How Wasabi CEO David Friend grew Wasabi to $160.1M revenue and 23K customers in 2024.

just got done editing this interview you guys are gonna love it before i do that though i want you to know that i'm going to be in the comments for the next 30 minutes or so answering your questions if there's additional questions you want me to ask the ceo next time i interview them leave them below or if you're just loving the data points i get ceos to share click the thumbs up button below that's your way of telling me you're loving this stuff and i'll get you more of it additionally again i'll be in the comments answering any questions you have all right for 30 minutes enjoy the interview hello everyone my guest today is david friend he's the co-founder and ceo of wasabi the hot cloud storage company that delivers fast low cost and reliable cloud storage prior to wasabi david co-founded carbonite one of the world's leading cloud backup companies he's been a successful tech entrepreneur for more than 30 years david you ready to take us to the top you bet all right you win the award for the most bankable last name i've ever had on the show so you're already a step ahead huh yeah but don't make any jokes the second step is you co-founded carbonite so you are not new to this space what is wasabi doing differently than carbonite and other cloud providers well wasabi is just plain storage so our product is exactly the same for all practical purposes as amazon s3 which is amazon's uh leading cloud storage product uh but wasabi is one-fifth the price okay and help me and i kind of put this on a timeline for me when do you launch the company so uh the company was launched about three years ago we we brought our product to market about two years ago and uh since then um you know we've grown rapidly we have about 100 employees now we have about 15 000 customers and uh and about 1700 channel partners and technology partners people who sell wasabi bundled with uh with various products how do you structure the the agreements with the 1700 partners um the the partners are for the most part resellers msps and so forth so they might be selling backup products like veeam where they might be selling video surveillance products like uh milestone for example and um and the technology partners are asked to provide a complete solution to the customer so they might say okay to do your backups we're going to sell you veeam software and we're going to sell you wasabi as the storage place to store your backups okay and can you give me a general sense i know with hosting you can have people spending a dollar a month or a million dollars a month where's your sweet spot on average what are customers going to pay you per month well typical a customer doing backup for example uh might be storing 50 or 100 terabytes of data and wasabi is six dollars a terabyte per month uh compared to twenty three dollars per terabyte per month for amazon s3 for example and uh so you know a customer with 50 terabytes or 100 terabytes might be spending 300 to 600 a month but we have some very large customers as well you know people like some big universities and so forth who are storing many petabytes and uh you know so petabyte is a thousand terabytes so the six thousand dollars a month for uh a petabyte of storage that's a million gigabytes so it's a lot of storage any customers where you look at the annual contract value and it's north of a million [Music] um don't know yes but yeah and of course there'll be more and more of those because the amount of data being stored in the world is just exploding and uh a petabyte of data used to seem like an unimaginable large amount of storage but we sell that much storage every couple of days now and is it really just price point or are there other kind of feature based reasons people are are coming to you it's primarily price and performance so we're we're cheap and we're fast and we're extremely durable we have what's called eleven nines of durability which is the same as amazon s3 and uh if you put that in human terms if you gave me a million files to store the probability of my losing one would be once every 659 000 years so unlikely let's put it so david if that's the case i mean what prevents amazon can afford to lose more money than you so why don't they why doesn't amazon give up all their margin undercut you and take all your customers well i wouldn't want to be the person that walks into the cfo's office at amazon and says uh gee i think we ought to wipe uh four or five billion dollars off the top line because some little company in boston is running annoying advertisements um you know that that typically doesn't happen and you know the history of american uh industrial history is is full of cases where companies come in and sell something that is similar to what somebody else has but at a disruptive price and it's very hard for the incumbents to just drop their price and see their whole business model have to change well it's easier to do that in software though amazon's done it in diapers which have a higher cost of goods sold than software so it might not be four or five billion a market cap but if you go to a significant scale amazon would pull this trigger into i mean they wouldn't hesitate i don't think or they might buy us there are lots of solutions so why would they buy you when they can just decrease their price it's probably cheaper to decrease their price and just undercut you on price we have a technology advantage amazon's product okay you didn't i see you didn't tell me that what's the technology advantage and the technology advantages we've written our own file system which takes advantage of some new kinds of storage technologies and at carbonite where we were backing up a half a billion files every day we learned how to do storage really really well and really efficiently uh so we use a very high percentage of the available disk space we make the disks we have some tricks that we do that make a disk last significantly longer than it's supposed to last uh so the amortization spreads out over a longer period of time so there's a lot of things we learned at carbonite as to how to really cut the cost of cloud storage and we've implemented that and for amazon to simply drop price they could do it but unlike diapers you know storage is a multi-billion dollar product for for amazon and it just seems unlikely to me that they're going to do that so david i think you're going to say unlike diapers uh cloud storage is not a shitty business that would have been a home run that would have been a home run when i would have ended the interview right there done uh credit for that joke all right so uh now look can i do the math 15 000 customers 300-ish sweet spot per month you have some that are probably way bigger and you have some maybe that are smaller but that puts you at like 4.5 million a month in terms of recurring revenue is that about right well i can't talk about our revenues because we're still privately held and you know i just don't want to go there okay well i'm only kind of multiplying numbers you already gave me though right so we asked arpu and you said it was around between 300 and 600 bucks and you said 15 000 customers so i'm not i don't want to make up any data here i'm just multiplying those numbers you gave me is there any reason those wouldn't be accurate uh no but okay you know you're trying to force me to tell you what our revenue is i can't do that i'm not necessarily looking to do that but you already gave me two hard data points you said 15 000 customers and a 300 rpoo the way you'd calculate revenue is multiplying two numbers you already gave me so since i'm only multiplying because you already gave me them all i'm asking is is there any reason that i asked what our sweet spot is and and i'm just saying that we have lots of small customers we have a small number of big customers but the customers that we like the customers that we go after in that sort of 10 to 100 terabyte range that's where most people tend to end up we don't we don't actually go after smaller customers but you know anybody can go to our website put the credit card in and uh and sign up and start using wasabi so so where did you get your first one you said you kind of started writing code and for this in 2017 went to market in 2018 is that right yeah and then well my my co-founder jeff flowers who's our cto had been thinking about this new storage architecture for a number of years so uh you know this was something that had been bubbling up in his mind and i i don't know when he started thinking about it but clearly quite a long time ago what i'm trying to get at is when i when our interview entrepreneurs especially an entrepreneur has already been through the ringer once is trying to understand how they think about risk pre-revenue in other words how much money they're willing to spend to build up the mvp before their first dollar revenue i'm curious how intensive that was for you do you have an idea did you spend two three five million building the mvp more than that okay um and we've raised 80 million dollars to date and uh you know we funded the development pretty much out of our own pockets for a while we made a lot of money off carbonite and in fact jeff and i have had five companies together prior to to wasabi so uh you know we don't really need to go raise money to start a new venture and in in addition to that we have a lot of investors who've made money...