About Brian Taptich
The cloud storage wars have only begun and there are still a lot of battles ahead, according to Bitcasa CEO Brian Taptich. He gave us the perspective from the trenches at his last Soapbox, saying that there's plenty of life and fight in the industry left.
Brian gave us great insight into the challenges faced in a market filled with fierce competition. He talked with us about how the cloud storage industry still had a ways to go. He also chatted about his experience as vice president at Zynga, telling us what the company did right and where they went wrong.
You're in the Business of Making Hits
Before heading up cloud storage service Bitcasa, Brian Taptich spent a good portion of his career obtaining the high score. He worked for years in the gaming industry — first at Electronic Arts and, most recently, as a vice president at Zynga. But the social gamer juggernaut has seen better days with declining revenue and an IPO bust.
Games are hard because no matter how you want to contort the business, no matter what you think you're doing, you're in the business of making hits.
Those hits matter, whether they're on Facebook, the web, a gaming console or mobile device, he said. EA won the first round because they bet on the right platform — Sega Genesis. They were able to build out the best distribution, but they were able to see that the market was going to change even back then. They foresaw that retail store sales would eventually erode. Yet the industry fell too much in love with their distribution channels, focusing more on optimizing around the business than the creativity, said Brian.
If all of that energy was spent making another great game, each of the companies would probably, over time, be more successful.
Hits-driven is where games don't want to be, yet end up there no matter how they try not to, he added.
That's a Wonderfully Unfair Question
Then there's Zynga. When we asked where the gaming company went wrong and what it got right, Brian said jokingly:
Oh … that's sort of a wonderfully unfair question.
Why? Because there are a lot of variables at play with Zynga. It's not a one-to-one equation. Zynga created the social construct of gaming, or at least optimized around it, Brian said. Their mission was clear: connect the world through gaming.
Over time, however, Zynga focused more on connecting the world and not enough on the games themselves.
To the detriment not just to the game players experience, but all of us that had our Facebook feeds being polluted by all of the Zynga game spam going out there.
But what it did right — identify the most powerful platform available. He added, "Oh the things it did wrong … "
Brian said the company lost sight of a simple fact: They were in the business of making fun games.
Having said that, it's easy to, particularly from the outside, to kind of cast stones and cast judgement.
He recalled a meeting on expanding into the China market, which would've been huge. China has its own ecosystem and social networks, he said. It could've doubled the business, and it'd only cost $100 million to do so. At the time, that was chump change to the two-year old company with 500 employees. But the company was addicted to its Facebook success.
Liken it to a heroin addict — it's first hit was the most perfect, blackest, rarest heroin available.
They were raking in hundreds of millions at 80% net margins. How could they resist? And why would they went the methadone of China as a replacement, said Brian extending the metaphor. But it's easy to say what you'd do different. Giving the change, however, he'd go back in time like Marty McFly and snatch those opportunities, like China, that got passed up in favor for the heroin.
The Battles that Are Being Won Today
Now Brian is heading up a service that's packed with competitors, particularly the big "boxes." And for all the problems of Zynga and the boxes, he said he wished Bitcasa to have those problems to solve. Yet he firmly believes that Bitcasa can survive because it has a fundamentally new way of approaching cloud storage.
He predicts great growth for the cloud and that we're only at the beginning of it all.
There are battles being fought and won today. This isn't a six- to 12-month war. This is a six- to 12-year war.
He added there's potential of creating hundreds of billions in market value in the next 20 years. And a lot of that will come from the overseas markets, like Japan that are way out ahead of mobile than we are. Japan was about 3% to 4% of Bitcasa's business and that's jumped to 25%.
Bitcasa is optimized for the future. And Japan is the future.
That future is your hard drive in the cloud, safe and secure and accessible everywhere and anywhere, like a "Star Trek" computer. As for critics that say Bitcasa doesn't stand a chance in the market, Brian said:
The battle isn't fought and won.
And it's shortsighted to think that the market is already taken. There's still plenty of space for Bitcasa, which is complimentary and works along other similar services.
Our discussion with Brian continued as he took questions from the audience. We'd like to thank Brian for sitting down with us and to those who attended the event.
