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Daring businesses to switch from Amazon to a company they've never heard of for cloud storage is a bold challenge. But Wasabi Technologies' founders were so encouraged by its product launch that they raised another $10.8 million to fund a second data center.

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Wasabi CEO David Friend said he expected the free trial of 1 TB for 30 days to attract a few dozen prospects when it became available on May 3. When more than 500 signed up, the Boston-based startup had to waitlist new subscribers until the week of May 17 to keep up with the server capacity demand.

Friend said about 80 users have converted to paying customers, and Wasabi boosted the available storage capacity at its leased data center space in Ashburn, Va., from about 7 PB to more than 20 PB to stay 90 days ahead of demand.

Those customers are likely lured mostly by Wasabi's claims that its cloud storage is significantly cheaper and faster than Amazon's Simple Storage Service (S3). They may also find it encouraging that Wasabi founders Friend and CTO Jeff Flowers also started Carbonite, an early successful cloud storage player for consumers and small and medium-sized businesses.

The founders also likely learned a few things from Flowers' post-Carbonite efforts to build on-premises cold data storage for financial and security firms and service providers. Storiant, initially known as SageCloud, raised $14.8 million in equity and debt between August 2012 and May 2015. But Storiant shut down operations in November 2015 and sold off its intellectual property for a mere $90,000.

"They were selling hardware systems and ended up competing with EMC, Dell and HP, which I thought was a mistake," said Friend, who was CEO and later executive chairman at Carbonite, as well as a director on Storiant's board.

In 2016, Friend, Flowers and Storiant's founding engineers shifted their focus back to public cloud storage at BlueArchive, now called Wasabi Technologies. The startup raised $8.2 million over two rounds in 2016 to get started.

Has Wasabi built a better mousetrap when people don't realize they have a mouse problem? Or, is this a real issue? Stu Minimansenior analyst, Wikibon

Wasabi added $10.8 million through a convertible note that will become equity when the company decides to raise a Series B round of funding. That will help finance the West Coast expansion to a colocation facility in San Jose, Calif., or Seattle, according to Friend. That would allow Wasabi to add automatic replication across multiple geographies for compliance, and to mitigate the risk of having all customer data in a single data center. Wasabi is also investigating expansion into Europe, a prospect that Friend said he hadn't planned to pursue until next year.

"I'm a cautious, conservative kind of guy, and I don't like just spending money without knowing what I'm going to get for it. But at this point in time, the market is almost limitless for this," Friend said. "Every day, new opportunities show up at the company for amounts of storage that are more than we had in our whole second-year projection. If any of these big deals start to come in our direction, it's going to be pretty impressive."

Friend said the speed at which Wasabi's software can read and write data is "what really blows people away." It offers performance that he said is generally achievable only at higher cost with on-premises data center hardware. He said the Wasabi software takes control of disk write heads and packs data onto storage drives more efficiently and at higher speed than Linux or Windows operating systems can.

"We get our speed by parallelizing. The speed comes from breaking the data up and reading it and writing it simultaneously to many drives at the same time," Friend said. He added that the data is distributed with sufficient redundancy to enable 11 nines of data durability, as Amazon does.

Friend said Wasabi keeps costs low by buying directly from hard disk drive (HDD) manufacturers at about the same price as Amazon does in the low-margin HDD business. He said Wasabi's technology also enables longer disk life.

Wasabi charges a flat 0.39 cents per GB per month for storage and 4 cents per GB for egress. Competing public clouds vary prices based on the amount of data stored or transferred, the type of storage service -- such as cold or nearline -- and the requests made, such as puts and gets.

"Our vision is that cloud storage is going to become a commodity that's out there for everybody to use. You don't need three plugs in the wall for good electricity, so-so electricity and crappy but cheap electricity. You don't need all these different kinds of storage as well," Friend said.

Friend said he expects most potential customers to compare Wasabi to Amazon S3. But one trial participant, Phoenix-based WestStar Multimedia Entertainment Inc., pitted Wasabi against Amazon's colder, cheaper Glacier, Backblaze and Google Coldline in addition to Amazon S3, Microsoft Azure Backup and Rackspace.

WestStar vice president of information technology Chris Wojno said his company had a pressing need to back up more than 26 TB of video with an estimated data growth rate of 2.7 TB per month. WestStar produces The Kim Komando Show, a syndicated digital lifestyle radio program, and operates a multimedia website.

Wojno calculated costs based on storing 39 TB of data and found Wasabi had the lowest per-month price per GB. If he chose Wasabi, his per-month cost would be $3,747.90 less than Rackspace, $1,590.80 less than Azure Backup, and $744.90 less than Amazon S3. The price differential was far less over Google Coldline ($120.90), Backblaze ($42.90) and Glacier ($3.90), according to his spreadsheet analysis.

Wojno also weighed the data recovery cost for 39 TB of backed-up video in the event of a disaster. Backblaze was least expensive at $780, compared to $1,560 for Wasabi and $3,900 for Glacier. But Wojno figured Blackblaze's higher per-month storage fee than Wasabi would negate the savings.

Based on Wojno's calculations, WestStar selected Wasabi Technologies for cloud storage. Wojno admitted he would have been suspicious of the new company had he not been familiar with Friend through his work at Carbonite, a former sponsor of the radio show. Komando, an owner of WestStar, last month invested in Wasabi after her company became a paying customer.

Wojno said WestStar spent about two weeks backing up 26.5 TB of video over a 200 Mbps connection with backup software from Wasabi partner CloudBerry Lab. He noted that WestStar received a complimentary CloudBerry license for his participation in a webinar with the vendors.

Friend said migrating data through transfer to a storage appliance, such as Amazon Web Services (AWS) Snowball, and transport by truck to the cloud storage provider is "an idea whose time has come and gone."

"It's much cheaper to go and put in a 10 Gigabit [Ethernet] pipe for a month, move your data and then shut it off, assuming you're in a metropolitan area where such things are available," Friend said.

Stu Miniman, a senior analyst at Wikibon, said Wasabi faces a stiff challenge against Amazon, the clear No. 1 cloud storage player. He said Amazon could lower costs as it has done in the past, or improve performance to respond to any perceived threat. Plus, he hasn't heard many public cloud users complaining that storage is a problem.

"Has Wasabi built a better mousetrap when people don't realize they have a mouse problem? Or, is this a real issue?" Miniman said.

Miniman said users might look to the free 30-day trial for new applications. He said the question is how long they'll stick with the service over the long haul, especially if the initial application runs for only a limited time.

Friend said Wasabi Technologies is going after AWS customers who want to save money on their long-term data storage or keep a second copy of their data with a different cloud provider. Wasabi provides a free tool that customers can install in Amazon Elastic Compute Cloud (EC2) to copy their S3-stored data to Wasabi automatically.

Friend said, thanks to Wasabi's S3 compatibility, organizations using EC2 to host applications could leave the applications there and move data to Wasabi's data center via Amazon's Direct Connect, rather than store it in Amazon S3. He said Wasabi does not compete against Amazon's Elastic Block Storage, which he said is designed for fast-moving data that doesn't stay in memory long.

Friend said Wasabi uses immutable buckets to protect data against accidental deletion, sabotage, viruses, malware, ransomware or other threats. Customers can specify the length of time they want a data bucket to be immutable.

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Wasabi Technologies takes on Amazon S3 on price, performance - TechTarget