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Tarsnap reaches profitability (daemonology.net)
88 points by cperciva on Mar 9, 2009 | hide | past | web | favorite | 49 comments



I think it will be a little while before you're nicely profitable, but I'd say it will come. Backups are just the worst thing ever. Getting the data to unreliable tape drives, rotating the tapes, dealing with finite capacity physical hardware, making sure that it's secure (both from people stealing the data and disaster happening to the data). It's a nightmare and one that I'm happy to replace with Tarsnap.

With Tarsnap, I can simply run a cron that creates a backup with the date in the name and I'm done. I never have to eliminate old versions since they all take the storage space of an incremental. I never have to worry about where we're storing the tapes (a crappy basement a block from our main building shudder). I never have to worry about people getting past the little security in the building. Most importantly, I don't need to do anything. The cron does it. I don't have to monitor tape capacity, constantly test whether the tapes are any good, deal with incrementals vs. full backups, etc.

There's no longer any excuse for having poor backups. Tarsnap allows you to do full backups as often as you want while only using the space of incremental. It's paranoid secure and replicated on S3.

Congratulations! You deserve for this service to become the premier backup solution for many IT departments.


Before anyone asks, I'm not going to say how much profit tarsnap made in February, except to say that it's significantly less than I spent on insulin (I'm a type 1 diabetic) -- I belong to the crazy set of people who get very uncomfortable at discussions about income.

To be honest, I wouldn't have posted this at all, except for one important thing -- the fact that tarsnap is self-supporting (as I mention in the post) means that people have a much stronger reason to trust that it will continue to exist in the future.


Out of interest and on the topic of your personal profitability, do you get any meaningful income from the AdSense on your daemonology.net pages?


Not recently. A couple of years ago I was getting around $4 CPM and $50/month from Adsense; now it's more like $0.25 CPM and $10/month. It's at the point where I'd remove the adsense except that I can't be bothered to edit all the pages I put it onto.


Is that Ramen profitable (i.e. it pays for your basic living expenses) or just profitable in the sense that it pays for your server expenses?


...

"Now, this is only under the most limited definition of profitable: In February, tarsnap had more income than expenses; but it isn't paying me a salary yet. Tarsnap isn't making enough profit to pay for my living expenses (Paul Graham uses the wonderful phrase "ramen profitable" to describe this), never mind matching what I could earn by working elsewhere; and it hasn't made enough profit to cover its accrued losses (either those in the three months between moving into public beta and becoming profitable, or the expenses during the lengthy unpaid private beta testing period), never mind matching what I could have earned over the past two years if I had decided not to work on tarsnap."


"At YC we use the phrase "ramen profitable" to describe the situation where you're making just enough to pay your living expenses. "

http://www.paulgraham.com/fundraising.html

He is not "ramen profitable" by that definition.


Ah, doh... should have read TFA :-) Thanks.


It's not a useful definition of profitable when it doesn't cover the living and health expenses of the only staff member.


I'm surprised Hacker News is so quick to jump down tarsnaps throat.

Profitability, heck, revenues is a freaking achievement, and we should be congratulating him -- not arguing over semantics.


Tarsnap looks great and I've said so in the past, and may use it in the future. But if the title was, "Tarsnap turns 5" and later mentioned that it was founded in 2007, we'd probably also jump in to point out that it wasn't, in fact, 5 years old. That's what's happening here.

The reason I and others get a bit knee-jerk-y with the "profitable" line is that it's said often here on HN of businesses that aren't.


I think it's this: "I could walk away from tarsnap tomorrow (or get hit by a bus) and tarsnap would keep on running and making a profit."

To me that's a fundamental understanding of business and is worrying.


Ramen profitable is not the most interesting milestone. Getting any kind of revenue is a major step: it shows there are people willing to pay for your product.

After that, it's all a question of scale. PG's definition of ramen profitable is useful because it gets rid of all the accidental revenue. Sure, if my aunt bought my software once, it shows somehone is willing to buy my product. But not really. By setting a bar just a tad higher than just "1 sale is good enough", it becomes a useful metric.