Ryan: Before joining Bitcasa, Brian, I know I'm going to screw this up.
Brian: That's all right.
Ryan: That last name, Taptitch. I practiced all morning.
Brian: Yeah. By the way, most people call me Tap.
Ryan: Okay. I'm just going to say "Tap" then.
Ryan: There we go. Seriously, I was practicing all morning and still screwed it up. But anyway, Tap spent his career obtaining the high score. He worked in the ever-evolving gaming industry, most recently at Zynga as a vice president. The social gaming juggernaut has seen better days. It has declining revenue, weathered an IPO bust. Now Tap is poised to take Bitcasa to the next level in a market that is fully dominated with competition. Which raises a very interesting question: what exactly is a shelf-life of an industry? With that, please give a warm welcome to Tap, CEO of Bitcasa. Thanks for joining us today, I really appreciate it.
Brian: Yeah, thanks for having me.
Ryan: Cool and I kind of wanted to actually start with the gaming industry.
Ryan: And kind of take you back a little bit to working with Electronic Arts first, then Zynga. Can you kind of tell us a little bit more about your experience in that ever-evolving industry and how that industry has weathered continual competition?
Brian: Yeah. I think it's a hard one. First, I have a caveat that I'm off a plane back from Japan an hour ago. Fortunately, I did get some sleep but if my brain is in a fog, that's why. And apparently not because we were celebrating way too late last night.
Ryan: The release of Foundation last night, right?
Brian: Congratulations to you guys on that big release. That's exciting. So games is hard. Games is hard because no matter how you want to contort the business, no matter what you think you may be doing, if you're in the games business, you're in the business of making hits, right? So whether it's hits on console, whether it's hits on web, whether it's hits on Facebook, whether it's hits on mobile, a company is going to be successful or not successful if it can make hits.
Back in the day of retail distribution, the reason that EA sort of won that first round was they bet on the right platform, which was Sega Genesis back in the day. Raise your hand if you remember Sega Genesis. An old crowd, I love it. Sega Genesis back in the day and one. And two, as a result of that, were able to build out the best retail distribution, which was incredibly important because at that point, sort of shelf-space made sense.
I joined EA at an interesting time because the company was not actually going through a transition, but anticipating a transition. To its credit, it squinted its eyes and it saw a future where the importance of retail distribution was going to be eroding over time because the reality is that when you buy a game off the shelf of Wal-Mart, you're just buying bits, right?
When I went to EA, I thought I was going to a technology company. I kind of wasn't. I went to a retail company, at least on the business side. All of the business infrastructure was built around retail distribution and so the company at that time felt way more like Proctor & Gamble than it did like Yahoo, right? And I'm talking vintage '99, 2000.
Ryan: Right. Right. A long time ago.
Brian: A long time ago. So because their business model was way more akin to selling Tide off the shelves of Wal-Mart than it was to creating digital services and what happened to be inside that box was not laundry detergent. It was games, which made for a very kind of creative and idiosyncratic culture, but at the end of the day, like it was a CPG company. When I joined EA, it was anticipating this look, these bits are going to be distributed, not on hard discs and boxes as Wal-Mart, but through the network. And so, that's been the pain that EA has had to endure. I was there in 2003 for the last ten years just figuring out that transition. And all of that that's abstracted away from where I started, right? That's all of the business concerns. The reality is even if you're able to crack that code, you still have to make great games and this is what we saw with Zynga, right?
Brian: What ended up happening was I'll say a couple things. One is for all of Zynga's warts, and as easy as it is to kind of beat up the company, we can't lose sight of the fact that one, the company is six-years-old and it's created $3 billion in market value. Like that, in and of itself is pretty extraordinary. What we shouldn't do is we talk about everything that's wrong with Zynga is lose sight of the fact that there's an incredible amount that was right with Zynga.
Part of the challenges in expanding the business was the company creates Farmville. Farmville has a 100 million at its peak, a 100 million daily users. A 100 million daily users, right? That's a remarkable percentage of the known universe using this game every single day, for better or for worse. And then not unlike EA, kind of fell in love a little bit with its distribution platform, right? And the analogies are with EA it was shelf space at Best Buy and Wal-Mart; with Zynga it was the number of active users, its network on the Facebook platform.
