Backblaze: Mounting Losses, Lawsuits, Sham Accounting, Insider Selling
164 comments
·April 26, 2025nikisweeting
jmcguckin
I remember when my mom used to hold Tupperware parties.
I guess they could go door-to-door selling backup or maybe hold Backblaze parties…
hiyer
Beachbody isn't an MLM. They sell workout programs (used to be dvds but have now moved to a subscription model). From personal experience, I can say that at least one of their programs - Tony Horton's P90X - is very good.
lolinder
They have been historically [0], it looks like they only changed their model last October [1], a few months after Marc Suidan switched to Backblaze.
TFA even specifies this:
> Instead they hired Marc Suidan who joined from Beachbody (NYSE: BODI) - a publicly traded health and fitness company where he was CFO between May 2022 and August 2024 when the company was operating as a “multi-level marketing” company.
[0] https://www.cnbc.com/2011/01/31/beachbody-grows-exponentiall...
[1] https://nypost.com/2024/10/01/business/beachbody-lays-off-th...
slenk
They WERE an MLM until they stopped being able to make money. There are good YouTubers out there dedicating time to getting people out of MLMs (some are basically cults). 99% of people in MLMs lose money.
If you think he is a good CFO I think you drank the coolaid.
https://marencrowley.com/podcast/the-demise-of-the-beachbody...
tanjtanjtanj
My roommate freshman year of college was hocking P90X boxes and trying to get a "downstream" going. Quacks like a duck to me.
jimmydddd
The workouts, including P90X, were great. The MLM part, which you and I may not have been aware of, was on the coaching side. Coaches would try to recruit other coaches to be downstream of them, and so on. Part of it was also selling their over priced protein shakes. But yes, if you were just a person who bought a P90X dvd and did the workouts, your were oblivious of this and just got in good shape and loved the products.
cyanydeez
MLMs focus on recruitment over product selling is what makes them an MLM. The actual product having some use is coincidence.
null
sixhobbits
I know nothing about them so not saying you're wrong but the statement "X is not an MLM" is normally a positive indication that X is an MLM.
And then promoting them also gives strong mlm vibes.
So I would bet more money on them being an mlm after reading your comment than before
ellen364
Under that rule of thumb, anything accused of being an MLM will seem like an MLM, even if the accusation is absurd.
"Uh, what?? Air isn't an MLM, it's just the thing we breath. We all need it to live."
"Huh, I guess air is an MLM after all. Wild."
slenk
BODI was an MLM that had to stop being an MLM and are hemorrhaging money
sjml
Article says they're losing customers to Wasabi, but as far as I can see on a quick perusal of their website, Wasabi is just straight storage? For me, a lot of the benefit of Backblaze comes from a (mostly) good client solution that handles the automated backup. The backup history upsell is also great for someone (like me) whose travel patterns often mean going months without reliable internet.
I know I could use some open source stuff to get similar functionality, but I feel almost as nervous rolling my own backup as I would rolling my own crypto. Does Wasabi have some client solution that I'm missing?
esperent
By coincidence I just spent several hours today comparing exactly these two services (Wasabi vs B2) and even though I am familiar with Backblaze and have used it before, I went with Wasabi. It's basically the same price, has more regions, a very simple interface, and rather than having to manage both hot and cold storage Wasabi is cheap enough to just throw everything into hot.
The only downside I found is that they limit free egress to 100% of your storage (so if you store 1tb, you get 1tb egress). In practice I don't think this will be an issue for my use case.
So I'm an example of a person who this morning had almost never heard of Wasabi, knows Backlaze well, and after an hour or two of research I have completely switched over.
mdasen
Isn't B2 cheaper than Wasabi? B2 is $6/TB while Wasabi is $6.99/TB. Why would you have to manage hot and cold storage with B2?
Wasabi also treats every object as having a minimum 90-day storage period. So if you upload something and delete it, it's still considered "stored" for billing purposes for that 90-day minimum.
B2 also gives you 3x storage as free transfer compared to 1x for Wasabi.
I'm not saying you shouldn't go with Wasabi, but the reasoning you've articulated doesn't seem to track.
masfuerte
Additionally, Wasabi bills you for a minimum of 1TB of active storage, which is $6.99/month. For my modest backup needs it is way cheaper to use any service that bills per GB.
smileybarry
Wasabi used to be the cheaper option when B2 didn't offer variable free egress. B2 was basically "cheaper S3" as it still charged $0.005/GB for egress, while Wasabi was free egress (I think their upper limit used to be >1x your storage, so maybe that changed, or I'm misremembering?).
