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Backupify founder Rob May: Majority of Google Apps users are small, but big domains have billion-dollar potential

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Backupify, which started in Louisville, has the tech blogs buzzing with its survey of Google Apps users.

The conventional wisdom is, Google’s applications business is comprised mostly of small companies using the free version of Google Apps.

Wrong.

Backupify’s research show that Google Apps likely will turn into a billion-dollar business. And a business that will add to Backupify’s business because Backupify (you guessed it) backs up a lot of that data behind the new apps.

Rob May, who founded Backupify in Louisville before moving (most of) it to Boston, wrote a blog post about the research: “Who Uses Google Apps? Are Large Companies Pushing It To A Billion Dollar Business?” which is included below.

Backupify execs surveyed their 8,000-plus business customer base that signed up for a trial of their Google Apps backup product, then built the infographic included here, according to a news release.

This survey is based on customers with at least 30-plus account users, or “seats” in industry terms, who want to buy backup for Google Apps.

The real news in all this is, Louisville lost a cutting-edge company when we lost Backupify. The question is, does Ted Smith, the city’s new economic development guru, have any plans to help tech start-ups so we don’t keep losing the best and brighest technology minds to Boston and Silicon Valley?

Here’s the full post by Rob May:

One of the most common criticisms of Google’s Apps business is that it’s just a bunch of small companies using the free version of Google Apps. But is that really true? We did a little research to find out, as summarized in the infographic at the left.

Over 8,000 businesses have signed up for a trial of our Google Apps backup product, or Snapshot – our Google Apps account download tool. When someone signs up for a trial, one of the pieces of information Google sends us over the API is the total number of seats on the domain (which we use for capacity planning). As a result, we have a nice sample of data to look at to see who is on Google Apps*.

Now, to be clear, this is not a random sample. This sample consists of people who want to buy backup for Google Apps. And in our experience, it skews towards domains with at least 30+ users. Why? Because that is the point where companies add an I.T. person, and I.T. pros are the ones who love to buy backup for anything and everything. Our close ratios on larger companies are much, much better than on the small ones.

But getting back to the data… what does our sample of companies on Google Apps say about the Google Apps ecosystem? Here are some inferences that can be drawn based on the data:

1. Most of the domains are small

As you can see from the chart, 53% of the domains are 10 seats or less, just what you would expect based on what you hear in the tech media about Google Apps. Domains with 10 or fewer seats are free, and free is a popular price point. But that doesn’t tell the whole story.

2. The number of small domains doesn’t matter because the big domains overwhelmingly drive revenue and seats on Google Apps.

Notice that 0.33% of domains drive 54% of seats. Even with educational institutions removed — Schools also get Google Apps for free, regardless of domain size – 0.22% of domains drive about 40% of seats. If that ratio holds true across Google’s number of 50 million total Google Apps users, then more than 20 million paying business users are on Google Apps. If that’s the case, Google Apps should be closing in on a billion dollar annual revenue run rate.

I will add that, based on our data, it also seems that the average size of a Google Apps deployment is increasing. That is, larger and larger accounts are moving to Google Apps.

3. If you sell a per-domain product in the Google Apps marketplace, you should probably customize it for smaller accounts. If you sell a per-seat product, you should probably customize it for larger accounts.

Selling add-ons to Google Apps can be difficult because the large customer base spans many customer segments — more than most small companies or startups can target. Very few solutions work for mom & pop accounting firms and real estate office and also work for large universities and software consultancies. But, because Google Apps is relatively young, there is a lot of whitespace around the product, and thus lots of add-on opportunities for those who find their niche. Moreover, Google has increased staffing in their partnership department this past year, signaling that they take their partners seriously and want to build a strong ecosystem that includes add-on developers.

4. If you remove educational institutions, the largest industry on Google Apps is the technology industry.

No surprise there. But why don’t we hear more about some of the cool tech companies on Google Apps? Well, from dealing with customers in this industry, I can tell you that many of them don’t want to be reference customers and don’t want any publicity. But there are some big names on Google Apps, some that would surprise you.

That is our take on the Google Apps ecosystem, based on our own survey. You can see the full infographic here, and of course, if you are on Google Apps and need a backup, sign up for our 15 day free trial.

*Note: All data shared about our Google Apps install base is derived from aggregated user data. We don’t share any customer- or account-specific user data without clearing it with the customer first. If you want to see customer-specific data, check out our testimonials and case studies.

 

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