Backblaze’s IPO shows it’s possible to go public sans mountains of VC cash

But the cloud infra company touts the power of the written word

Sure, Facebook is apparently rebranding as a metaverse company — becauseĀ that will fix its trust deficit — but this morning we’re jumping right back into the IPO game instead of making rude jokes at the social giant’s expense.

This time our target is Backblaze, which you may not be familiar with. Frankly, given how limited my knowledge of the storage-focused software company was before reading its IPO filing, I was almost ready to stick it in The Exchange newsletter for the weekend.


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It turns out that there are a few twists to the company’s filing that make it really worth our time. So, we’re digging in.

Backblaze, based in San Mateo, California, has a very limited venture capital history. That’s because it has a track record of not losing money. Indeed, per Crunchbase data, it only raised a handful of millions during its private life. The company confirmed that in its filing, stating that:

Our operations have historically been efficient with limited outside investment. Prior to issuing $10.0 million of convertible notes (which we also refer to as a Simple Agreement for Future Equity agreement (SAFE)) in a private financing round in August 2021, we had raised less than $3.0 million in outside equity since our founding in 2007.

Did anyone else mostly forget that you can build IPO-ready software companies without utter truckloads of external cash? Here’s a reminder.

Naturally, we’re going to figure out just how the company managed to grow to its current size without losing nine figures worth of venture money. And we’ll want to look at its gross margins.

Why? Because by offering storage, our presumption is that Backblaze has somewhat lackluster gross margins. But we could be wrong. Finally, we’ll pick up a topic we touched on last weekend, namely specialty cloud infra providers and how they may stack up with the public cloud giants.

Let’s go!

How Backblaze grew to IPO scale without losing all of god’s money

Backblaze has two main products, both of which sit atop its “storage cloud.” Or, as I like to think of it, a large bucket of online storage capacity. The company offers “B2 Cloud Storage,” a tool that includes API access for developers looking to back up information, mesh with third-party content delivery networks (CDNs) and the like. Its second product is called “Computer Backup.” It does what it says on the tin, for one computer or many.

For whom does Backblaze build? While the company claims that its “solutions are designed for individuals and businesses of all sizes and across all industries,” it does note a “particularly strong appeal to midmarket organizations,” or those with under 1,000 employees.

All of this matters because it frames our question: How did Backblaze grow to a greater than $60 million annual run rate (based on H1 2021 data; more on the matter shortly) without more venture dollars?

Here’s a hint:

Image Credits: Backblaze S-1 filing

When we were first reading the company’s S-1 filing, this statistic caught our eye and we laughed at it. What a silly non-GAAP metric! However, it turns out that online demand generation through native content is actually a huge lever for Backblaze, so, sure, the blog readers metric actually does matter.