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The Carbonite file: Boston-based backup company plans initial public offering

Posted by Scott Kirsner  May 12, 2011 09:05 AM

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Carbonite, a Boston start-up that sells online backup services to consumers and small businesses, indicated its intention to go public today by filing an S-1 form with the Securities and Exchange Commission. Carbonite offers to back up consumers' computers over the Internet for $59 a year (that includes an unlimited amount of data), and the company sells more expensive plans to small businesses that need to back up more than one or two machines.

The company, founded in 2005, had revenues of $38.6 million in 2010, but lost $25.8 million that year because Carbonite continues "to invest heavily in customer acquisition, principally through advertising," as the S-1 form says. The company plans to begin selling its backup service in Europe and China over the course of the next year, and also plans to launch a backup service for tablet computers and smartphones.

Carbonite hopes to raise $100 million in the offering, but some analysts express skepticism that the company will be able to turn a profit, and one predicts that the stock market will have a "tepid" reaction to Carbonite's IPO.

The biggest shareholder in Carbonite is California venture capital firm Menlo Ventures. But the company's co-founders, David Friend and Jeff Flowers, still own 9.7 percent and 8.3 percent, respectively. The company has raised $67 million in venture capital, some of it from the Lexington-based angel group CommonAngels.

Some background on the company:

- In 2009, I wrote about the competition between Carbonite and Mozy, a division of EMC that sells a comparable service. (That story includes some audio from an interview I conducted with Carbonite CEO David Friend.) Talking about Carbonite's marketing strategy, Friend said at the time: "We found that the only thing that sells our product is fear."

- In March, I moderated a panel called "Secrets to Success: Inside Stories on Growth" that included Carbonite CEO David Friend. The audio is here.

- Inc. Magazine last year named Carbonite the fastest-growing IT services company in the U.S.

- Here's a recent video interview with Friend, talking about how the company attracted one million paying customers.


- I use Carbonite to back up my laptop, and when I first signed up, I wasn't thrilled with the customer service (Carbonite has since moved its customer care center from India to Maine.) Last year, I wrote this post, "A Carbonite customer confronts the CEO."

- David Friend was part of a panel discussion at the Nantucket Conference last spring (I'm on of the organizers), telling some funny stories about how the company advertises its service. Here's the MP3 audio of that panel. His story about writing a $1 million check to Rush Limbaugh for an on-air endorsement is, well, priceless.

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Innovation and technology news that matters, on a new website from the Boston Globe, featuring Scott Kirsner and other original reporting.

About Scott Kirsner

Scott Kirsner was part of the team that launched in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.

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