As reported by By Ellen Nakashima, Washington Post Staff Writer, on Friday, August 1, 2008, Federal agents may take a traveler's laptop computer or other electronic device to an off-site location for an unspecified period of time without any suspicion of wrongdoing, as part of border search policies the Department of Homeland Security recently disclosed. An increasing number of international travelers have reported that their laptops, cellphones and other digital devices had been taken -- for months, in at least one case -- and their contents examined.

Personally, I'd be pretty bent out of shape if Homeland Security took my laptop the next time I came through customs. But apparently this is happening with increasing frequency and with no explanation and no requirement that it be returned in any reasonable period of time. Putting civil liberties and privacy issues aside, I've got a lot of valuable stuff on my laptop that I need for my business, not to mention family pictures and all the music I love to listen to while traveling. Plus, I'd have to go out and get a new laptop because I couldn't be sure when I'd be getting the other one back – that would set me back $1500, not including the software that I've purchased.

So a word of caution for anyone traveling outside the US – back up your PC online. If you have Carbonite and you open your laptop in the Hong Kong airport, Carbonite will automatically back up the work you've been doing while you're on the road. At least then you can be back in business quickly if your computer gets taken by our government on your return.

And if you're really worried about the privacy of your files, encrypt them on your laptop (I wonder if they can force you to give them the key?) and when signing up for Carbonite, choose to keep your own encryption key. That way, if they come to us with a court order, all we'll be able to turn over are your encrypted files. With the kind of encryption we use, these would be pretty useless without a huge effort. (But, if you choose to manage your own key, don't lose it, because there's no way to get your files back without it.)

Me personally, I'm going to write to my representatives. I don't like the idea that the government can go on a fishing expedition on a US citizen without probable cause. It's chilling!

— Dave
CEO, Carbonite

— Dave
CEO, Carbonite

I was reading a blog the other day from noted Silicon Valley blogger Om Malik, and I wanted to share my thoughts on it: I think Om is absolutely right about the "online storage" market – most of the attempts to support such services with advertising have failed miserably and it's amazing to me to that people keep trying. Only Google, Yahoo, or other portals have much chance of being successful with a free ad-supported collaboration service. Few people are willing to pay for these services given the wide range of free options already available.

It seems to me that online storage is a solution looking for a problem. What exactly is the problem? Data protection? Photo Sharing? Remote access? Publishing and file sharing? Syncing multiple devices? The more features you throw into these products, the worse they seem to sell.

Most of the products that purport to "do everything" lack focus, are hard to market, and have not been notable financial successes. Before I started Carbonite, I was looking to buy an online backup service for my daughter who had already had two hard drive crashes. I remember looking at xDrive and saying to myself "This product does so many things, I can't figure out what it's for." The marketing message was hopeless!

Pure, simple, set-and-forget online backup is thriving, thankfully. Hundreds of thousands of people now pay $50 per year to back up their PCs with Carbonite. We've enjoyed 26 consecutive months of double-digit month-over-month revenue growth. And investors and corporations are paying good money for companies in this space – Mozy sold out to EMC for $63M and Swapdrive sold out to Symantec for $123M, to name a couple. Online backup (as opposed to storage) is a great subscription business. You pay your money and your worries go away. Simple.

Amazon is the only online storage company that has really found a market, and that market, as Om points out, is all the little companies that are trying to put lipstick on the service and sell it to the next guy. And Amazon charges real money for their service.

And while I agree that there is no clear leader in this collaboration space (my bet would be for Google, long term), there are clear leaders in Online Backup: NPD Group, the company that surveys consumers to rank various consumer products, recently started covering the online backup market and ranks Carbonite as #1 in the market. I think that when the dust settles in four or five years, almost every PC is going to ship with online backup built-in (every Packard Bell in Europe ships with Carbonite pre-loaded with similar deals in the US close behind), you'll be able to buy online backup (and maybe online storage) from your ISP, and online backup may be bundled with other data protection services, such as anti-virus. There will be two or three leading players in the space with tens of millions of subscribers each, and a bunch of little guys occupying various niches.

