One Online Storage Startup Backs Up Profits

Last week in my analysis of online storage sector, How to standout in the sea of storage startups, I pointed out that many startups were having a tough time convincing folks to upgrade from free to paying services. That post got many reactions, including a comment from Raghu Kulkarni, founder and CEO of Pro Softnet, a Woodland Hills Calif.-based company.

His company runs two online storage services, IDrive and IBackup. While IDrive is a more consumer-focused backup service, while IBackup caters to the enterprise crowd, because of its additional capabilities. Think of them as Mozy and Mozy pro, says Kulkarni, who claims that his self-funded (bootstrapped) outfit is growing almost 50 percent every year.

Revenues for 2008 are projected to be $12 million, up from $8.3 million in 2007 and $5.4 million in 2006. The company has been profitable for three years now, but Kulkarni declined to share profits data. At present, the revenues are split 70/30 in favor of IBackup, but he is betting this is going to change soon. “The conversion rate for free to paid for IDrive is about 15%,” he wrote to me in a subsequent email exchange. “Early 2007, we had to create a version of IBackup to compete in the low priced segment, hence the IDrive product offering.” The company has about 250,000 users and stores many petabytes of data, Kulkarni says.