Carbonite Eyes IPO, Aims to Be the Symantec of Online Backup
The first thing you should know about Carbonite, the Boston-based online backup company, is that it is indeed named after the ice-like substance in which Darth Vader encased Han Solo at the end of The Empire Strikes Back. David Friend, Carbonite’s co-founder and CEO, even has a replica of the frozen Solo in his office.
But if you ask him whether there’s an intentional resonance between the idea of preserving your data online and being frozen in carbonite, the answer is not really. “That’s an added benny of the name, but my first criteria for a name are that if you say it you should be able to spell it, and the URL should be available,” Friend says. “If it means something cool that’s relevant to your product, so much the better.”
In other words, Friend is a certified nerd, but with a hard-edged, practical bent. And that’s more or less how Carbonite spins its service, too. Most PC users don’t back up their data at all, let alone on the Internet, so cloud-based storage of the type Carbonite offers is still an exotic, high-tech idea for many people. Yet Carbonite spends most of its advertising dollars buying spots on populist radio and TV talk shows hosted by the likes of Glenn Beck, Rush Limbaugh, and Rachel Maddow.
Its pitch is simple, playing to the same widely held fears about data loss or malware attacks that drive many consumers to buy anti-virus software from McAfee or Symantec. Even Carbonite’s pricing and service model—$55 per year for unlimited Internet-based backup, period—is meant to save customers from having to fuss over the details. (The company was the first to offer flat rate, all-you-can eat backup, and takes credit for converting most other backup providers, including archrival Mozy, to this model.)
Carbonite, in other words, is a smart company with some very sophisticated technology in the back room—but it’s even more focused on the challenges of marketing that technology to a non-tech-savvy public.
Next week I plan to compare Carbonite’s backup service to Mozy, its main competition, in a detailed review. But today I want to focus more on Carbonite’s business strategy, drawing on a January 13 interview with Friend at the company’s 14th-floor offices at 177 Huntington Avenue, in the Christian Science complex. The most important takeaway from the interview was that the serial entrepreneur, who has co-founded five previous technology companies, from music-synthesizer maker ARP Instruments to Web conferencing startup Sonexis, has big plans for his sixth. If all goes according to plan, he says, Carbonite will register for an initial public offering this year and go public sometime in 2011.
That’s not because it needs the money to keep growing—revenue has doubled every year since the company launched its service in 2006, and the company still has $15 million of the $20 million Series C money it raised in late 2008 in the bank. (That’s not even counting the additional $20 million in Series D funding that it raised earlier this month.) Rather, it’s because Friend sees Carbonite as the next Boston-area tech-and-marketing company that could go really big—the next VistaPrint (NASDAQ: VPRT) or Constant Contact (NASDAQ: CTCT).
And he’s not daunted by the downsides of life in a public company: the investor scrutiny, the endless Sarbanes-Oxley compliance requirements. “It’s expensive and it’s personally risky” to go public, Friend acknowledges. “But what you get for it is access to capital at a rate that is far better than what you would get in the private markets. I’m looking forward to spending a few years running a public company—I love talking, I love road shows, I would love to get out there and pitch Carbonite to the investor community.”
Becoming a publicly traded company is also an important “branding event” for a small firm, Friend notes: “A quarter of the antivirus products on the market are actually viruses, but when you install antivirus on your PC from a McAfee or a Symantec, you don’t worry about that, because their reputation precedes them; they are public companies.”
If Carbonite isn’t yet a household name like those firms, it’s because the world is just now beginning to catch up with the company’s original idea of simple, flat-rate, unlimited backup. There were already a few online backup vendors when … Next Page »
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