Backblaze Business Issues
Morpheus Research (via Juan Báez, Hacker News):
Since its November 2021 IPO, Backblaze has reported losses every quarter, its outstanding share count has grown by 80%, and its share price has declined by 71%.
In October 2024, two former senior employees filed suit against Backblaze, alleging accounting fraud, inflated projections, and whistleblower retaliation.
[…]
4 months into selling his shares, Backblaze co-founder & CTO Brian Wilson wrote in an internal email, “if BLZE goes straight down to zero, each day I sold was beyond totally justified and I won’t regret it” shortly before resigning amidst continued share sales, according to Backblaze’s former VP of Investor Relations.
[…]
After the exit of CFO Frank Patchel, in August 2024, one might have expected Backblaze to bring in a CFO with a track-record of turning around poorly performing companies. Instead, Backblaze’s new CFO, Marc Suidan, joined from Beachbody (NYSE: BODI), a multi-level marketing company, where he was CFO from May 2022 to August 2024. During his tenure, BeachBody missed earnings estimates in 6 out of 9 quarters and the stock fell 91%.
Governance issues have arisen, with the company ceasing to answer retail investor questions after Q2 2024 and failing to disclose whistleblower lawsuits in its 10-K filings. The reliability of Backblaze’s financial metrics has been called into question, particularly after redefining its “Adjusted Free Cash Flow” metric.
On the market front, Backblaze’s positioning as an “AI storage” company has been criticized by former executives, including the former CTO, as misleading.
Scharon Harding (Hacker News):
Backblaze is dismissing allegations from a short seller that it engaged in “sham accounting” that could put the cloud storage and backup solution provider and its customers’ backups in jeopardy.
On April 24, Morpheus Research posted a lengthy report accusing the San Mateo, California-based firm of practicing “sham accounting and brazen insider dumping.” The claims largely stem from a pair of lawsuits filed against Backblaze by former employees Huey Hall [PDF] and James Kisner [PDF] in October. Per LinkedIn profiles, Hall was Backblaze’s head of finance from March 2020 to February 2024, and Kisner was Backblaze’s VP of investor relations and financial planning from May 2021 to November 2023.
Even if the accounting is accurate, it doesn’t seem prudent to rely on a company that is continually losing money and that offers unlimited plans for a low flat rate.
I have continually heard of people’s good experiences with Backblaze, but I could never get past various design issues and its practice of telling you that your files are backed up before they are committed and actually restorable. Arq has worked well for me for many years.
I am worried about this because Backblaze is part of my backup strategy. If it reduces its focus on backups in favour of an enterprise clientele it cannot win, it seems likely both are at risk — assuming Morpheus Research’s findings are in any way accurate.
[…]
I have many terabytes backed-up with Backblaze. I entrust it with my precious photos and music collection — the latter was the motivation for my subscription in the first place. But I should have always been more cautious given the company’s flat-rate promise. I simply assumed it would eventually become a tiered system. Now, I feel like I have reason to worry a little more.
Backblaze doesn’t break out profitability by product division anymore, but when they did, computer backups were profitable. B2 wasn’t. The cost of revenue largely comes from the B2 side because S3-compatible object storage is intensely competes on price/gb whereas computer backup competes on perceived trust, UI, etc. They consolidate fixed operating costs now, but the R&D is largely for B2, too.
That’s interesting, as I had assumed that the metered B2 was the part that was profitable. But I guess they’re focusing on it because that’s where they think the growth is.
If you’re wrangling massive datasets for AI, machine learning (ML), high-performance compute (HPC), content delivery networks (CDNs), or analytics, you’re familiar with the trade-off: Pay a premium for the highest speeds, or compromise on performance to keep costs manageable.
Backblaze B2 Overdrive changes that.
See also: TidBITS-Talk.
Previously:
- CrashPlan Consumer Is Back
- Backblaze Computer Backup 8.0
- Arq 7
- Backblaze bzfileids.dat Scaling and Little Snitch
- Backblaze Mails Unencrypted Hard Drives
- What Backblaze Doesn’t Back Up
8 Comments RSS · Twitter · Mastodon
I've been using Backblaze for several years now and this is a bit worrying. That said, I would like to use a backup service where my backup is fully encrypted and never gets decrypted anywhere except locally. I was never a fan of how restoring data with Backblaze requires decrypting server side. It's hard to beat Backblaze's price though.
I've been using Backblaze for years and have generally been happy with the user experience, but I will caveat that by saying I've never had to do a full restore from their service. I unwisely didn't encrypt stuff in the beginning and have let the status quo persist.
My mid to long term plan is to build a Truenas box that holds 12 drives or so and stash it at my parents house on their rack. Their upload is abysmal, but I could use it as a backup destination for my main truenas rig in my basement. Also planning on setting up remote cloud backup for the most critical pieces of my truenas machine.
I too used Arq for years but noticed several months ago how slow it has become. It wouldn't finish a scheduled back up before the next one was scheduled to start. I thought that perhaps this was because I was using Dropbox as the destination, however when I tried to use Wasabi it was glacially slow. Duplicati ran about twice as fast to Wasbai but I don't like the interface. iDrive is a possibility but I'd really rather roll my own storage rather than rely on someone else's black box. For now my cloud backup is in disarray. Maybe I'll old school it and use rsync or maybe ChronoSync to Wasabi.
Worth noting: Morpheus Research is a short-selling hedge fund (they profit when the stock goes down)
Doesn’t mean they’re wrong, but they’re also not an impartial observer.
Never continue to use a backup service beyond a trial period if you have not actually tested a restore. It doesn't really matter how well a backup product claims to back up. What matters is what happens when it's time to restore.
As for the idea of keeping a NAS at a relative's house (not to pick on one post but it just happened to hit two good points), I think the bandwidth actuall works out for this for once. Home connections have crap upload, but good download, and from your perspective backing up to the NAS there, it can download your backup as fast as you can upload it (unless you're blessed with symmetric gigabit fiber). And if it's not too physically far away, just go get the NAS when disaster strikes. Individual file restores up to several gigabytes wouldn't be too painful even over residential upload of a decent connection.
I’ve used Backblaze for something like 15 years. I’ve restored small subsets of files as well as a full backup at one point (via the option to have them send a physical hard drive). My experience with recovery has been rock solid in all cases.
If it turns out Backblaze the company has problems and folds in the future, I’ll look for an alternative provider then. (Though I have my doubts about that Morpheus report.) I see no reason, as a user of their product, to jump ship at any point before that as their service continues to run just fine at present.
Are those types of backups even relevant anymore? All the data I care about on my computers sits in cloud-synced directories, and I run cloud backups to my NAS.
