CEO Reflections

Fremium?

I have been often asked why Egnyte does not offer a basic service for free - something like a plan with 2GB worth of storage. Indeed, there are consumer class solutions in this space, doing the same. Although we have thought about it, we are unable to convince ourselves about the value of this model. I have seen companies in the cloud storage space that may have a few million users, but when you peel through the layers, you may find that less than 1% of users actually pay. I think that the free users can be a big burden to the service, especially for a storage solution that requires significant infrastructure costs to serve the customers. Expecting to monetize these in some way can be really hard, if not impossible. It reminds me of a company called X Drive (owned by AOL) that ran into several problems, the majority of which was related to the fremium model. Also this model, if it were to be profitable, does require the cost of free users to be passed on to the paying accounts - the real customer. In my opinion this is not how we want to build our business. A customer that does not pay is not a customer in my book.

Indeed, we do offer a 15 day free trial, which can be extended depending upon the situation and the class/size of the customer. But continuing to offer a high quality service for free is not in our DNA. We want to build a healthy and profitable business for businesses, but not have them shoulder the the burden of free users.