In the games industry, the trap you can fall into is focusing more of your efforts around trying to optimize around your business reality and forgetting your creative reality, right? And in both cases, one could probably argue all of the effort and resources that were dedicated towards trying not to be in the hits-driven game business was a distraction from being successful as a hits-driven game company, making great games, right? So all of the publishing stuff, if all of that time and energy was spent just making another great game, each of the companies probably would over time be more successful than it was.
Ryan: All right, so you're saying that in that likelihood, there was some disconnect between long-term planning and actual making great stuff for end users?
Brian: Yeah. It's even a little less abstract than that. I think that it was more about, oh my God, the thought process is "We've got a hit game. Oh my God, everybody knows that being in a hits-driven business is a terrible business to be in." So what do we have to do to not be in that business and then trying to contort your organization and your functions to try and not be in the hits-driven game business but you end up in this weird place of denial where you lose sight of the fact that, "oh yeah, that's right. We're a hits-driven game business."
Ryan: Taking that, you kind of touched on it, and just taking it a little further, what was it exactly that Zynga got right? What is it also that they exactly got wrong with this?
Brian: Oh. That's a sort of wonderfully unfair question because it's a multi-variable equation. It's really tough to say like, "Look, here's the one thing that went right and here's the one thing that went wrong." You know what Zynga did do well though arguably it got perverted over time, is it created this new social construct, right? Or, even if it didn't create it, it certainly optimized it. Zynga's mission statement from the beginning was always "connecting the world through social games" and they did do that. Arguably, over time, they focused too much on the "connecting the world" and not enough on the "social games" to the detriment of not just the game-players' experience, but all of us who had Facebook feeds that were being polluted by all of the Zynga game spam that was going out there.
So what did they do right? They identified this incredibly powerful, new distribution platform for games and Mark Pincus is the single-best entrepreneur I've ever been around and had the pleasure to work with. And his ability to identify an opportunity and then mercilessly go after that opportunity, that's what he did. He saw this opportunity initially around Zynga Poker and then it evolved into sort of the Farmville-style games and just drove execution to this remarkable extent. I'd say those are the two things that it did right. It identified this opportunity and it really got after it.
Oh, the things it did wrong. I'll say two things: the company lost sight of the fact that it was in the business of making fun games, okay? Having said that, again, it's easy, particularly from the outside, to kind of cast stones and cast judgment. I remember a meeting I was in, and we were talking about expanding into China, which is huge. China has its own ecosystem. It's got its own set of social networks there and Facebook, it doesn't really exist.
I remember being really frustrated with the discussion because I was in charge of international business and operations and this was a big beta bet and at the highest level, my argument to Mark and the board was, "Look, we're talking about all these things that are kind of going to create incremental opportunity. This is one of the few things out there that could literally double our business. There's a lot of risk associated, yes, but this is one of the few high alpha opportunities available out there and what do we have to lose? We're going to lose $100 million. Who cares?"
But that's really where we were. We're going to lose a $100 million. Who cares? Because this was a two-and-half-year-old company that was 500 people and on a $500 million run rate. Think about the organizations that you guys have worked in when it's two-years-old. Bitcasa is two-years-old right now and we're 50 people. ZURB is 15-years-old and you're 30 people. All right, this is a company is two-years-old, is 500 people and is scraping hundreds of millions of dollars off the table doing this one thing at these incredible net margins.
To then come in and say, this is my crass analogy and people who work at Bitcasa will start shaking their heads. I liken Bitcasa at that point to a heroin addict, right? And this heroin addict, its first hit of heroin was the most perfect, blackest, tarrest heroin available, right? It's this Facebook, Farmville, hundreds of millions of dollars at 80% net margins. It doesn't get any better than this. And then you've got a lot of people like me, wandering into the board room being like, "Hey, I got this methadone you should try out," right? What the hell am I going to bother with that for? Like, look at me. Do you see all this money I'm scraping off the table? Why would I do these other things?