If your storage was fairly consistent, not tiny, and you intended to pull it regularly, Wasabi would come out on top. B2's egress change probably shifted the scales to favor B2 for those cases.
Manouchehri
Wasabi also charges objects at a minimum 4KB of storage, which isn’t great if you have millions of files at 1-2KB.
gruez
>Article says they're losing customers to Wasabi, but as far as I can see on a quick perusal of their website, Wasabi is just straight storage?
That's addressed in the article:
>Since 2021, Backblaze’s B2 Cloud Storage segment revenue growth has outpaced its legacy Computer Backup segment. In Q4 2024, the company announced that its B2 Cloud Storage segment generated $17.1 million in revenue, surpassing its Computer Backup revenue of $16.7 million.
Even if Wasabi isn't a straight replacement for Backblaze's entire business, it's a replacement for its biggest and fastest growing segment.
nikisweeting
how in the world do they only make $17.1 in revenue, everyone I know is on BackBlaze, even if they're only used by techy people I'm surprised they're not making $100m+/quarter.
gruez
Anecdotally most people, even "techy people" don't do actual backups. At best, they have icloud/google backup turned on for their phone, and upload important files are on dropbox/onedrive.
geerlingguy
They're cheap (the reason many people use them), and the number of people we know that use them is ridiculously outsized compared to the general population, because we know people in the tech sphere.
conradfr
Maybe you know their entire customers base.
I know nobody who use them, so it all balances itself.
anon7000
I mean, my B2 monthly bill is like 17 cents.
If they don’t have enterprises and people storing large amounts of data...
j45
Appreciate the intro to Wasabi, happy to learn about others too while evaluating backblaze.
e40
I used to be a customer of computer backup, but had issues with it and their support suggested I delete my backup and start over with a new account. I was flabbergasted. On macOS btw.
I ended up rolling my own solution with rclone and testing b2 and r3, going with b2 because of the price and speed.
sandbags
Years ago I used Backblaze and it twice "lost" my entire backup with their support staff shrugging and suggesting I start it again. At that point I didn't have fibre so a full backup was weeks if not months. Needly to say I opted out of their service. I am not overly surprised that this is not a solved problem.
e40
Yeah, it's clear it has bugs and doesn't work well. rclone to B2 works fine for me. And I tested with Cloudflare R2 and can switch to it if BB goes under.
R2 was slower than B2, in my tests. I think it's slightly more expensive, too, but not much IIRC.
tw04
You’re missing the point. Enterprise customers where they would presumably see the bulk of their profits is what they’re losing to wasabi. Commercial “unlimited backups” is not a wildly profitable business which is why basically every other competitor in the space either failed or intentionally exited the market segment.
sjml
Ah, got it; that makes sense. Thanks for the clarification.
dehrmann
> but I feel almost as nervous rolling my own backup as I would rolling my own crypto
Is there a Restic frontend for Windows that you'd be comfortable setting up a family member with?
cheshire_cat
It's not Restic, but Kopia has an optional GUI and runs on Windows: https://github.com/kopia/kopia
PaywallBuster
Backblaze business is 50% object storage (from financial statements)
That's where Wasabi is taking customers
lud_lite
As a customer do I need to worry? It is my favourite cheapo backup.
klodolph
I recommend worrying about any service where you don’t pay a fee that scales with usage. This includes Backblaze. Yes, I recommend worrying about Backblaze and I’ve recommended worrying about it for a while.
Storage costs money. People love to dream up creative business models where your personal storage is subsidized by some other part of the business, but I think it’s just a matter of time before the business model changes. At the end of the day, there’s a massive gravitational pull that brings everything in line with market rates. These days, I think we have a pretty good idea of what market rates are for cloud storage. Anything less than market rates should be viewed with suspicion.
From another angle, in any long-term relationship with a vendor, you want the vendor to make money. We know that major cloud vendors do, or at least close enough, because they charge the same for small customers and big ones (or close enough). None of them offer unlimited data… or at least, not any more (most of them used to, but those parts of the business always get shut down).
rsync
"I recommend worrying about any service where you don’t pay a fee that scales with usage."
This is the issue and it is a heuristic that people need to develop.