Not really. Diffle made about $60/month when we killed it, on costs of about $80/month. That's purely on AdSense revenue. Thing is, we could easily have downgraded to a $10/month shared webhost for Diffle, and it would've been profitable. The only reason we needed the dedicated webhost was so we could have a working, demoable version of GameClay (the next iteration, Flash game creation instead of just Flash game hosting) up all the time.

Similarly, FictionAlley pulled in several thousand in donations a year, but nowhere near enough to support its 200+ person staff had they not all been volunteers.

I still contend that being able to support founder living expenses is a much, much higher bar than just being able to support the operational costs of your product. It's not too hard to do $100/month or so in AdSense alone.


Sure, if my aunt bought my software once, it shows somehone is willing to buy my product.

Right, but there isn't enough information to determine if this is not what he means by profitable. I am also a hacker, I know how much money it costs to run something like this. It could mean that 1 person paid $50 and the AWS bill and web hosting was only $49.

Anyway, I don't find this conversation interesting anymore so congrats on the profitability.


If you RTFA, you'll see that I addressed this point: I think it's a useful definition given that tarsnap basically runs itself. Yes, I'm working on it; but I'm working on making tarsnap better, not on keeping it running -- I could walk away from tarsnap tomorrow (or get hit by a bus) and tarsnap would keep on running and making a profit.


I could walk away from tarsnap tomorrow (or get hit by a bus) and tarsnap would keep on running and making a profit.

I read the article. If you disappear, the business dies. It does not keep on running and making a profit. Employees are the most important part in a startup. Especially in a one person startup. A definition of profitability that does not include employee salaries is bogus.


It's not that he isn't profitable, is it? It's that he hasn't provided us with enough information to know whether he is or he isn't. One of his lines of business is currently cash flow positive. If he's got a consulting business that's paying the rent for him, he's profitable, and as reliable, as that consulting business.

Is what I think is happening here, is all.


[deleted]


It seems that this is confusing a lot of people. Let me spell things out for you.

1. Tarsnap is profitable. Its revenue exceeds the cost of keeping it running.

2. I am not profitable. My revenue does not exceed the cost of keeping me running. (Well, living. I've never been very good at running.)

3. I could get a job, move to the middle of Africa, and get hit by a bus, and tarsnap would keep on running. Tarsnap doesn't need me on a day-to-day basis; while it is true that I'm still writing code for tarsnap, that is appropriately accounted for as a capital cost, not as an operating cost.


Unless you've hired someone you haven't told us about, you getting hit by a bus kills tarsnap. Nothing really runs itself on a day-to-day basis without any oversight:

* You still have to invoice/bill customers and do the books.

* You still have to keep up to date with Amazon web services, which could change out from under you.

* You still have to be responsive to bugs in your software, which will inevitably occur.

I take your point though; you've architected the business so that it depends very minimally on your own infrastructure and labor, and so its operational costs are very low.


You still have to invoice/bill customers and do the books.

Actually, no. That's all done automatically.

You're right about the rest -- but so far "bugs in my code" is very correlated to "new features in my code", so if I get hit by a bus it's unlikely that many new bugs will be found.


Well, but your hosting is probably paid for by an account owned by you or your business, and if you go away, those accounts do too, Amazon pulls the plug, Tarsnap go bye-bye.


Sorry, but that's just not what profitability means. That's like saying that ice cream is health food if you don't count all the sugar and fat.

Most business folk wouldn't even consider "ramen profitable" really profitable. Until the business is operating at a sustainable level, it's not profitable. Just because nobody switches the server off doesn't mean that a business is alive.


A definition of profitability that does not include employee salaries is bogus.

What if I pay myself hourly for the time I spend keeping tarsnap running?


What if you only pay yourself for the time spent actually pressing the keys on your keyboard? Clearly you should only count the time that you're pressing them in, because they bounce back by themselves, so the time the key is going out should not count as billable time.


