Cloud data backup service Backupify aims to cash in on the increasingly crowded cloud computing space, offering services to firms seeking to cut down on physical storage space. CEO Rob May concedes the firm has some work to do before can compete with some of the sector’s major players, but as businesses and investors alike begin to pay more attention to cloud solutions, he believes that the firm can become an attractive acquisition target in the coming years.

¤ What makes Backupify different from other cloud backup services?
We don’t do any PC backup or server backup, the only backup data is software-as-a-service (SaaS) applications such as Google apps, social media, and tools like that. We started as a consumer application, but the only reason we keep that is that while it doesn’t generate a lot of revenue in itself, it generates a lot of leads for the business side, [where] most of our revenue comes from. We have 140,000 consumers using the product and more than 2,000 businesses using the product. About half of our business comes from outside the US. In terms of getting the user numbers up [in the US], Google is the main lead-source for companies moving to Google apps and so far they don’t always do a great job of sharing those leads with the ecosystem, so we probably need to focus more on our presence in the application marketplace and engaging the emerging ecosystem around Google apps.

¤ What is your business model?
We charge a flat fee for the social media archiving, there are a couple of different packages, and then for the Google apps package we charge USD3 per user per month. We don’t leverage user data for advertisers, that’s against our privacy policy right now. We are not profitable; we are currently pursuing market share over profitability. We don’t have the goal of becoming profitable like a lot of companies that are in this situation. We hope to transition to profitability in the next 18 to 24 months.

To be profitable we need a more efficient sales cycle and then need to be able to price the product better, figure out where to add and extract more value. There are a lot of requests from larger customers that we can’t do right now because they have license and administration functionality that we haven’t built in to the product. As the product matures we’ll be able to take on some of those customers as well and that will help.

¤ Who are your main competitors?
There’s no one doing backup and archiving of the full Google apps suite. There are some Gmail-specific tools and there are tools that do everything but Gmail – we’re the only company that is doing the whole thing. Backupify just announced the beta launch of our cross-platform search product, and I think over the long-term, Backupify has the ability to become an independent data warehouse for all your SaaS data to allow any cross-data, cross-platform work or analysis that you need to do.

¤ What is the biggest challenge you currently face?
Efficiently finding the right customers. If you’re going to sell a product like this there are partners that you can go to, but system integrators, managed service providers, those guys aren’t moving to [the] cloud en masse. The support ecosystem around this tends to be comprised by other startups, so it’s a very small and very fragmented type of market. That presents a challenge, the fact that you don’t have built-in customer acquisition and distribution channels like other startups.

I would expect that we would get acquired during the next few years. I know some of the big players are looking at the cloud data backup and archiving market and if we are a technology and customer leader then I would expect that we would be an attractive acquisition. I think there are a lot of Boston-based storage companies such as EMC or Iron Mountain that might be good homes for us some day.

¤ What do you think is the hottest trend in digital media?
We’re big proponents of the open data movement. I think it’s pretty important because you’re going to see a lot of changes in these services over time, and you’re starting to see viruses on social networks, you’re starting to see more hacking on social networks. There are going to be use-cases where you want to migrate from one platform to another and protecting yourself from all those things and allowing those use-cases is going to be much easier if you have your own copy of the data somewhere else.

VERDICT
Backupify’s strategy to build a significant share in one area of the burgeoning cloud computing market is a smart one, and May is clear about how the platform needs to improve. The company’s stance on open data could hinder its chances to harness revenue through targeted ads at a time when non-intrusive user data is a goldmine for advertisers. However, Facebook is treading a fine line on privacy with the recent trials of its recent hyper-targeted ad platforms and Backupify would likely encounter the same issues being a third-party holder of the data.

The firm’s focus on mainstream SaaS applications, with the growing importance of social media to the enterprise sector, presents opportunities to carve a niche in the market. However, it also leaves it at risk of being surpassed by larger rivals that may decide to integrate the same service as part of a larger offering that includes PC and server backup. However, with several cloud storage startups, including Egnyte and Scality, closing significant funding rounds already this year, it is essential for Backupify to differentiate itself.

May acknowledges that Backupify’s platform needs to add more value to achieve profitability, and its move to create a cross-platform search engine to enable users to pull information and perform analysis across their stored data signals its intention to increase its revenue streams. Forrester estimates that cloud security is set to grow into a USD1.5bn industry by 2015, suggesting that there is potential for Backupify to grab a slice of the profits in the cloud solutions space.

AT A GLANCE

CEO: Rob May

HQ: Cambridge, MA

Founded: 2008

Commercial launch: June 2009

Number of employees: 17

Investors: Avalon Ventures, First Round Capital, General Catalyst Partners, Lowercase Capital, Betaworks

Funding to date: USD5.53m