Backblaze: Mounting Losses, Lawsuits, Sham Accounting, Insider Selling

Original Article ↗ Hacker News Discussion ↗

Short-seller report & bias

  • Thread centers on an activist short-seller report alleging: persistent losses, aggressive insider selling, accounting irregularities, whistleblower-related lawsuits, executive churn, and customer losses to Wasabi.
  • Many readers stress the author’s clear financial incentive (short position) and argue the disclosure should have been at the top, calling the piece a “hit” even if some claims may be valid.
  • Others argue short-sellers have “skin in the game,” often surface real malfeasance, and must be at least somewhat confident or risk lawsuits if claims are materially false.

Financial health, governance & insider behavior

  • Several commenters view the pattern of CEO stock sales around bad news and the finance team’s refusal to sign off on books (plus related lawsuits) as deeply alarming and suggestive of the company being “run for insiders.”
  • Some think bankruptcy isn’t imminent, but believe the stock is unattractive and the company is being “plundered” rather than built for long-term value.
  • Hiring a CFO from a company widely perceived as having used MLM-style models (Beachbody) strongly damages confidence for some; others downplay that as guilt-by-association.

Business model, pricing & sustainability

  • Big concern around flat-rate “unlimited” backup: many argue backup vendors must have incentives aligned with customers and that non-usage-based pricing is structurally risky.
  • Others counter that unit economics can still work if average usage is moderate; Backblaze’s reported ~55% gross margin is cited as evidence that per-product economics may be sound even if the company overall loses money on R&D, sales, and admin.
  • Some think customers should primarily fear price hikes and data deletion on plan changes, not sudden collapse.

Technology: ZFS vs erasure coding

  • Wasabi is believed (via job ads and third-party testimonials) to use ZFS with compression; some speculate they may charge on uncompressed size while storing compressed data. Exact implementation is unclear.
  • Security implications of provider-side compression before encryption are debated.
  • Backblaze’s use of erasure coding on simple filesystems is described as the industry-standard, more storage-efficient approach for large-scale object storage; several hyperscalers reportedly do the same. Under this model, the specific filesystem (e.g., ZFS) is seen as mostly overhead.

Customer impact, reliability & alternatives

  • Individual experiences are mixed: some are very happy with B2 and backup; others report catastrophic backup loss and weak support (being told to “start over”).
  • Consensus that Backblaze should not be a sole backup; multiple commenters advocate at least one local copy plus an independent cloud provider.
  • Alternatives mentioned: Wasabi, AWS S3/Glacier (including Deep Archive), GCP storage, Cloudflare R2, iDrive, rsync.net (ZFS), Jottacloud, Arq (with Hetzner or others), Tarsnap, Borg, Mega, Storj.
  • Wasabi vs B2 tradeoffs: B2 slightly cheaper per TB and per-GB billing with more generous egress, Wasabi has 90‑day minimums, 1 TB minimum, and free egress up to stored volume; choice depends on workload.