Startable – Healy Jones’ & Prasad Thammineni’s Blog

Amazon’s and others cloud computing and storage have unleashed a new wave of productivity in the internet startup world. It’s very exciting to see how entrepreneurs are leveraging these powerful (yet oh-so-affordable) resources to create rapid innovation. One of the obvious first business models to be born from these web services is remote storage and backup – essentially putting a skin on Amazon’s S3 storage and letting consumers and businesses upload their documents. Since monthly storage and bandwidth costs are something like 15 cents per gig, and customers seem to be willing to pay $5 to $20 per month, many of these business models appear to be quite profitable.

Unfortunately, this market opportunity was so obvious that a ton of startups were founded to attack it. IBackup, SOSBackup, Mozy, Carbonite, FolderShare, AlwaysSync, GoodSync, Megaupload – this is just a random sampling of companies I know of in and around this remote data access/backup/storage/sync space, listed in no particular order (the order is actually from a competitive landscape analysis I did about 8 months ago, and this was the most copy-paste friendly list in the report - I identified another score of companies, but those box charts don’t paste so well.) Note that not all of these companies are using S3 or an outsourced provider of storage, some of them have developed in-house storage… expensive, but once you reach enough volume stored it makes sense.

So what’s a poor little venture investor to do when faced with such a huge number of competitors in a still infantile industry?

1) curl into a ball and cry “it’s too competitive, I can’t figure it out!”

2) demo like a mad man. (note: this probably requires a backup computer, since when demo’ing betas, at least those with downloaded clients…) The two I’d recommend right now, for the average prosumer, are:

• Dropbox (http://www.getdropbox.com/) I found this utterly simple to use, and very effective at keeping folders on all four of my computers backed up and insync. The designer, Drew, has created an elegant and simple solution that is wonderfully user friendly.
• BeInSync (http://www.beinsync.com/) This is more of a corporate, function rich offering. The UI isn’t as clean as others, but there is a boat-load of functionality available.

Despite the inherent fun in demo’ing so many products, I’m starting to wish there was another way to compete. If I can’t tell the difference between all of these companies, how could the average consumer/SMB purchaser? So, I’m starting to wonder if there is a more specific solution:

3) search for a verticalized, industry/end-market specific solution. Is there an application specific offering? Maybe there is a way to develop a front end that provides amazing functionality to a particular user. In other words, instead of competing with all the other remote storage/sharing/syncing companies head on, there could be a company who has a product that only appeals to a specific target market due. I’d imagine that this appeal is derived through application-specific UI and tools. The best example I can offer right now is Wixi (http://beta.wixi.com/), a music storage and sharing service. Through slick UI and media-specific wigit-type things it makes playing with music and videos remotely pretty fun. Check it out and let me know what you think.

Do people think that verticalized cloud based storage/sync/access plays could have legs? I’m not just thinking of music focused offerings like Wixi, but also other spaces. I’d love to see something that plays well in the SMB space, since I think there might be a decent chance of purchasers actually having some willingness to pay. Prasad will likely have opinions too…