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September 19, 2008
This is an exclusive interview by BackupReview.info
with Mr. Frederik Schouboe, President of Keepit.com
1/BR: Please give us some background information about your company, such as how it was founded, by whom, how long have you been around, where your headquarters are, how many branch offices you have etc.
Keepit.com was founded in 2007 by a leading hosting company named
Combined with the competences in managing infrastructure and support for a large number of customers (100,000+ for Surftown alone) and complex storage solutions Keepit.com was able to quickly launch a complete and competitive solution.
The vision for Keepit.com is to make a product that is easy to use without compromising security. So instead of building a Swiss knife with to many features, the development work was put into making sure that Keepit.com was the most simple and easy to use solution on the market. Our ambitions were validated by winning the big test from Bonnier Publications where Keepit.com was awarded the winning spot against strong competitors, such as Mozy and ADrive.
2/BR: Is your customer base primarily in the US, or is there a significant international presence as well?
Our current customer base is European based, but we do see an increase in customers from the US signing-up to our FREE service. Especially, our long-year knowledge of online marketing and affiliates from our webhosting experience has made it possible to find the right ways to promote and market the service at the right prices.
We have just opened an office in Reston, Virgina and anticipate to capture a larger amount of US and Canadian based customers.
3/BR: How many employees do you have and how big is your R&D department?
Cohaesio employees over 70 with over 20 are in R&D. Keepit.com operates its platforms together with Cohaesio since they already run very complex solutions for hosting and has over 10 years of experience in this category.
4/BR: What are your top selling account packages, and why are they enjoying so much success?
Keepit.com offers a 2GB FREE account that allows people to try-out the service without any commitment. Naturally this package is the most chosen for novice users– they want to see what this service is all about. It also shows that the maturity of the marketplace is in its infancy. People want to try the service before buying.
Once customers become trustful towards the service, it is much easier for them to see the need and enter into a commitment with Keepit.com. We do enjoy a healthy conversion into our UNLIMITED product.
5/BR: What makes your company and its service different from others?
Simplicity, simplicity and simplicity! I can’t stress how important this mantra is to us and for our success. We come from Scandinavian design culture (home of IKEA, Bang and Olufsson and also Skype) where the general driver is that “less is more”.
We see gatekeepers like professional buyers or even journalists asking about a feature list but in the real world only a small fraction of customers would actually use these features. So, instead of Keepit.com building a 2nd tier photo album we will tell users that we do backup and we do it extremely well and they should go to Google, Flickr, Facebook or MySpace for these fancy features as that is what they do to perfection.
6/BR: One of the biggest concerns of online backup users is data security and privacy. How have you addressed those issues?
Keepit.com is very secure in its core architecture and will never compromise the importance of this aspect. Data is encrypted before leaving the desktop and no password is exchanged in clear text.
The personal encryption key is stored encrypted in an escrow service that allows users to retrieve the key in case that it is lost. For the advanced users we will allow them to disable this service and safe-keep their own encryption key.
7/BR: How has the online backup business evolved in the past few years, and how do you see it further evolving?
The market has clearly been focused on selling solutions to medium and large businesses. Most of the storage vendors have offered solutions for off-site backup services in line with on-site solutions. The most important selling point has been on ROI (return on investment) rather than on innovation.
Secondly, the online backup market has primarily been driven by cost reduction and actually no innovations have been made as it was merely a question of moving the backup location from on-site to off-site.
In the future, we see the online backup market evolving into a bank type business where the services will actually innovate with new services and functions and melting together with new SaaS (Software as a Service) type offerings. So, features like archiving, synchronization and real-time access to manipulate files across the cloud will differentiate the providers. The underlying driver for this innovation is based on the continued development of infrastructure like broadband services and online services.
8/BR: What kind of growth rate have you been experiencing? And what is your expected growth rate for the next few years?
It is early for us to say anything meaningful about growth rates as we come from 0 subscribers late last year. We achieve high conversions partly due to our marketing activities with a 30 sec TV spot (http://www.youtube.com/watch?v=MtpZl1moJFA) but also referrals in general. So, using marketing can boost the growth rates and we expect with our current distribution channels that we can achieve around 300-500% growth over the next 1-2 years.
9/BR: Whom do you consider your main competitors? And Why?