So it's easy when people say, "Well, what would you have done differently if you were Mark Pincus?" or "What would you do now if you were CEO?" My answer is I would get in a time machine and I would go back to that point in time where we had identified all of the right kind of strategic opportunities out there, but ended up not following them because we were happy with the black tar we were using at that point.
Ryan: It's hard to break that habit.
Ryan: I think that's one of the harder ones to break. So I think it's a spot on analogy.
Ryan: Was it just the heroin, the easy win there? It's a good analogy. I'm going to keep using it. Or was it this aversion to taking a risk and trying to get into some other niche that could further get them?
Brian: No, no, no. It was absolutely not aversion to risk. It was way more calculated than that, right? Part and parcel of Zynga losing sight of making fun games was I've never been in such a data and analytics-driven company. Arguably, Zynga was that to a fault, particularly early on where everything was sort of evaluated on a short-term ROI basis. So it was less about they were averse to risk. It was way more kind of analytical than that. It was well okay, what do we think the projected ROI is on this next hundred million dollars? And I remember Mark Pincus saying to me, when we were talking about China, "Well, I could take that hundred million dollars and make ten more CityVilles and we'd be a multi-billion dollar company."
Not bad logic, but there's a lot of presumption baked into that which is people want another ten CityVilles and you're going to continue moving up and to the right at the same pace. But again, good lord, a two-year-old company doing as well as it did, a lot to ask to have the perspective to be able to step back and say, "oh yeah, we need to be thinking more strategically."
Ryan: And how is that kind of carried over those lessons or those things you look at from that industry? Carried over to now that you're heading up Bitcasa and you're growing quickly. I mean, you just came back from Japan today.
Brian: Yeah. Third time in four weeks. I don't recommend that.
Ryan: Can you kind of go into how do you compete? How do you be strategic? How do you avoid some of these pitfalls that you've seen in like the gaming industry?
Ryan: And this market that's really dominated by like, the two boxes?
Brian: Yeah, and this is where the analogy sort of breaks down, right? I wish for all of us at Bitcasa that we have the problems that Zynga had, right? And when people say, "oh what do you think about Dropbox?" I sort of preface whatever I may say by "Just to be clear, I wish I had Dropbox's problems." From my perspective, I think there's a tension that exists in any industry that's kind of emerging, right? And whether it was console games or social games or cloud storage, which is the tension between satisfying kind of the short-term market requirements, so "Hey, this is what people want" and staying true to kind of your mission and your vision and what you're trying to accomplish over the long haul.
What wakes me up in the middle of the night today is this market dynamic that's currently set up, which is we're swimming in a lake with some very large and very well capitalized sharks. Beyond Dropbox and Box, you've got Google, Apple and Microsoft with collectively a trillion dollars in market cap, right? So what gets me back to sleep is a couple things. One is I truly believe we have the best product that's available on the market today. I'm not sure I could have said that six months ago, but I think we can say that today.
Ryan: Why not six months ago?
Brian: Well, because we're young. Google, Apple and Microsoft obviously have been around forever and a day. Dropbox and Box are five and ten years old, somewhere in that neighborhood. Bitcasa is a two-year-old company. And our product's been out since February, so we're relatively kind of babes in the lake, babes in the woods. Sorry, I'll mix metaphors all day.
Ryan: Just go back to the heroin. That's the metaphor that resonates.
Brian: I'm best with vice-related metaphors [inaudible 00:18:43]. So we're relatively new to the market, right? Well, I think we have a fundamentally different way in which we're looking at cloud storage and cloud storage going forward, but I've said this to the team before, so hopefully they won't get mad at me. I think what got pushed out pre-dating me in February at our official public launch was probably a 0.6 or a 0.7. It probably wasn't ready. And we did a release about a month ago, I should say two months ago that I feel like was our 1.0. Really. And an enormous push, much praise to the team this week, which was called internally "Death Star March". "Death Star Run", sorry. Yeah, there is no marching in Star Wars. You were saying before, we were talking about your push where you got to, what was it a 4.0?
Ryan: Gary [SP]. And then now we're at 5.0.
Brian: Right. It took you how long to get to 4.0?
Ryan: Relatively fast. So like Foundation four came out earlier this year, so maybe, I don't know, six, maybe eight months.