Your provider especially your backups provider needs to have interests that are aligned with your interests.
The non-B2 portion of Backblaze has a financial incentive to keep you from using their product and to use as little of their space as possible. This is a bad, misaligned set of incentives.
On the B2 side, all of our suspicions about the (well timed) "me too" IPO have been confirmed with each and every quarterly report showing increased debt load and the classic "losing money but making up for it on volume".
Now that money isn't free anymore it's just a matter of time.
The sad part is they don't use standard, commodity JBOD enclosures so there won't even be anything useful in the fire sale :(
mindslight
> The sad part is they don't use standard, commodity JBOD enclosures so there won't even be anything useful in the fire sale :(
Can you elaborate on this? They mount in a standard rack and it looks like they have a backplane connected to a commodity motherboard. I'd think if you wanted it to be a JBOD you could replace the motherboard with an external SAS connector. Based on your nick I'm sure you've thought this through so I'm curious.
The only thing I see is that it looks like you have to slide the whole unit out to swap a drive, but that seems like an inconvenience rather than a show stopper.
klodolph
> Your provider especially your backups provider needs to have interests that are aligned with your interests.
I also think about all those cafés with free WiFi, where you buy a single coffee and take up a table for six hours while you browse Facebook and have your screenplay open in the background. I benefit, but the café doesn’t.
gruez
>These days, I think we have a pretty good idea of what market rates are for cloud storage. Anything less than market rates should be viewed with suspicion.
Are you talking about their B2 product or their backup SaaS? The former has "fee that scales with usage", and the latter probably has enough normal users (ie. not data hoarders backing up 50 TB on the $99/year plan that they're not losing money overall.
klodolph
https://www.backblaze.com/cloud-backup/pricing
$99/year with no limits on data, as far as I can tell. The context here is someone talking about personal backups, not Backblaze’s broader offerings. We know the market rates for cloud storage, more or less, since they’ve converged somewhat, across the industry. This makes it easy to calculate what kind of usage patterns would lead someone to save money at Backblaze.
Cloud services often have a free tier or cheap tier to attract new customers. IMO, this is not it. This is a product. These people are not turning around and signing contracts with Backblaze at work. At least, not many.
So it could be that people are just using it below its limits, or it could be that it’s subsidized by other parts of the business. Overall P&L is irrelevant—you want to be able to explain this product as a profitable product, as some viable sales channel, or as marketing.
My recommendation is to buy storage products where the company is making money off you, or nearly.
mingus88
According to the article they _are_ losing money overall, every quarter since the IPo
Spooky23
I’d make the exception for Google Drive, OneDrive and whatever the AWS one is. The hyperscalers are able to get prices way cheaper with economies of scale and price models in a sustainable way.
When O365 launched, they were using spinning disk for exchange. The issue was that they stranded capacity because of the IOPS needs of exchange. So “free”, (low iops) SharePoint and OneDrive for business data utilized that “free” capacity.
rsync
"I’d make the exception for Google Drive, OneDrive and whatever the AWS one is."
No - no exceptions.
We must, as sophisticated 21st century actors, insist that providers (especially providers of critical services) have financial interests that align with our own interests.
I don't care how big the parent is or how much money they have to burn - if it makes financial sense to keep you from storing your backups you need to go elsewhere.
j45
The economies of scale go into profit for them while still incrementally increasing costs for clients.
If it was aligned with economies of scale, customers would get more storage for the same price every year.
We don't hear about cloud prices coming down that often.
j45
Storage is a fixed fee (space on a hard drive). It make money every month when it sits there and is used.
Bandwidth costs can seem like a lot more, but when you purchase a 10 gig fibre, you have unlimited data, up until the full speed of the 10 gig fibre, 24/7. That number in TB can be calculated.
Clouds massively mark up services. Ones that underprice can have the opposite problem.
I have heard good things about the Backblaze service itself, and appreciate the hard drive reviews they put out.
lud_lite
Thanks! I suspect that for my use case (actual backup no meed for cloud access) s3 glacier is statistically cheaper.
gruez
>actual backup no meed for cloud access
How do you test your backups? You do test your backups, right? Your other comment mentions using dropbox, but that's hardly a real backup solution, and you could easily run into a situation where you need to retrieve files beyond the 30 day window.
leidenfrost
What do you recommend as an alternative? I use it as a cheaper replacement to S3
geerlingguy
I backup to Amazon Glacier S3 Deep Archive backed buckets. The price is only a little higher for a few TB than other providers, though egress fees in case of restore are a lot higher. That's a tradeoff I'm willing to make as I'd have two have two separate local NAS replicas corrupt or die before I need to rely on the Deep Archive.
