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Bitcasa CEO: Unlimited storage “a wildly money-losing proposition”

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The past couple of weeks have been stormy, to say the least, regarding streaming storage startup Bitcasa and its decision to nix its “infinite drive” unlimited storage plan in late October. The move angered some of Bitcasa’s infinite drive customers who were told they had around three weeks to move their data over to the startup’s new Amazon servers or face having their storage deleted.

This led to a disgruntled [company]Bitcasa[/company] customer launching a tentative class-action lawsuit against the company, claiming Bitcasa did not give its users enough time to migrate their data. The lawsuit ended in Bitcasa’s favor with U.S. District Judge William Alsup ordering the plaintiff to shell out $99 for an additional month under Bitcasa’s new pricing plan if he wants more time to move data. However, financial details unearthed in the lawsuit painted a bleak picture for the startup.

In an interview with Gigaom, Bitcasa CEO Brian Taptich explained that removing unlimited storage was not a pleasant experience but a necessary move for the company to get its finances back on track. Bitcasa simply could not afford to keep unlimited-storage users as customers; one user who was storing 82 terabytes of data was costing the company around $3,000-$4,000 a month, he said.

Bitcasa CEO Brian Taptich
Bitcasa CEO Brian Taptich

“It’s not fun to stare at your earliest and largest users in the eye and say ‘we just can’t do it anymore,’” said Taptich. “It’s a terrible feeling. You wish you could subsidize those [customers] forever.”

While the company launched with the “audacious goal of eliminating the hard drive” and providing unlimited storage, the reality was that it was “a wildly money-losing proposition,” said Taptich.

Bitcasa’s own encryption technology also added to the problem by preventing the company from seeing which data belonged to the appropriate user; this led to a ton of data building up on the startup’s servers even though some users might have stopped using its services.

“When it came to time to migrate, we didn’t know what to migrate,” said Taptich. “I don’t know what’s in there or what’s not.”

Now, Taptich claims Bitcasa’s revamped infrastructure, which is part of the startup’s [company]Amazon[/company] server-migration plans, allows the company to know when data might be tied to inactive accounts so the startup can do a better job of cleaning out its orphaned data.

When asked how potential users can be assured that Bitcasa will still be around in a few years given the company’s financial troubles (the legal documents stated that the court-ordered extension was “likely to push Bitcasa into bankruptcy within weeks, if not days.”), Taptich said he couldn’t comment directly on financial specifics due to the pending legal case. But, he said the company has an investor base that is “incredibly” supportive.

Additionally, removing the unlimited storage accounts “fundamentally changes the model” and is saving the startup cash, Taptich said. Bitcasa is also apparently seeing more traction with enterprise developers who want to use its service as a way to build out products without having to manage the back-end cloud storage, he said.

“The roadside is littered with the carcasses of people who’ve tried fixed-fee all-you-can-eat services,” said Taptich. “And we aren’t trying to be one of those failures.”

8 Responses to “Bitcasa CEO: Unlimited storage “a wildly money-losing proposition””

  1. i totally understand where he is coming from, but the fact remains that when communicating with those “earliest users” the company supposedly cherishes so much, they did a terrible job. one rude e-mail to move files or get out, a terrible migration process, total mess up of desktop and phone apps (still not back to normal) and non-responsive customer service all along the way. can’t do that when people rely on you for data backups.

  2. Yuval Dimnik

    Didn’t your mom teach you not to follow strangers who offer you free candy?

    We looked at Bitcasa on Sep 2013 and thought that at $10/m for unlimited it was too good to be true, and it was! A couple of month later they moved to $99/m and we thought – makes more sense but still – not feasible. Now the $h#! had hit the fan.
    Other vendors provide “unlimited” but will cap your bandwidth after 10-20 Gigs so you’ll never get anywhere.

    Co-sharing cloud storage is the future:

    • Yuval, this isn’t a guy in a van down by the river offering up treats to go on a ride. This is a legitimate business that was offering services. If that legitimate business had completely folded I doubt anyone would have said anything. But that’s not what is occurring.

      This company offered service (unlimited storage) which I personally not only paid for one year of that service but was then offered a second year which I also paid. The company then mid way through what is basically a contract then said that I (and others) couldn’t have that contract anymore. But here’s another more expensive contract that you CAN have. Oh, but if you don’t want that contract then your data will be deleted.

      Here’s a very simple analogy to it:

      You go and rent an apartment at $1000 a month for a year. Then, 9 months into that year the apartment comes to you and says. Oh, you’re apartment now costs $9000 a month. Either get your stuff out tomorrow or we’re keeping it.

      Now, if Bitcasa had folded up shop, I doubt many people would have said anything. But that’s not what happened. They plan on (attempting) to do business just like nothing happened.

      That’s basically what happened here. This is the United States of America. There are laws against this kind of thing.

      Now, go and take your ad (which is what I’m assuming you’re even doing posting here) and go crawl back into the dark corner of the Internet where you belong.

      You stay classy.

  3. steven0767

    Guys, BitCasa made it very tough for other companies to compete. By offering a non-viable business model. Now I should feel pitty for them? No way. They will be bancrupt anytime soon. And I will enjoy that day!!

    • I completely agree… not because I want any company to go under but they could easily have given their customers plenty of time to migrate their data off. Three weeks wasn’t enough time to migrate even 1TB of data. The courts screwed the little guy again in this situation. They should have recognized that Bitcasa was holding their users data hostage. Either pay or lose your data kind of situation.

      What’s obvious from all of this is that there just aren’t that many Bitcasa customers. And their plans right now? That’s basically Dropbox’s plans. And I’d rather have Dropbox which is much more user friendly (and probably financially stable) than Bitcasa.

      Again, I don’t want a company that acts ethically to go under but Bitcasa didn’t act ethically. I’ll be glad when their gone and the officers of this company should never be hired to run a company ever again.