Points to both views. However, I think a big thing that's being neglected is the fact that this is a sole proprietorship. He's an owner not an employee. Big distinction. And, not unusual for an owner to work for nothing while building up a business.

You're arguing for "authentic profitability," or some such. You make fair points, but since TFA was quite clear, this really is just semantical masturbation.


Where's that money coming from? A grant? Then you're not profitable; you have a runway, and you're still waiting to get liftoff.


Congrats Colin for sticking with it for 2 years and even more amazing, being a lone founder and remaining focused.


Thanks! I must say, though, that staying focused on tarsnap has been easier than staying focused on my doctorate was -- with tarsnap, I could see my code improving long before tarsnap reached public beta, but for my doctorate, I didn't start writing my thesis until the beginning of my third year.


Getting to "cash-flow positive" is a great milestone! Congrats! Let us know when it liberates you from other work.


Congratulations!

"What guarantee can I provide that the tarsnap service will continue to operate?" - lots of upstarts get this question, and rightfully so. I've been wondering, would it be possible to set up some kind of foundation that would take over the data if a company goes out of business? This way users can get to their data, and port it to somewhere else, even if the company goes bankrupt. If it is possible this would give a lot of potential customers one less worry.


This is a really good idea, but sounds like a pain to set up.


I really hate to be an asshole about this, but I took a look at your pricing model:

- $0.30 / GB of bandwidth

- $0.30 / GB / month of storage

From what I see, you could host this on AWS and be "profitable" with just one customer, right? I mean, if your definition of profitability includes only your variable non-staff costs, which seems to be how you're defining it...


From what I see, you could host this on AWS and be "profitable" with just one customer, right?

If EC2 instances were free, sure. :-)


I'm assuming you're using S3 for storage, right? And the pricing for S3 is less than your pricing, so where's your additional marginal cost? Is it just an EC2 instance to handle the requests? Still seems like a really low threshold...


Congrats :)

It's a pretty big thing to be able to say that your service will stick around.


Congrats! I'm encouraged to see that others are able to pull it off on their own without cofounders, it gives me hope for myself.

Thanks Mark


Congratulations! There should be an award for this, perhaps a tee shirt that says "Ramen Profitable".


I'm not ramen profitable yet.


We need to define a new milestone before "ramen profitable".

Perhaps we can call it "beer profitable", as in, you can't actually live off your profits but you can buy the occasional beer with them.


great news!!! thanks for such a useful product Colin.


Don't you mean "reaches cash flow positive"?


No. Tarsnap has been cash flow positive for several months, thanks to the fact that people have to deposit money before using tarsnap. (Tarsnap turns out, completely by accident, to be an amazing cash flow machine: I take in money before I provide a service, but Amazon doesn't charge me for the costs of providing that service until the end of the month, and I don't pay the credit card bill on which that appears until the end of the following month.)

I mean profitable: Income (which does not include unearned revenue) greater than expenses.


Then I'm with menloparkbum and not understanding what you mean, since your business doesn't even cover the cost of keeping its sole staff member from going into insulin shock.

Didn't really mean to wade in here. Congrats on getting some liftoff with tarsnap.


It feels like you're deliberately not understanding so you can have a massive row about it.

Tarsnap business has money coming in from paying users, and that is enough to cover the non-human costs of servicing those users.

It's not a claim of amazing success or resiliency or world-beating awesomeness, it's a statement of progress, a milestone, a reassurance that things are moving in the right direction, that tarsnap isn't wallowing in "I have users but still no income" land.

Stop reading too much into it and then arguing about how much of a misleading dirty stinking lie it is.

You're spoiling a positive progress report with a meaningless argument and at the same time implying cperviva is misleading/lying, and stupid/incompetent. In short, you're trolling.


Hey, Colin: did you take offense?


No, but I did wonder a few times if people were deliberately misunderstanding what I was saying. :-)


Congrats again.


Cool service, I'll be signing up my two servers over the week




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