Spooky23
For raw backup, I use GCP. Pricing is similar to AWS and the deep storage is easier to use.
For most regular people, I suggest Google Drive or OneDrive because you get the value add of the their ecosystem. With Google, Photos are good. With Microsoft, the Office+OneDrive subscription is a great value.
billfor
IDrive.
immibis
You should worry they'll increase the price and worry they'll delete your data if you don't pay the higher price. It's not necessary to worry they'll go out of business just because they are charging a fixed price. They'll raise the price long before going out of business.
j45
Having your own NAS in the mix more and more is unavoidable.
On one side, the cloud is someone else's computer they will always charge more an more for it because customers have not learned the economics of cloud hosting and how profitable it is on the other end.
On the other side, a NAS is your storage computer, in a simplified home appliance form. Connect it to back up to any cloud you wish.
jillyboel
Huh? b2 absolutely scales with usage. Here is their pricing page: https://www.backblaze.com/cloud-storage
everfrustrated
They're not at risk of going bankrupt. This is more about confidence in the company to go anywhere that would help the share price.
The company is being plundered and run for the benefit of the exec team printing shares for themselves. Nobody should be buying shares expecting the price to rise.
stego-tech
If the service isn’t making money consistently, I would worry about its long-term viability. This is basic commoditized storage they’re managing to screw up making a profit on, not some super-niche or brand-new product line.
It’s bits in a barn, and they’re not making rent. That’s worried me enough to re-evaluate my relationship with them, especially in light of this research.
dist-epoch
If it's your only backup, yes, you definitely should.
lud_lite
It's one of two backups. The software is great. Dropbox level of just works. iDrive by comparison is cheaper but always errors and files it couldn't touch.
nikisweeting
Yeah do NOT do iDrive if you use git or care about symlinks, I learned the hard way. Backblaze doesn't backup symlinks either for that matter...
PaywallBuster
They already increased price from $5 to $6 sometime ago
Financial statements indicate they selling services at 50% margin, but all the extra sales/admin/R&D add up to a loss
They could cut all of that I guess, it's not like object storage need a lot of innovation and they've already stopped making their own storage servers and
mikeryan
Totally an aside but is Morpheus what happened to the Hindenburg Research guys after the founder of that stepped away? The site is eerily similar and the timing makes sense. I loved reading Hindenburg’s research.
sndean
I think so, or at least they have Hindenburg alumni working for them: https://x.com/NateHindenburg/status/1900596203156304371
justinclift
Any idea why the founder stepped away?
mikeryan
Sounds like he just decided it was time. He wrote a pretty gracious post about it.
https://hindenburgresearch.com/gratitude/
Funny, I wrote this without seeing what the full URL was (I’m on my phone) so the use of the word “gracious” preceded me knowing the path was /gratitude
SSLy
To me, the Hindenburg Research announcement seemed to suggest that they were being threatened by the subjects of their research.
guerrilla
Well if they go out of business where the hell am I going to get my hard drive statistics from? ;D
tgtweak
Did they cook the books on those too?
honestly I participated in the IPO then sold when it was up a bit - I had faith in their fundamentals as a business but they did not seem mature as a public company.
guerrilla
I don't know what the incentive would be for doing that. Could they use it to drive prices on HDDs lower somehow? I vaguely recall them being activist as far as quality.
rdtsc
> While Budman claimed that he wanted to avoid any appearance of trying to “time the market,” he appears to have done so nearly perfectly, as Backblaze’s shares crashed by as much as 26% intraday following the announcement and have continued to slide ever since.[5]
Doesn’t that seem like insider trading? I guess he can claim he didn’t know so and so was going to quit.
hinkley
Not to say he’s innocent, but insiders can also trigger market crashes just by selling their stock. There are public records of substantial holdings by company insiders and while I don’t think they’re made available immediately, they are updated periodically and people can and do read into it.
That’s part of why they usually deputize a brokerage to periodically sell a fraction of their holdings at intervals.