— Dave
CEO, Carbonite

A friend of mine sent me this picture. If only she had had Carbonite!

— Dave
CEO, Carbonite

I got a nice letter from a user who was saved by Carbonite. For those of you who are running your own business, I'd recommend taking a look at her blog: http://www.ecommercediva.com. I was impressed with all the good advice. Here's her letter:

“

As a full-time "multipreneur" with several businesses — most of them virtual — my livelihood is in my computer. Over the years I've had a number of computer meltdowns where my data was lost. I'm a busy woman, never seemed to have the time or discipline to manually backup my data as often as I should have. I learned the hard way several years ago when my computer's hard drive literally melted and I lost almost all of my files and contacts. I vowed "never again!" My data is too important to gamble with.

Desperate for a solution that wouldn't fall victim to my busy schedule or my memory, I turned to Carbonite in January 2007. It was affordable and painless. Set up was so easy a monkey could do it! I just set it and forget it, and it automatically backs up all my important files and program settings, and even my music downloads. In May this year, I had another computer meltdown, and everything on my hard drive got wiped out. This time I was prepared — I simply retreived my data from Carbonite and I was back up and running pretty soon afterwards. What a relief.

Regards,

Jamila

— Dave
CEO, Carbonite

The news that AOL is trying to sell off XDrive in a fire sale (asking price: $5M vs. estimated $30M they paid) says a lot about the difficulty of mixing business models. When we were out raising our first round of venture capital two years ago, I can't tell you how many times I heard 'I think Google or AOL is just going to end up giving this away.' Well, they are in fact just about giving it away — but it's the company, not the product!

In my opinion, there were business problems AND product problems. AOL's EVP Kevin Conroy explained in an email to employees:

“

To effectively grow the XDrive online storage business we would need to focus on subscription revenues vs. monetizing through advertising revenue, and this business model is not in strategic alignment with our company's goals.

AOL is having plenty of problems with their core media business, let alone trying to build a subscription revenue business on the side. Mixing two totally different business models in one organization is never a wise idea, which is why it's not likely that Google or Yahoo will go down this path. An encrypted backup can't be indexed, so it's of little value to a company whose primary business is search and advertising. Backup is a background application and shouldn't be in the user's face all the time, therefore, I'm not sure how you would get any advertising revenue off of it.

The second problem was the product. There was a time when XDrive was basically backup. Then they added file sharing, storage in the cloud, photo sharing, and a zillion other features, probably thinking that if they had more features it would sell better. Wrong. Every feature added complexity. The success of Carbonite is based on our motto: "Backup. Simple." What XDrive delivered was "Backup (and a whole bunch of other things) complicated." When are engineers going to recognize why products like the iPod are so successful? What's wrong with a device that just plays your songs? Or compare the web pages for google.com and aol.com; is there not an inverse relationship between the amount of stuff on the page to the amount of money in the bank?

— Dave
CEO, Carbonite

I wanted to bring to your attention another very nice review of Carbonite. This one, by Mike, at Simply Offsite is thoughtful and balanced, IMHO. In the comments on his blog, I did try to explain why it's very hard for Carbonite to have an "estimated time to completion" indication for the initial backup like some other backup services do. The reason, in short, is that Carbonite allocates bandwidth dynamically so that it never interferes with your browsing. If you're using the Internet for other things, Carbonite will automatically slow down to get out of the way. So we can't tell you how long your backup is going to take because it depends on whether you'll be using your computer in the meantime. Other backup services transfer data at a steady pace. So while that makes the backup time predictable, it also means that your computer is going to feel really sluggish while the backup is going on – not a good thing.

