The Open Cloud Revolution: Why Backblaze Could Be the Next Cloud Giant
48min read The global cloud storage market is on fire, projected to hit $161.5 billion by 2025, yet the industry’s established giants—AWS, Azure, and Google Cloud—face a growing challenger. Backblaze (BLZE), with its radical open cloud ecosystem, is carving a path to disrupt the status quo. At the heart of its strategy lies a simple but revolutionary value proposition: cost efficiency without vendor lock-in. This isn’t just about saving money—it’s about redefining how businesses store and interact with data in an era of AI-driven workloads and escalating cybersecurity threats.
Why Backblaze’s Model is a Game-Changer
Legacy cloud providers thrive on complexity and opacity. Their pricing models bury costs in hidden fees—like egress charges—and force customers into proprietary ecosystems. Backblaze, by contrast, offers a pay-as-you-go model with no egress fees, a stark contrast to AWS’s “fake free egress” (as Budman quipped). Its B2 Cloud Storage charges just $15/TB for high-throughput workloads, undercutting AWS’s S3 by nearly half.
The company’s interoperable architecture is its secret weapon. Features like Event Notifications (which automate workflows across platforms) and Scalable Application Keys (securing IoT devices at scale) let businesses mix-and-match tools from rivals like AWS or Google, without contractual chains. This open ethos resonates with enterprises tired of paying a premium for vendor-specific solutions.
Gleb Budman’s Needham Moment: Validation of a Turnaround
Budman’s fireside chat at the Needham conference wasn’t just a PR stunt—it was a financial and strategic masterclass that should have sent BLZE’s stock soaring. The numbers tell a story of a company hitting its stride:
- Revenue Growth: Q1 2025 revenue hit $34.6M, up 15% YoY, with B2 Cloud Storage surging 23% to $18M.
- Margin Improvements: Adjusted EBITDA margins jumped to 18%, up from 6% a year ago, with free cash flow improving to -6%—a dramatic turnaround from -17% in Q1 2024.
- AI Momentum: Backblaze’s AI customer base grew 66% YoY, storing 25x more data than in 2024. Use cases span wildfire prediction (via satellite data) to manufacturing optimization, proving its open platform’s versatility.
The $15M+ hyperscaler migration deal—stealing a major AWS customer—was the cherry on top. It signals Backblaze’s ability to compete head-to-head with giants in regulated sectors, a market AWS and Azure dominate but struggle to innovate in.
Why Investors Are Missing the Boat
Backblaze’s stock trades at just 13x forward revenue, a fraction of AWS’s valuation multiple. This disconnect is perplexing. Budman’s team is executing flawlessly on its three-pillar strategy:
- Cost Leadership: Backblaze’s price-performance edge is undeniable. Its $15/TB B2 Overdrive offering is a direct shot at AWS’s S3, which charges ~$28/TB for comparable throughput.
- AI & Security as Growth Drivers: AI customers are expanding at 66% YoY, while compliance wins (e.g., NASPO ValuePoint contracts) open doors to government and education markets.
- Open Ecosystem Momentum: The “Powered by Backblaze” partner network—now including Axle AI’s cloud platform—is creating a flywheel effect. As third-party tools integrate with B2, switching costs for customers rise.
Critics cite risks: regulatory hurdles (e.g., India’s data laws), competition from hyperscalers doubling down on pricing, and execution risks in hitting positive free cash flow by Q4 2025. But these are manageable. Backblaze’s 117% net revenue retention suggests sticky customer relationships, while its $144–146M 2025 revenue guidance is conservative compared to its AI and media sector traction.
Act Now—Before the Market Catches Up
The undervalued thesis hinges on a simple truth: Backblaze is the only pure-play open cloud storage disruptor with both scale and profitability in sight. Its valuation ignores $161.5B market tailwinds, a 23% CAGR in cloud storage adoption, and the structural shift toward hybrid/multi-cloud strategies.
Investors who wait for consensus to recognize this story may miss the boat. Budman’s Needham presentation was a catalyst—but the real move will come when enterprises finally demand true open architecture and fair pricing. Backblaze isn’t just a storage player; it’s a platform for the open cloud revolution.
The question isn’t whether this disruption will happen—it’s whether you’ll be on the right side of it.
Andrew Ross Sorkin is a pseudonym for this analysis. The views expressed are hypothetical and for illustrative purposes only. Actual investment decisions should be made with due diligence.