Brian: Yeah. And that's really exciting, right? When you start seeing a company that's accelerating its development timelines and compressing point releases down to months, not quarters, not years, that's an amazing moment in time for a company. Couldn't be prouder. It took us from February to you know a couple of months ago to go from 0.7 to a 1.0. I probably wouldn't call this a 2.0. I'd probably call this a 1.5, but we'll be to a 2.0 by the end of the year.
So you start to see these development timelines and these product releases getting really accelerated it gets exciting. I've digressed. So what wakes me up in the middle of the night is these trillions of dollars in market cap. What gets me back to sleep is the two things. One is, a remarkable product that is improving at a phenomenal pace and two, is that this is the notion around social games was oh, okay, well, it's not just social games is taking a piece of the traditional gaming pie. It's making the pie much, much bigger. So it's bringing games to a whole new universe of people and I think that's true.
Cloud storage is that just remarkable human growth hormone PEDs. Oh, I'm back to drugs again. What gets me back to sleep is there are battles that are being kind of fought and arguably won today, but this isn't a 6 to12 month war, right? This is a 6 to 12 year war, right? This isn't a market with a potential of one or $5 billion market potential. We're literally talking about hundreds of billions of dollars in market value that's going to be created over the next 20 years as we head toward this inevitable future of zero local storage, right?
I had an interesting conversation with a couple of the big mobile service providers in Japan. For those of you who have travelled to Tokyo, I have such mobile envy when I get there, right? Because you get off the plane and it seems nobody uses computers, right? And it's barely tablets. Like, it used to be feature phones and now it's smartphones. But their infrastructure is so well developed and the way in which people interact with their digital belongings and with their digital experiences all through mobile devices, because it can be.
So Japan, is really a future and one of the things I'm particularly excited about at Bitcasa is we launched in Japan two months ago. What does that mean? That means we localized in Japanese and we held a press event. Well, Japan went from like three or four or 5% of our business to now over a quarter of our business. And I spent a lot of time in my career trying to do business in Japan and most of the time, as a Western company, you fail and unfortunately, you're never quite sure why you failed. And every once in a great while, a company is able to succeed. But equally, you're never quite sure why you're succeeding.
I talked a little bit about how we think about the world fundamentally differently. Bitcasa, we don't think about sync. We don't think about share. Our fundamental value proposition is around storage, right? It's really about replicating that hard drive experience in the cloud. What does that mean? It means it needs to be safe and secure. It needs to be very, very large at a very, very low price and it needs to be incredibly accessible.
Tony Gauda, our founder, I think he was very much thinking about where the puck was moving rather than where the puck is today, right? So the battles that are being fought in the corner against the boards for the puck today, I'm less worried about because what I see is a future where devices get smaller and smaller and smaller; local storage gets to a point where it literally evaporates if you think about wearable devices. Where's all that data going to land? There's this four-dimensional graph that is some combination of size of device going down, stick with me here, size of device going down, amount of data created going up, speed of data networks going up, cost of data networks going down. All of those are on the right trajectory which leads to a future where everything is happening on devices like this and even smaller. And there's little to no actual local storage.
When you start envisioning that future and that fries your brain, right? Because now you're not like where is all that stuff going? And where is it living? Well, it's all going somewhere and it all needs to be accessible everywhere. So again, this is what gets me back to sleep, like good product, I think anticipating where the puck is going to be, in what's going to be a hundreds of billions of dollars opportunity. By the way, in such a market dynamic, there will be no single winner, you know? It's not these sort of network effects that apply on things like social platforms like don't apply here. There's fundamentally different dynamics going on.
Ryan: And then speaking of that future and that long-term having now gone to 1.5, you've also kind of changed your pricing dynamic. Instead of like, for infinite 99 a year, it was and now it's now shot up to 999 a year.
Ryan: What was the decision making in kind of changing that pricing plan and now who are you targeting?
Ryan: Does the consumer change for you guys? Who are you now targeting for that long-term 6 to 12 year war?
