Backblaze CEO sees open cloud key to AI innovation

Cloud storage vendor Backblaze is looking to grow its business offerings, which previously targeted SMBs, into an enterprise-grade business. Backblaze, an early cloud startup that opened its doors in 2007, has expanded over the years into more business uses and offerings after starting with only a consumer PC backup service.

Gleb Budman

Backblaze CEO and co-founder Gleb Budman sees generative AI as a massive growth opportunity to cloud storage services. While waiting for the tidal wave of data to arrive over the next several years, however, he's looking to draw enterprise customers into what he considers an "open cloud" ecosystem best suited for AI development.

In this Q&A with Informa TechTarget, Budman talks about how the Backblaze cloud storage business has evolved in recent years from personal backups to an enterprise destination, some recent new offerings and the omnipresent impact of AI for storage.

Editor's note: This Q&A has been edited for brevity and clarity.

How has Backblaze's business changed since going public in 2021?

Gleb Budman: We're on track to more than double revenue since [going public in 2021]. We have 115 customers that pay us over $50,000 a year each. We [have] two $1 million deals we closed in the prior quarter.

We felt we have this great platform, customers love it, but we didn't have the go-to-market motion to go after these bigger deals. We've been undergoing a go-to-market transformation. We hired a new chief revenue officer, Jason Wakeam, who started about six months ago. He's been working through the model of upskilling the sales organization.

What's the benefit of AI for the storage sellers?

Budman: We're seeing increasing success with AI use cases. A lot of these AI companies' oxygen is access to the GPU and the [large language] models when they need them. They need to be able to have their data go wherever those resources are available.

Because we take an open cloud approach where we make egress free and support [customers] in getting their data wherever they want, those AI companies are finding us to be the preferred [storage] destination.

A lot of people have thought of us historically as a consumer computer backup company, and many of them don't realize for about a decade now we have offered Backblaze B2 [enterprise] cloud storage. That is more than half the business and primary focus of the company.

What do you mean by an open cloud model and how does that affect cloud storage?

Budman: What we mean by the open cloud is customers getting to choose from whatever solutions they want to use and then work with those. It's not being locked into a walled garden where they have to use only the services inside of AWS [or another cloud].

Fundamentally, Microsoft, Google and Amazon do not support the open cloud, and it seems antithetical to the way they're structuring their business.

AI is driving the need for that more than other things have in the past. There are more startups, more [cloud service] places and more infrastructure choices. Customers are feeling the limitations that if they have to use only AWS services, they're going to fall behind.

Fundamentally, Microsoft, Google and Amazon do not support the open cloud, and it seems antithetical to the way they're structuring their business.

We offer free egress. We find customers often say egress is 40% of their cost. For some customers, it's dramatically more.

It's a significant impact to enable that free egress both from a cost perspective and from a predictability perspective. Application developers and CFOs hate surprises. The peace of knowing that they don't have to worry about [transit fees] is a big benefit.

What are some product launches since going public?

Budman: Toward the end of 2023 we introduced shard stash, a patent-pending technology that makes us up to 30% faster than Amazon for uploading smaller files.

In Q1 of 2024 we launched Powered by Backblaze that allowed our customers to build our storage [into their offerings]. In the following [business] quarters we launched Event Notifications, which allowed customers to build workflows around their data.

We've also launched Backblaze B2 Live Read [last June]. We found customers with large data files, like media companies, have to wait until a file is fully uploaded [before] they can start editing it. But if you're broadcasting, you might want to be doing that in real time. [With Live Read] you can upload the file and start editing it while it is being uploaded.

We're still doing storage, but it's about expanding the art of the possible for clients.

How will the AI boom in the enterprise tech industry affect Backblaze?

Budman: I look at the AI path as being a decades-long tailwind.

When we started the company, the idea of cloud was very nascent. Cloud is many orders of magnitude bigger than it was in 2010, and that's what it feels like the case is with AI. We've barely scratched the surface of AI.

When the kids of today are using Snapchat, they're texting each other. They take a photo of something, and that's the data that they're sending. But not that long from now, kids are going to type in a few text prompts to have it autogenerate videos that they're going to be sending back and forth.

A video is dramatically more data than an image, which is dramatically more than a text message. That level of data is just going to continue to explode. It's a trend that's going to generate a tremendous amount of data, which needs to be stored somewhere.

Tim McCarthy is a news writer for Informa TechTarget covering cloud and data storage.