We see few powerful competitors. But it is clear that EMCs recent takeover of Mozy.com will be a heavy player in the market. But, I actually see Carbonite as one that is very focused on the distribution and global play. They have a very good offering and Carbonite has great marketing campaigns. It was a real genius who conceived their Howard Stern radio campaign on Sirus.
10/BR: Large companies like Microsoft and Google have started to offer online storage solutions. Do you fear them? How can you compete with such formidable adversaries?
We work closely with both companies as partners on general hosting and they definitely work towards a hosted model of all their offerings. However, since both Microsoft and Google are increasingly relying on income from display advertising in the consumer space, we do not see Online Backup as a very good offer. Online Backup is a set-and-forget type application. It is an insurance policy and the solution does not offer many opportunities to show ads. Further, customers will probably feel it intruding if the vendor suddenly shows ads through the application. We believe that the Online Backup market will be driven by a paid subscription model, where everybody is required to compete on price and quality of service.
11/BR: There has been a great deal of M&A activity in the industry during the last few years [such as Xdrive being acquired by AOL, Microsoft acquiring FolderShare, Iron Mountain acquiring LiveVault, and Seagate acquiring eVault, EMC acquiring Mozy, and Symantec acquiring SwapDrive (Backup.com)]. What is your strategy? Do you think that the acquiring companies got a good deal or the acquired companies sold too soon for too low?
We have by far seen the last acquisition in the space. I think that some of the deals we have seen probably make good sense for both the seller and buyer. But, I anticipate that higher valued deals will come out over the next couple of years. The services will evolve over time into more insurance type products and future acquisitions will be from a broader set of companies in the financial sector as well. So, the future valuations of successful companies in this market will have a much higher valuation than what we have seen so far, once the maturity hits the market.
Our strategy is to realize our ambitious goals to become a dominant player known for ease of use and security. Over the next couple of years, we anticipate that we need to merge or sell of to a bigger player due to our own financial strength. It will most likely be an industrial player, either from the market side or from the storage industry side.
12/BR: Are there any new products/services you are developing that will soon be available?
Yes, we have both a Linux and Mac version of our software in the pipeline and actually already on internal beta with our Linux client. We also have a very compelling partnership model that will be released shortly together with an improved management panel to manage larger instances of PC in one account.
13/BR: Where do you see the online backup market heading?
We see the Online Backup market becoming a very important add-on product to many different sectors of the market. It will experience the same development as we have seen in the anti-virus sector, but it requires more education of the market to get to this level.
14/BR: Which companies are your main sales partners globally?
Currently, we work with the security provider MySecurityCenter.com in Europe and are working on some major distribution partners in the US as well.
15/BR: How many subscribers do you have?
This is something we currently do not disclose.
16/BR: What is the amount of file you backed up in your servers?
We have secured storage capacity of more than 10PB in our current datacenter locations.
17/BR: Do you feel that Google will dominate the online storage market?
Perhaps, but they will not get the backup part of the storage market. As previously said, Google is primarily living of display advertising and they need to fit advertising into online backup which can prove difficult or offer a paid model which will be in competition with other, more advanced solutions. Secondly, I would be very surprised if Google will win the online storage market due to fear from people that Google will then know too much. Just have a look at the hefty discussions related to the release of Google Chrome where keystrokes are stored by Google without telling the world what they will use it for.
18/BR: Could you briefly tell us about your revenue history, and what your future revenue growth would be?
Our group company has experienced a very healthy growth rate of more than 220 % over the last 4 years and we expect to realize around an annual year over year growth of a minimum 40%-60%.
19/BR: How does your proprietary technology compare to the proprietary technology of your main competitors?
Our proprietary technology is based on some codebase we actually bought from a software development company with almost 10 years of track record. The code base is used for client/server communication in a monitoring system written in entirely C++ thus making us able to move the code base between different operating systems and platforms. This makes Keepit.com very agile and flexible for new features, functions and stability.
20/BR: What is the most regrettable mistake that you or your company has made in the past? How would you handle that mistake if you were given a second chance?
Time to market– we actually misread the readiness of the market and instead of working on press relations to increase the awareness of the market more low-key we conceived a TV campaign that was anticipating more understanding from the customers and we found that it actually was needed to work more on press relations and PR to increase the knowledge of the basic service.