Brian: Yeah. So we released new pricing and what happened was we used to offer $10 a month for infinite storage and now it's $10 a month, you can get a terabyte, which by the way, we launched in February and infinite was sort of our sole unique value proposition we were going out with because the company very much thought this is what consumers wanted. There are a handful of things that if you imagine this world where your hard drive lives in the cloud, are your requirements, right? One is that it's very private and secure because it's yours and not anybody else's, right? Two is that because it's cloud based and it's not hardware based, it should be infinitely flexible. And the last is it should be infinitely accessible, right?
I think we've learned a lot in the first eight months and one of the things we learned is that people don't want infinite. People don't need infinite. In fact, often times, particularly when we start talking to partners, people get confused by the idea, like "infinite? What the hell does that mean?" There was one device manufacturer we were talking about potentially doing a deal with and they're based in Asia so there was also this sort of language challenge as well. Their legal group kept coming back and pushing on "Okay, but infinite. Can you actually do it? What if somebody actually wants infinite storage? What does that look like?" and we started getting into this very abstract existential discussion about, like how you define infinite. There was a lot of that. There was as much sort of market confusion as there was excitement.
Like any good small startup company who released a product eight months ago, we're looking at the data that we've got and we're acting accordingly. And the data that we've got says that 99% of our users are using less than five terabytes of data, 94 or 95% of our users are using less than one terabyte of data. What we assumed to be the initial value proposition was you got all the storage in the world. What the market has told us in our first nine months is one, we don't need infinite and maybe in some cases, we don't want infinite; two, is what we're as concerned, if not more concerned about, some of these other components of your service as we are about the amount of storage you're going to provide me, right? It's in direct contrast to some of the other kind of cloud storage guys that are out there.
People are very excited about what we're doing with privacy and security and client side encryption, user owns the key. I've got billions and billions of blocks of data that I'm storing, that I have no idea what's there, right? And I shouldn't because this is your hard drive in the cloud. And you should know what it is. I shouldn't know what it is and you should be able to do with it what you want. I shouldn't tell you what you can do with it.
So our value proposition, I wouldn't say it's really changing. It's just evolving. It's evolving to what the market is asking for and so what you're going to see going forward is much more focus on the privacy and security. Still a ton of storage for the lowest price you can get there in the market. We're still a tenth the cost of most of the other competitor's services that are out there. And last is that accessibility.
And then soon to come, which I'm really excited about. I think more so than anybody in the company, totally by accident, 75% of our users are outside the United States. And you go outside the United States and 25% of them are in Japan, which is wonderful. You go outside the United States and it's a very different universe than it is here in the US. There's even concern about "All right, where is my data living?" And in the next few weeks, we're changing our architecture. Our architecture as it currently exists with all the data sitting in the US is now going to be distributed so unique data in APAC is going to stay in APAC. Unique data in the EU is going to stay in the EU. Unique data in North America is going to stay. Well, you or I might stretch and kind of yawn and say "Well, does it really matter?" You talk to your average person in Japan or Germany or France or the Middle East and it matters a lot.
Ryan: It seems like 70% you said outside the US?
Ryan: 75? Is that kind of one of the reasons for growing outside of the United States?
Ryan: Because with everything we do, kind of in the Valley, everything gets scrutinized. You guys just got 11 million in funding and so inertia [SP] brings out the naysayers or the critics and one critic in one of the comment threads of one of the blog post announcing that did say like "I'm not surprised to see that their CEO is replaced and they're looking elsewhere for customers since the US and European customers clearly don't like their product and Dropbox has dominated in those markets." What do you kind of say to that kind of criticism? I know that you write on the blog a lot and you project a lot of what you guys are doing.
Ryan: Kind of get your insights on how you respond to that criticism, especially since 75% of your market is outside the US.
Brian: Yeah. I'll say at least three things and probably think of another. Again, back to the, this is a 20-year war and hundreds of millions of dollars at stake: it is a very short-sided perspective to say things like, "Well the US market is already . . . " like, that's baked. That's gone. Right? For a couple of reasons. One is that it's not true. Two is that the diversity of kind of requirements that people have varies wildly. Even on the consumer side. Forget about it.
