EVault

Phil Gilmour has learned the value of backing up -- the hard way: As an accountant, he lost valuable financial data due to a system failure. The crisis led him to a new career as head of a technology company.

I was a CPA for umpteen years,” says Gilmour, CEO of storage services provider EVault Inc. “I was always involved with technology as a fun thing, because accounting was so damn boring.”

During Gilmour’s accounting days, his company ran a service allowing customers to manage 401K plans online. Then the database failed. “I always thought accountants were anal people and would have it all backed up; but I’ll be darned, we were backing up corrupt data on tape and it didn’t restore. I lost lots of money and market data."

The experience prompted a life change. Gilmour bought his own small backup company in 1997, re-named it EVault, and moved it from Toronto to Walnut Creek, Calif. Today, Gilmour’s customers are people like himself who fundamentally distrust tape. Although EVault does offer tape backup, most of its business is disk-based backup products and services.

“We find that companies are anxious to give up tape,” he says. “There’s no question tape is a much more burdensome methodology, a 40-year-old methodology born out of old mainframe technology."Gilmour continues: "It’s fairly manual and involves people handling it; you have to take it offsite. If you have big facilities, tape works nicely, but it’s expensive. A small business running four to five offices with 100 gigabytes between them -- it’s too much to have cartridges shipped off site. It’s a point-and-click recovery with disk.”

Gilmour maintains that EVault replaces tape backup in more than 90 percent of its engagements, where customers typically have software from the likes of Veritas Software Corp. (Nasdaq: VRTS) or Computer Associates International Inc. (CA) (NYSE: CA) already installed, but welcome the chance to hand over the task to someone else. "We can get your whole system up and running in a couple of days," Gilmour boasts.

While EVault began by addressing a range of customers, it seems to have found the right market for its services with small to medium-sized businesses (SMBs). They lack IT staff to manage backups for them, and they find it too costly to do their own disk backups. Since they're open to enlisting a service to do backup chores for them, they don't care if the data’s on tape or disk – as long as it’s available when needed.

Gilmour says EVault’s customer base swelled from 430 to 917 since it launched its Small Business Edition service last July. Revenues also more than doubled. “We’re targeted at providing the best backup services to small and medium business,” Gilmour says. “We have a whole division targeted at customers with less than 15 Gbytes of data. Most of our customers fall under the 100-Gig range."

Another reason EVault has found more success with smaller businesses is security. While trusting outside help to safeguard corporate data is a sticking point for many enterprises, SMBs are less reluctant to turn their information jewels over to outsiders.But SMBs do like to keep an eye on things. While offsite storage for companies with fewer than 15 Gbytes of storage can be centrally located, Gilmour says larger outfits like to keep things local. "For larger customers, [our service is] pretty much a regional application – they want to be a couple of hours’ drive from their data. In case it comes down to the last resort, they can go pick it up." So far, EVault's been able to meet all needs with four data centers in strategic locations throughout the U.S.

All data is backed up online, via the Internet, to the remote locations. At first, this presented a problem in some corners. "Two years ago, I’d say [security] was a major concern for about 80 percent of our customers, and today it’s so for less than 20 percent. Now people are used to doing wire transfers and business over the Internet. They’re more accepting of doing business that way." Gilmour stipulates that EVault keeps data encrypted even when it's stored in the provider's vaults. "We can’t even access it."

With its SMB business taking off, EVault doesn't expect to need a third round of funding to add to the $17.2 million it's raised in two rounds. "This year’s objectives include corporate sustainability. December was the first month we had net income, and I mean net income, not EBITDA. Our goal is to have a profitable June quarter, then reach free cash-flow the following quarter.”

EVault’s headcount more than doubled in the past year to 111, and there are plans to hire 23 more in 2004, mostly in customer service. EVault originally sold its products directly, but now does about 40 percent of its sales through VARs and resellers. All of its burgeoning European business is through indirect sales.

EVault’s primary competition comes from fellow SSP startups LiveVault Corp. and AmeriVault Corp.; but it actually replaces backup software vendors in most of its installations. Other SSPs, such as ManagedStorage International Inc. (MSI) and Arsenal Digital Solutions Worldwide Inc., are more focused on enterprise customers (see Ruettgers Becomes EMC Board Chair, MSI Courts the Enterprise, and Arsenal Reloads With $11M) ."The bigger services are looking at $10,000- to $15,000-a-month contracts," Gilmour says. "I think they see a need to move into the mid-sized market, but we don’t run across them all that much yet in our marketplace. That narrows it down to LiveVault and AmeriVault – the 'vaultiers.' ”

Sounds chummy. But don't expect to hear this four chant "All for one and one for all” as they try to split up the SMB storage services market (see Is Disk the Key to the Vault?).

— Dave Raffo, Senior Editor, Byte and Switch