experience had a lot to do with it. First, Jeff’s wife gets laptop got stolen. She lost a lot of valuable stuff, including pictures of the kids. Then about two weeks later my daughter’s hard drive crashed and she lost the term paper that she’d been working on for 6 weeks and that was due in 2 days. It was a real upsetting event. She sent her drive out to one of these clean labs and they charged her $800 to recover about 60% of what was on the disk. The term paper, unfortunately, was lost. $800 would have paid for about 16 years of Carbonite subscriptions.
Jeff and I began to ask ourselves why consumers, including our own family members, weren’t backing up. We did some market research and found that only 2-3 % of consumer PC’s are backed up daily! Some people backed up onto CD’s once or twice a year. Others backed up to external hard drives or other PCs. But almost nobody did it regularly. People would say “it’s a pain in the neck” and it’s one of those things you put off until tomorrow, then tomorrow, then tomorrow. Next thing you know the kid pours coffee on your laptop and then it’s too late.
Why are so many people not backing up?
Well, basically it comes down to price and complexity. People are willing to pay about $3-5 per month – the price of a nice latte. And people expect it to be completely automatic. They don’t want to have to learn something new. They don’t want new interfaces to deal with, they don’t want to do anything. They just want their data to be safe.
When we went out and looked at all the backup solutions on the market, it immediately clear to us why none of them were selling in the consumer market. They were many times too expensive and they were way too complicated. So we knew there was an opportunity for us.
For example, the other backup services on the market all sell storage by the GB. Xdrive, for example is $10/mo for 5GB and $25/mo for 50GB. Ibackup is $10/mo for 5GB and $50/mo for 25GB. We found that a lot of people have no idea how much data they have and many don’t even know what a GB is. So for the sake of simlicity, we said unlimited for $5/mo or $50/year. If you’re a typical 10GB user, that compares with $250 for xdrive and $600 for iBackup. The technology that allows us to achieve this price point is what we spent all our venture money on so far. It’s our secret sauce.
We figured that if we could come up with a backup solution that was like antivirus softwarec — it just sat there in the background and worked all the time, people would love it. We actually managed to make Carbonite so that it does require you to use anything other than you’re My Computer screen.
Carbonite just looks like another drive. What’s in the Carbonite “drive” is a complete copy of what on your PC. If you want to restore files, folders or the whole drive, you just right click and hit ‘restore’ and it comes right down the pipe.
It’s -really, really simple. We haven’t found anybody that finds it intimidating. Backup doesn’t have to be complicated. People who design enterprise backup system get used to the complexity that’s needed in that environment. Home and small business owners don’t have IT guys – they want something that is simple. It should just be working away in the background all the time.
Carbonite is smart enough that if you’re working on your computer, it will go to sleep temporarily. So Carbonite never slows down your CPU or Internet. Once your PC is idle for a few minutes, Carbonite wakes up continues backing up your PC.
What sets you apart?
Price and security. If you’re a typical 10GB user, you’ll be paying 1/5th to 1/10th the price of anything else you’ll find out there. Google “online backup” and see how much it would cost you to back up 10GB. You’ll be amazed.
Security is the other issue. We encrypt everything that comes to us before it leaves your PC. We don’t want to see your files. We don’t want to be able to see your files even if we wanted to. If law enforcement comes and asks us for your files (which is conceivable these days), they’ll have a tough time with them. We use a very strong DES encryption, so bring on the super computer and good luck cracking that. It would be much easier to get a search warrant and take away your PC.
How do you feel the online storage market has changed since its inception?
The consumer market for online backup is just starting. There aren’t any really successful companies in this space yet. The products are a pain and they’re way too expensive. So to answer your question, the market hasn’t changed yet, but it is about to. In a few years backup will be like virus protection and anti-spyware. It will just be part of any sensibly configured PC. It’s like an extended warranty for your data.
How applicable would Carbonite be for businesses or IT departments, as a means of secondary or primary storage?
I think that while we aren’t specifically going after the business market yet, we know that it will come. People will go into Staples to buy Carbonite for their home PC and think, “Gee that would be great for my small business too.” So we’ll have to come out with an enterprise edition sometime in the near future. The same thing happened with Spysweeper, McAfee, and most everyone else in the home PC security market.
Right now we do have small businesses signing up for Carbonite, but they have to open a separate account for each PC. We know it would be easier to have one master license for the firm — it’s something we will have to be responsive to when we can get some breathing time.
Where do you feel the industry is heading?
The industry is heading toward cheap and simple, because that’s what consumers want. That’s not to say that expensive and complicated backup products won’t continue to prosper in the large enterprise market – they will. But the really big trend in the industry is backing up your PC and my PC. We’re greenfield opportunities. The big companies already have backup.
There have been so many horror stories – Gartner says that more than 50% of Internet users have suffered data loss, and 2/3 of those couldn’t get the data back no matter what – that most people are ready and willing to get into backup if it is cheap and simple and secure. It will be the next thing after virus protection for consumer PC protection and security.
Closing thoughts?
In a couple of years, you’ll be able to buy Carbonite just the way you would but virus protection: at retail stores in a box, via your ISPs as an add-on to your DSL bill, pre-installed on computers, etc. Backup will become a regular part of the consumer computing landscape.
This is a big play that will require lots of money to play. When you think about potentially backing up 100 million home PCs with 10GB average per PC, we’re talking about 1000 pedabytes of data. The machines that can store these quantities of data start at $1 million apiece. And the software to make it all work doesn’t exist in the commercial marketplace. That’s what we’ve been spending our venture capital on. This business is going to grow fast, and you’re going to have to spend a lot of money and write a lot of new software to play. The old guys with their enterprise backup technology are not going to be in this game. It’s a different technology, a different design mindset, different economics and business model, and different distribution.
And that’s why I’m so excited about Carbonite because right now there’s nobody better positioned to lead this market.
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