We haven't even gotten into [inaudible 00:33:13] start talking about small, medium businesses and the enterprise. What people want varies pretty wildly and there are a lot of people who want the ability to sync files across all their devices. I do too. That's a cool feature. But I also have a need not to hog up the space on all my devices and so I want a repository to put stuff and then be able to access and share and collaborate in that way.
One the battle isn't fought and won and by the way, we work very well alongside all of those services, right? Many, many ways, we're complementary, not competitive. Two is, I will confess that I think what we're building isn't optimized for today in the US. I think what we're building right now is optimized for a not-too-distant future in the US.
And this gets back to our success in Japan. I see that as a leading indicator, right? I said that we have mobile envy when we go to Japan. I think that's absolutely true because the reality is their infrastructure is better built out, they all access and create content through mobile devices and there's a ton of that being generated. I see that as a great leading indicator. Bitcasa is optimized for the future and Japan is the future, right? I see that as an amazing leading indicator for our future success in a lot of these other markets.
And again, we haven't even targeted internationally. So that's the last thing I'll say, which is I think it's a testament to how the non-US market requirements are not being met right now and I'm great with that. I love the rest of the world. There's a lot of people and a lot of money out there.
Ryan: Especially in China and Japan.
Brian: Especially in China and Japan.
Ryan: Awesome. Great. I want to actually thank you for answering my questions. I want to give the audience a chance to ask you any questions in the last five or so minutes that we have. So I want to open up to the audience. Who wants to go first?
Man: Bitcasa as a name from a brand perspective. How do you see that evolving and what do we [inaudible 00:35:31]?
Brian: Bitcasa's a name from, what do you mean?
Man: Bitcasa: Casa's a home, right?
Brian: Yeah, so it's a really good question in that it's an easy one for me to answer. This is an exercise we've literally gone through in the last month, which is all right, Bitcasa. What does that mean and does it kind of accurately reflect what we're trying to accomplish? The pricing change, the product developments that we've made, and oh, by the way, that was the other thing I wanted to say, there was a lot of noise about the pricing changes and what got lost in some of that noise was like, really remarkable advances that happened in the product, but all of those advances were really reflecting this whole notion of home, right? There's a lot of affinity for the brand, especially the house sitting in the cloud. I'm not sure how I feel about the green color, but a lot of people really love it.
Ryan: Whoa. Whoa. Whoa.
Brian: I got to pick my battles. I think, quite frankly that focusing on infinite kind of exclusively, kind of did the brand a disservice ultimately because what we're going to see going forward is we think about your digital belongings, right? We think about Bitcasa as the safe place to keep and distribute your stuff. This needs to be your digital home, right? This needs to be the place where, not just you can keep everything and feel safe but then you can do with it what you please, right? And you can invite people in who you want and you can take stuff out when you want and I think it dovetails incredibly nicely with what we see the future of cloud storage being, which is not about just sync or share. It's about your digital home.
I think there's a real crisis in cloud storage right now, I think. And the crisis is that I think the industry, and I think Bitcasa has been at risk of falling into this trap, has lost sight of the fact that we spend so much time thinking about hardware and transit and puts and gets and all this. Even the language that we use cloud storage and data is so abstracted from the fact that what we're really talking about is you and your stuff, right? Your digital belongings that are incredibly important to you. These are the most important things in the world to you. They are your pictures, your videos, your financial documents, for God's sakes. And it's yours. It's not Google's to sell ads against. It's not Apple's to keep in their little ecosystem. It's not Dropbox's to look at and do whatever it is they're doing with it. It's not the NSA's to spy on. It's yours, right?
And when you kind of get to the intersection of that set of assumptions with this future of the ultimate disappearance of local storage, this is serious stuff. Again, that's why I don't get too spun up on who's got hundreds of millions of users right now because this is a long, long horizon we're talking about.
Woman: You mentioned that 75% of your business currently is outside of the United States. Are you looking into emerging markets? Are you going to be partnering with local partners? Have you selected areas so you're not on planes all the time back and forth with jet lag?
Woman: Game plan have you been thinking of in terms of going into those markets?
