BackupReview.info Interviews Jamie Brenzel, CEO, Data Deposit Box Online Backup

This is an exclusive interview conducted by Backup Review (here on referred as “BR”) with Jamie Brenzel (here on referred as “JB”), CEO of Data Deposit Box.

BR: Is your customer base mainly in US or do you have substantial international presence as well?
JB: Seventy percent of our customer base is from the US; twenty percent is from the UK and Europe and ten percent from Canada.

BR: How many employees do you have and how big is your R&D department?
JB: One of our key competitive advantages is our size. We are under 20 employees, approximately half of which are devoted to R&D. Our growth strategy involves continuous refinement of our software platform making it both easier for our customers to use, and easier for us to manage. This efficiency and automation will enable us to keep our overhead low and our offer competitive with the marketplace. It will also allow us to grow while remaining profitable as a company.

BR: What are your best selling products and services and why are they selling so well?
JB: Data Deposit Box is the product – it makes instant online backups whenever your files change. There are no procedures to follow and no schedules to set. Once the software is installed on your machine you don’t have to think about it. The product is selling so well because it is easy – you can be set up and running in under 5 minutes; it’s secure – all data is encrypted before it leaves your PC or server and affordable – there is no fee per machine, simply pay as you go for just $2/GB. We have consistently earned excellent reviews for this product.

BR: What makes your company and its services different from others?
JB: We are focused on two things – ease of use and being the low cost producer. Everything that we do is based on automation and architecting for scale. From the software application through to the data centre we are obsessive with balancing capital expense and operations management expense.

BR: One of the biggest concerns of online backup users is data security and privacy. How have you addressed these issues?
JB: Even though most services use encryption to protect your data as it traverses the Internet, many do not use encryption when they store your data on their servers. In fact, some even state in their terms of service that encrypting your data is not allowed. They are banking on the fact that many people will store the same files, so they don’t want to back up a file more than once. If someone else needs that file, they could be giving them access to one of your files instead. This may be fine if you’re just saving MP3 music files, but wouldn’t you prefer your personal information (like banking records or emails) be kept secure?

With Data Deposit Box, each file is 448 bit encrypted before it leaves your PC. (by comparison, your online banking only uses 128 bit). It travels the Internet this way and is stored on the DDB backup servers as a bunch of numbered files containing encrypted data. Your encryption key is unique to you. Only you have the ability to access your data.

BR: What kind of growth rate have you been experiencing? And what is your expected growth rate for the next few years?
JB: Data Deposit Box is growing at approximately 10% per month. Unlike other backup vendors, we have been consistently profitable for the past 17 months.

BR: How has the online backup business evolved in the last few years, and how do you see it further evolving?
JB: Online backup is growing dramatically because bandwidth and storage costs continue to decrease each year. Other backup solutions, such as burning CDs or external hard drives do not get the data off-site in case of disaster and rarely get done.

BR: Whom do you consider your main competitors?
JB: Back in 2003 there were companies like Xdrive, Connected, ibackup, Novastor and Swapdrive now there are new consumer entrants such as Carbonite and Mozy.

BR: Large companies such as Microsoft and major telco’s have started offering online backup business. Do you fear them? How do you plan to compete against such formidable adversaries?
JB: We believe that Microsoft is not a near term threat as the market for online backup is still in its infancy stage. Data Deposit Box and other backup vendors will be able to build millions of dollars of value before Microsoft even focuses on competing in this market, but when they do, watch out, Microsoft has huge market reach.

BR: There has been quite a bit of M&A activity in the industry lately (such as XDrive being acquired by AOL, Microsoft acquiring Foldershare and LiveVault by Iron Mountain, and Evault by Seagate). What is your strategy? (being acquired, IPO, etc…)
JB: We are focused on profitably growing our customer base through our direct and partner channels.

BR: Are there any new products/services you are developing that will soon be available?
JB: Yes, we have just released Version 3 of our service. One feature that is exciting for consumers is the ability to create photo albums to share through a link to family and friends. And we have always offered the ability to securely access your data from any web browser, as well as sending large files and folders through an email link.

BR: What is your opinion about Google entering the online backup business? Do you feel that Google will dominate the market?
JB: I think it is unlikely that Google will offer encrypted online backup as we do. Google’s competitive advantage is that they can scale cheaper than anyone and could easily afford to give it away. From that perspective, everyone in the online storage space needs to worry about them.

BR: What is your annual revenue?
JB: Our revenues tripled last year and we expect it to double again this year, but we don’t divulge specific numbers. About half of our revenue comes through our partner program, with the balance coming from direct customers.

BR: How does your proprietary technology compare to the proprietary technology of main competitors?
JB: Data Deposit Box uses a continuous online backup process, so that your files are backed up automatically as soon as they change. This means that if you close a Word document at 2pm on Tuesday, that file will back up at 2:01pm on Tuesday. If something horrible happens at 2:15pm, you’re protected. The service backs up when your mouse is idle, so it runs in the background and is not perceptible. It does not take up any of the computer’s CPU.

BR: What is the most regrettable mistake that you or your company made in the past? How would you handle that mistake if you got a second chance?
JB: So far no miss steps.

BR: In the future, say five years from now, do you think the cost of online backup will remain as today or will it go significantly cheaper (For example to backup a 1 GB file)?
JB: Over the past five years, storage costs have come down by 20% each year. If that trend continues, the end user will benefit through further price savings of retail offers for online backup.

BR: How many subscribers do you have? What is the amount of file you backed up in your servers?
JB: We have about 30,000 small business customers backing up with us. However, we can not release this kind of information for our wholesale partners for obvious reasons.

BR: What do you see as the greatest challenges facing your company today? And what are your biggest accomplishments so far?
JB: Scaling our business profitably.

BR: What are the key competing technologies and what are some of the advantages you offer over the competition?
JB: Most online backup tools were designed to be used by expert IT administrators. Many of these services require intimate knowledge of Windows in order to make a backup. For example, did you know that your Microsoft Outlook email file is kept in a special hidden folder 6 levels deep in your PC? If you don’t, you may have a lot of trouble backing it up. Data Deposit Box was designed from the start to be used by normal everyday people. No special skills are required to back up your PC. When you download and run software, it will automatically figure out where things like your Outlook email, My Documents, Desktop, and Favorites are located. From there you can easily add or remove other folders if you wish.

BR: Can you tell us about your servers? Where they are located, how many backups you perform, if server room is controlled for humidity, temperature and what kind of backup generation system you use?
JB: We keep our redundant servers in a high security and major peering facility called 151 Front Street in Toronto, Canada. We are in a facility that is shared by all the major Telcos and ISPs. Our data center remained up and running throughout the big blackout of August 2003.

Our Cisco based switched network employs redundant Internet providers, redundant routers, and redundant firewalls. We use BGP and HSRP protocols to implement failover and redundancy.

We use only Carrier Grade computer hardware from major manufactures to store your data. There are no “clones” in our data center. All systems operate on redundant power. Servers have dual power supplies fed from separate electrical panels. The facility includes triple redundant diesel generators, dual redundant UPSs, the latest fire suppression equipment, and 24 hour guards on-site.

When your data is stored on our servers, it is written to RAID 5 disk arrays (including hot spare drives). Each storage server is then replicated in real time to a second storage server for backup. Every precaution is taken to protect the integrity of your data.