21/BR: In the future, say five years from now, do you think the cost of online storage will remain as it is today, or will it go significantly cheaper? For example, to back up a 1 GB file?
The price will decrease on an ongoing basis, but the needs will also go up accordingly. So, the backup 1GB will drop in price but customer will also need to backup more.
Keepit.com and other vendors will naturally adapt to the ever changing capacity game as 1GB will not be significant in five years from now.
22/BR: What do you see as the greatest challenges facing your company today? And what are your biggest accomplishments so far?
Our greatest challenge is to have Keepit.com become the de-facto solution for your backup needs!
We think that we have come a long way by getting the first award in the first test we took part in. We don’t think it will be the last. Just this week, we got nominated for the Best Broadband Product of the Year at Broadband Days 2008.
23/BR: What are the key competing technologies and what are some of the advantages you offer over the competition?
Our “secret sauce” behind the scenes allow us to be very aggressive both on price and functionality. However, we will always have simplicity as our main goal because we will not be successful if we can’t deliver an easy to use product that can be used by everybody with a computer. We have to work very hard on design and usability every time we wish to put a new feature into our product.
I think our competitive advantage is our technological platform where we can cater for specific needs of both customers and partners and make the integration of the latter as compelling as possible to ensure a success without compromising our flexibility and single codebase approach.
By deploying a backend powered by IBM TSM, we actually have a much more stable platform than most of our competitors.
24/BR: Can you tell us about your servers, please? Where they are located, how many backups you perform, if server room is controlled for humidity, temperature, and whether there is backup power?
Our entire Keepit.com infrastructure is architected a bit like DNS (Domain Name System) where we have some root servers that can redirect clients to the appropriate server that can handle their request and uploading of data. The redirects are based on several parameters such as geographical locations and speed. We can easily move customers between nodes in the system thus making us truly scalable.
Currently, our main Keepit.com services are placed in Denmark– a very high bandwidth country with great connectivity to both US and Canada, plus the European space. We are planning to launch a new datacenter location in the US before the end of the year.
25/BR: Any other news about your company you care to share?
Yes, we have just recently signed a distribution agreement with leading security provider MySecurityCenter.com that has 20 Million registered users on their suite of security products mainly on anti spam and anti virus.
26/BR: Xdrive recently announced that it is getting out of the online backup business. Do you have any comment on that?
Well, I anticipate that we will see other companies go out of the business as their business models didn’t work or perhaps they had an unstable platform. It is still a very young market and many people have seen that Online Storage will become a profitable business area.
27/BR: In the past few years, many small companies and even some banks, such as Wells Fargo, have started offering online backup solutions? Do you think that the online backup market is getting crowded? What do you have to do to stand out of the crowd?
We come from the web hosting business and when we started the market was very crowded. It was easy to get into and we still have managed to get a good position in our focus markets. The Online Backup market is potentially much larger then the webhosting market and as such we are ready for the increasing competition. We actually like that more companies are beginning to market their solutions â€“ it is beneficial for the entire market. I also anticipate that many new companies that will start offering Online Backup will choose a trusted vendor like Keepit.com, either in a co-branded or fully white label version, depending on their strategy.
Secondly, the name of the game in Online Backup is to get critical size and you only achieve this by securing the distribution. Distribution partners from financial institutions over security product vendors to pre-installs on hardware to more traditional boxed product are all in play. We are staffing very hard on getting partners to become our channels and we select partners that can benefit from the Keepit.com solution.
29/BR: Now that we know about you, we want to ask you about us. As you know BackupReview.info is the ONLY website providing information about the top 25 online backup companies on a monthly basis. We have more than 400 backup companies listed in our directory. We have been in the online backup information since 2004. How can we improve our website and its services?
We at Keepit.com really appreciate the work the team behind Backupreview.info put into covering the market for online backup and related services. The industry needs focused analysis and reviews and I hope we will see additional activities from this side, such as, industry events so one can learn from each other and also potentially find and develop new partner channels collectively as an industry. I also see many opportunities for some of the companies to work together as their services are offering synergies and should not be seen as competing.
We will definitely continue to actively support the work at Backupreview.info
We sincerely thank Fred for the interview opportunity.
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