Brian: You know, it varies market by market. Yes. Emerging markets are incredibly important. I won't repeat it, but remember those four lines on the graph that inevitably end up at a place where there is no such thing as local storage anymore? You can plot different areas of the world on that graph, right? Japan is way out in front of that graph, right? It's the closest to that reality that currently exists. I would put Korea out there too. The United States is definitely toward that end of the spectrum and then you have Sierra Leone is probably at the other end of the spectrum, right? So you should anticipate we're having lots of conversations and both with partners and consumers in places at that end of the graph and relatively fewer conversations at the other end. That's sort of how we're thinking about it.
Man: Hey, I think the concept of removing the storage liability from the device to the cloud by providing the actual storage on the cloud and not just syncing a bunch of data and replicating it across a million devices that are all [inaudible 00:41:18] I think that's . . .
Brian: It feels glutinous when you think about it that way, doesn't it? It's almost like "oh yeah, I can just put this everywhere."
Man: Yeah. I absolutely hate that. So I feel like that's your key thing and I'm curious about what your insight is into are people getting that? Do you think they're starting to get that? Do they want that?
Brian: Yeah. That's a really good question. I think about this upside down triangle, right? The way I think about it is there's this line and you're asking, all right, where is that line along the axis of this upside down triangle. At the very bottom of the triangle is my mom, right? Who's 75-years-old. She still has a tower computer and she uses AOL for her email, right? She doesn't care, okay?
At the other end of the spectrum you have really large institutions, whether that's Proctor and Gamble looking to deploy cloud storage across its enterprise or companies like Yahoo that have huge web audiences that they want to be able to provide cloud storage services to, or it's someone like, particularly acute, someone like Samsung who has mobile devices that have this problem. The top of that inverted triangle is acutely aware of it.
I started talking Bitcasa, I only joined three months ago, but I started talking about it nine months ago. Even in that period of time, the speed with which that line has come kind of crashing down the triangle has been way faster than I would have anticipated, for better, for worse, accelerated from things like the PRISM scandal. You know, for better, for worse, accelerated by things like employees at competitors who may or may not be looking at people's files. I think there are more people aware of this story than I would have anticipated.
Ryan: Very good. One last question I think is what we have time for. Yes.
Man: Getting back on topic, here. What would you say would be some key indicators that you're coming up on the shelf-life of your product and when you find out you're coming up on the shelf-life, how do you decided whether you should sunset the product off or try to change it or pivot the product onto something new?
Brian: A couple things: are you a journalist?
Man: No. Product manager.
Brian: Oh, product manager. Yeah, even more serious.
Ryan: I'm a former journalist. No.
Brian: So am I. I can usually tell. And apologies if we were off topic. Can you repeat the question? Come on man, I'm off a plane from Japan.
Man: To start the question is what would be your kind of key indicators that you're coming up on the shelf-life of your product and when you figure out that oh, this product is coming up on its shelf-life, how do you make that decision whether you should sunset that product off or try to change or pivot the product to something new?
Brian: Yeah. The reason I'm struggling is there are two different answers to that question. There's two different answers based on, from my personal experience I would answer that question very differently than if I were at Zynga where you have a set of sort of discrete products with relatively short life-spans and when you're at Bitcasa which is this product which has a shelf-life, a service rather that has a shelf-life of infinity, right?
So in a universe where you have this discrete set it's relatively easy to look at metrics and see how everything's trending and what you should be doing with those users. In a situation like Bitcasa where you're providing a service that people want. People don't want to not have their stuff stored anymore and so it's going to be there forever. It's a much more granular process. You're looking at the future level stuff and you're saying okay well where are people seeing value? Where are people not seeing value?
Things that you're not seeing value on, you need to be sun-setting that because you know as a product manager, right, your commodity is your engineering resources and this also speaks specifically to the pricing change which is, we had a choice to make, right? Which is are we going to spend these incredibly valuable engineering cycles on the 1% of our users that need somewhere near infinite storage? If I had 1% of my engineering resources working on that 1% of features, that would be great. The problem is that I had way more than 1% of my engineers working on features for that 1% so you sort of have to adjust accordingly. Is that a vague enough answer to your question?
Ryan: Very good. Well, thank you, Tap. I appreciate you coming down and answering our questions.