It’s been a long while since I paid any attention to this but I do believe I saw at least a couple of instances of an insider triggering weakness in their stock just by increasing the rate of sale of their holdings.
rdtsc
Yeah it would have to be something like that. It seems a too obvious of a move, so I figured he might have had a solid loophole.
hinkley
To wit: Bill Gates did a bunch of press before starting his foundation to make it clear that him selling MS shares was not about concerns over MS’s future but that he needed a shitload of money for other pursuits.
And Warren Buffet would use many frontmen to slowly buy shares without triggering a buying frenzy. You can’t just buy or sell 3% of a company without causing drama.
Spooky23
It almost certainly is. Canceling the planned sale makes it look even worse.
But… are there securities laws in this era where policy decisions are timed to pump/dump the lowest?
avsteele
Very happy with their B2 storage. Easy to use, works well, prices fine. I use it as a backup target for several of my Synology NAS's. I hope they stay in business
PeterStuer
Wasabi a more known brand than Backblaze in the storage space? Doubt!
mdasen
It might depend on who you are. I think Backblaze is well known on here because they've been around for longer and their hard drive stats posts are well liked.
If you're a less technical CTO, Wasabi seems to do a lot more traditional marketing on things like sports games: https://ibb.co/21qNkM9b (NBA, NHL, Premier League soccer). I'm not saying that makes them better, but a lot of people with purchasing power are going to be seeing Wasabi around.
Wasabi has also been pushing value-add services on top of their storage with Wasabi AiR (https://wasabi.com/cloud-object-storage/wasabi-air). It's basically an AI-powered database of your content. If you're running a place generating lots of content, having a system automatically tag and make searchable all those images and videos is a really nice value-add. Being able to search for a video clip containing a specific person in your library junk pile of video can be nicely useful for a lot of organizations.
It could just be that different people get their brand awareness from different places.
Fizzadar
Moved to wasabi from their s3-like b2 product because it was so utterly unreliable. Pretty wild list of things if true.
e40
I use b2 and never had any issues. What problems did you have?
everfrustrated
Morpheus Research should look at Fastly next.
sndean
Can anyone recommend a decent Backblaze alternative in case things really go south? Not so much for storage but for the automated computer backups that I have Backblaze doing. I'm okay paying more than Backblaze's $9/month.
wmf
I haven't tried it but Arq has a good reputation.
tinodb
I’m using Arq which backs up to a Hetzner storage box. Cheapest €/TB I could find.
cantrecallmypwd
Much data, medium risk tolerance: Mega
Small data, or low risk tolerance: Tarsnap
rsyring
Tarsnap restore times are crazy slow. Avoid.
We replaced with Borg.
ryao
I have no experience with them but I have heard good things about rsync.net. They use ZFS.
bartvbl
I use Jottacloud, which is quite similar in many respects.
memset
Who are the players in the “s3 compatible but cheaper than AWS” space?
- Wasabi
- idrive
Who else?
manquer
Almost every cloud provider outside of Azure and GCP have an s3 compatible offering . S3 API is de-facto standard for object storage tooling
Cloudflare, scaleway, hetzner, OVH, Oracle, minio and dozens of others all have s3 compatible object stores
Most of them expect AWS have at least inter cloud transfer free (or discount Azure and GCP) being part of bandwidth alliance(BWA).
AWS S3 pricing is designed to keep you in the ecosystem , not be the cheapest, so tend to be costliest not cheapest unless your workload is archival.
For almost all non archival workloads egress costs will be on par or much higher than storage costs and AWS[1] charges a lot for any bandwidth.
AWS also makes migration really expensive so if you started with them, you are likely stuck as you would have to pay up to 10-12 months of cost to migrate out if you are on anything but the standard tier (cheaper the tiers higher the retrieval costs)
[1] All tier one providers have 10-20x b/w costs compared to tier two , however Azure and GCP discount for inter cloud transfers AWS does not
Manouchehri
GCP has an S3 compatible endpoint for GCS. I’ve used it and it works fine.
It’s only Azure that isn’t on the S3 API train.
manquer
Yeah you are right, thank you the correction.
I vaguely remembered they announced it, but didn't find it on a quick search, thought maybe I was wrong.
Manouchehri
memset
Exactly what I was looking for - thank you!
thomasjudge
How about S3 Glacier?
cvalka
Storj
None of this really shook my faith in Backblaze being able to recover until I got to this part:
> Instead, Backblaze’s new CFO, Marc Suidan, joined from Beachbody (NYSE: BODI), a multi-level marketing company
eek