Interview with Josh Coates, Berkeley Data Systems

Our interview this morning is with Josh Coates, CEO and founder of Berkeley Data Systems ( Berkeley just came out of stealth mode and launched Mozy, an online data storage service that allows users to back up their data to an online, secure storage vault. The firm is backed by Wasatch Ventures, Tim Draper, and Drew Major. We spoke with Josh a bit about his background, the new service, and the challenges of running a startup in Utah.

Techrockies: What's your background, and how did the company come about?

Josh Coates: I'm an engineer by education. I was at UC Berkeley and studied large scale parallel systems and supercomputing there. I went out to the workforce, and started my own company in the Bay Area, Scale8, which specialized in large scale parallel storage systems. We had a lot of big customers – Microsoft, Viacom, Fujitsu – and built what was, at the time, the largest online storage system in the world. I ran that for about four years, shut it down, and sold the IP to Intel. I spent some time at the Internet Archive, building petabytes of storage in San Francisco. Then, I took off to Utah and started Berkeley Data Systems. My career has been spent around large scale parallel systems. The next problem I wanted to tackle was the backup problem. It seems like such an obvious solution to a problem everyone has—how do you keep your data safe? You back it up remotely. Floods, fires, and earthquakes can't get to you, and if someone steals your laptop you're still safe, and your hard drive is still okay. That's a problem that has never been solved. There are three to four dozen backup companies out there, but none have been terribly successful. I thought to myself—why is this still a problem? Why isn't this a no-brainer? Why isn't there a free, automatic, secure backup solution out there? Well, it doesn't take long to figure out why. If you're Yahoo, or Google, with a ten million user base, with 1 or 2G of backup data, that's ten to twenty petabytes. That's why there isn't this ubiquitous remote backup solution out there. I wanted to fix this. Over the last year, I built a team, and we've been focusing on research and development for the remote backup problem, and we think we've got it.

Techrockies: What's different about Mozy from other online backup products?

JC: Well, we're the first to offer enterprise quality backup for free. That's probably the first difference. We're also different in that we're enterprise quality. We do heavy duty encryption, block level incrementals, open file support, lock file support, and single instance storage. All the intelligence of an enterprise solution we've embodied in a very simple consumer solution. Second, we make it freely available. We're altruistic--we want to save the world--that includes every home and office PC in the world. We're able to do that because of the technology we're using in the back end is very different than traditional online backup players. Traditional backup providers get an enterprise storage solution with 10 to 20 Terabytes and hook it up to a web server. We want to solve the Petabyte problem. It's a completely different architecture that turns out to be ten times cheaper. So we are able to give this away for free. We also have a premium subscription, extremely cheap, which is 10 times less expensive than traditional online backup companies. Between free and very affordable we're dramatically different than folks out there now. The intention behind this is to help people do backups, and to make it a no-brainer. Right now, you're either out $200 if you're willing to pay, it's complicated to set up. Or, you can buy a $200 or $300 external hard drive, and make sure you don't have a fire in the office. We thought about how we really solve the problem.

Techrockies: With all that storage, you must make the storage vendors pretty happy...

JC: Just the disk drive manufacturers. We don't buy storage systems, we buy disks. We've done the architecture of the storage system all ourselves, because a petabyte is not something you can just buy. We needed to design it in an economic way. A lot of the technology we have uses a special type of encoding to keep the data safe. You can't use a RAID system because of the probability of permanent data loss with traditional encoding. Our proprietary method of encoding the data is very custom and all aimed at one very specific problem, the remote backup problem.

Techrockies: How about security and encryption—how much should users trust your service?

JC: Encryption is very important, and privacy is very important to us. There is enterprise-grade security built in to the product. It's automatic so the user does not have to worry about. We offer two types of encryption, based on 448 bit Blowfish encryption. You can pick a private key or a Mozy key. The private key makes it so that we can't ever decrypt your data. Say Dick Cheney shows up with a subpoena, and you've privately encrypted your data with your key, we can't decode your data. However, if you lose your key, you're hosed. If you opt for Mozy encryption, the data is encrypted not only in transit, but also on our disks. We go the extra mile to keep your data completely safe.

Techrockies: So you can't read the data people store with you?

JC: If they opt for self encryption, that's absolutely correct. It's a free option when you install Mozy. Your data is encrypted on your PC and we're just storing a bunch of bits for you.

Techrockies: What operating system platforms do you support?

JC: Right now, we support Windows XP. This quarter, we're hoping to get a beta out for the Mac.

Techrockies: Tell us about your VC funding and backers?

JC: We closed a Series A about a year ago. We raised approximately $2 million dollars. The investors were Wasatch, and two other investors were Tim Draper, from Draper Fisher and Drew Major, who was the co-founder of Novell. Tim Draper was an investor in Skype and Hotmail. He's very into big problems, with really innovative solutions. He immediately got it and he put his money in, and is very supportive. Drew Major is the father of modern networking, he got it, instantly. He totally gets it. Wasatch has been a great partner for us.

At my previous company, my last startup, we raised $60M. It got really big and crazy. This time we're keeping it very small and very focused.

Techrockies: What have you learned, having built a startup before?

JC: Keeping the company sized small. We have a small, handpicked team of experts. We're also staying focused. That's really the two key lessons. Oh, and also, hand-picking your staff. Hiring has been a grueling process. We've kept our standards high and have a fantastic team of experts, albeit small, and kept focus on the remote backup problem.

Techrockies: How would you compare and contrast building this company in Utah compared with the Bay Area?

JC: The best thing is really the quality of life. I don't have an hour and a half commute each way, I don't miss that. There's also a lot less pressure out here, and that can help to make you more methodical in the decision making process.

The downside is that there's so many technology workers in the Bay area, compared to here. You have to be very selective out here, but it's been great for me to see. There are some amazingly talented engineers here in Utah, just not very many of them. You have to consider that there's just over 2 million people in the entire state, and there's 5 times that just in the Bay Area. That's been the challenge and that's also given Berkeley Data Systems an advantage out here. We're very focused on exactly what we're trying to do and the kind of people we need to be part of the team.

There's lots of challenges, but it's not impossible to run a startup out here. We've been doing great. It's a completely different world. Plus, the good news is there are great venture capital companies out here, willing to fund talent. The VC companies here are small, but very active, and they're very mainstream. That's really refreshing and nice.

Techrockies: Thanks for the time and the interview!