Carbonite, With IPO On the Horizon, Puts New Focus on Consumers and Small Businesses

1/11/11Follow @gthuang

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software has matured to the point where Carbonite needs a separate, dedicated division to sell it. And the company has matured to the point where it needs to work harder to understand its different customer groups.

Business customers already “account for a pretty significant part of our business,” said Friend, who estimated the fraction as between one-third to one-half of Carbonite’s total revenue.

Yet the online backup sector is still relatively young. A huge number of people and businesses—amounting to hundreds of millions of personal computers worldwide—still don’t back up their data in any systematic way. That is where Carbonite and other companies could see growth in the coming years. For now, Friend sees the future of the sector as a two-horse race. “Most of our competitors who tried to scale have fallen by the wayside, except for Mozy,” he says. “Most people don’t have the engineering depth. The problem for a startup these days is, how are you going to get 50 million bucks to be a serious competitor?”

On the topic of his chief competitor, he says, “Mozy is less aggressive in the consumer space than they’ve been in the past. That’s not surprising given the EMC DNA. They will continue to be successful in the business space.” He adds that Carbonite will “compete strongly” there as well, with one of its sweet spots being the “three-person dentist office.” [Disclosure: Mozy provides online backup service for Xconomy---Eds.]

Carbonite also has its eye on other expansion areas, including mobile apps and remote file access technology that lets customers access individual backed-up files over the Web from any computer. “More and more people say, ‘I don’t need to drag my computer everywhere—I can get all my files on every computer anytime, anywhere, on any device,’” Friend says. “The adoption rate of that stuff is really starting to move.”

But the overarching message I heard from Friend was that Carbonite needs to hunker down and focus on what it does well—providing fast and efficient online backup to its customers. “Our bet is just to get to be really, really excellent at what we do. That will provide us with years of runway,” he says. As for the timing of the potential IPO, all he would say is that the company is shooting for later this year.

So, in the meantime, I asked him for his top advice to other entrepreneurs, based on his vast experience with startups. “Do as much market research as you can before you get started,” Friend says. “Talk to customers before you build the product. Build something that looks and feels like a picture-perfect prototype and see what people really think of it. If they don’t like it, change it. If they like it, make it real. And if it starts to sell, worry about the scaling. Most important is to have a product that solves a real problem.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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