— Dave
CEO, Carbonite

I just had to comment on a video that I saw on CNN.com (The transcript can be found on the Data Doctors website). The answer given by "the Data Doctor" is a little strange – the guy loves online backup but he doesn't like unlimited backup plans like Carbonite. He seems to think that they are hobbled in some way. This doesn't make an ounce of sense and it would have been good for the "doctors" to check their facts before making such pronouncements. The assertion that vendors with unlimited backup somehow throttle or limit backup speed or capacity in some way is just plain wrong. I know it's not the case with Carbonite, and I suspect that our competitors, like Mozy, similarly do not encumber their unlimited offers. It's amazing how these rumors and "common wisdoms" spread on the Internet and how infrequently experts actually bother to check the facts.

I love these guys for promoting online backup, but I wish they would have reported unlimited backup for the incredible deal that it actually is. I wish they would have said, "With disk storage costs dropping like a stone, vendors like Carbonite are able to offer truly unlimited capacity for a fixed price. Yeah, they probably lose money on a small percentage of their users, but by making it unlimited they keep the user from having to make a lot of compromises and choices."

— Dave
CEO, Carbonite

Recently, online storage space startup divShare announced on their blog a recent security breach by "a malicious user." Lucky for them, only basic profile information available through the database was accessed during the intrusion. But the important question here is what else could have been taken by a more skilled trespasser?

Many people think that backup is a simple application – what's so hard about backing up a PC?   I remember one of my MIT students grousing about Google's success: "Anyone can write a search engine," he said.  Backing up the data is not the problem. The problem is dealing with huge volumes, millions of database transactions, hundreds of thousands of customers, and all the complexity that this implies – all while making sure that there is 100% security.  Carbonite backs up over 50 million new files every day without losing any of them.  Like any other web site, we constantly get attacked by hackers, but we have enough security measures in place that these attacks are always unsuccessful. As I mentioned in a previous post, Carbonite was one of only two backup services that the guys at Heise Security weren’t able to crack. 

If you’re doing your engineering properly, online backup can be made to be extremely secure.  For instance, Carbonite starts with encrypting the data BEFORE it leaves your PC so that by the time we get it, it's already useless to an intruder in the very unlikely event that someone acutally gains access to our system. We also make sure that the authentication is rock solid, so that there are no "man in the middle" vulnerabilities.  And, we actually pay people to constantly test our defenses. 

After we get your encrypted files, we want to make sure that we don't lose them, so we store all your data on RAID-6 redundant arrays that are 36 million times more reliable than a single drive.  The main Carbonite data center is located in a "bomb-proof" building, alongside those of major Boston financial institutions and telco companies.

Online backup is a hot area right now and you'll see more startups entering the space over the next couple of years.  Not all of them will know enough about security to be really bullet-proof.  It isn't easy or cheap, but I can tell you that for Carbonite it's a live-or-die proposition. 

— Dave
CEO, Carbonite

When Carbonite entered the online backup market in May 2006, everyone in the online backup business was pricing their services by the gigabyte. We introduced the first backup service with unlimited storage for a fixed price. Why? Because our market research showed that people didn't like having to learn new software applications and they didn't like having to figure out what they needed to back up. If your backup is limited to, say, 5GB, you are forced to pick and choose files and folders. We envisioned a service that didn't require the user to do anything other than put in an email address and password.

Many people think that we came out with unlimited backup in order to win the "gigabyte war" vendor A gives you 5GB for $5/mo, vendor B gives you 10GB for $5/mo, and so on. But that's really not why we decided on unlimited backup – the REAL reason was simplicity of the user experience. If you make the capacity unlimited, then the user doesn't have to make any choice – we just back up everything by default.

What happened, of course, is that our direct competitors were forced to switch to an unlimited pricing plan, but THEY DIDN'T CHANGE THEIR PRODUCTS! They missed the point. You still had to learn new software. Every bit of complexity makes it harder for the user and lowers adoption rate.

We are committed to one simple task: protect all the valuable data on your computer with the absolute minimum of effort and at the lowest possible cost to you.

— Dave
CEO, Carbonite