Intronis, which promotes cloud backup services to MSPs, is on pace to grow 50 percent or more in 2011, according to CEO Kent Plunkett. To maintain that growth, Intronis plans to double-down on the North America market, focusing like a laser on managed services providers that need cloud backup services. Plunkett described the Intronis cloud storage strategy to MSPmentor yesterday during an hour-long interview.

It has been roughly 12 to 14 months since Plunkett joined Intronis as CEO, succeeding co-founder Sam Gutmann. Externally, Plunkett has kept a pretty low profile in the market -- preferring to maintain the spotlight on key team leaders like Intronis Channel Chief Ted Roller and VP of Marketing and Customer Success Carol Ferrari. When I asked Plunkett how Intronis managed to accelerate its growth in 2011, he said the company's secret sauce involves an intense focus on MSP user experience, and putting the right people (Intronis team members) in the right seats at the right time on the Intronis bus.

Tracking the Numbers

Based on research from Business Solutions magazine, Intronis held about 25 percent of the file-based cloud backup market for MSPs as of early 2011. Plunkett believes Intronis market share has grown -- though he says the cloud backup market will get more crowded (not less) because venture capital companies and private equity companies have money to invest. Over time, Plunkett believes three market tiers will emerge:
  • Tier 1: A file-based cloud backup leader that has about 45 percent market share with MSPs. Plunkett believes Intronis will be that leader.
  • Tier 2: Second- and third-place players that each have roughly 15 percent to 20 percent market share.
  • Tier 3: A "ton of companies that will kill each other and lose lots of money fighting for the final 20 percent of the market."
Plunkett said the "lure of selling direct" will distract cloud backup companies from doing what's necessary to serve MSPs. "Our strategy is to focus everything on the MSPs. We want to be in almost half of all MSP accounts. Then, the next stage will involve a strategy to hold that hill. But first we're taking the hill."

Taking a Long-term View

When Plunkett arrived at Intronis, MSPmentor speculated that perhaps Intronis's venture capitalists and financial backers were seeking faster growth to accelerate a potential company sale or IPO. Each time we've spoken Plunkett has politely shot down that speculation.

"My mission here is clear; it is to build a great company," said Plunkett. "That's what the board wants me to do. We think the MSP market is rocking." One proof point: Plunkett says the Intronis cloud storage system is growing about 1.5 percent per week in terms of storage consumed.

Why's that? Plunkett insists that Intronis is "the easiest" cloud backup system for MSPs to deploy. "Our customers -- MSPs -- are spending less time managing backup and restore, which gives them more time for selling." To reinforce his point, Plunkett says the MSP renewal rate for Intronis -- measured by storage -- is 97 percent of storage volume. Plus, MSPs typically increase their volume commitments by 50 percent to 100 percent at renewal, he added.

Thinking Team

I asked Plunkett a few times about his management style and milestones in the past year. He kept shifting the spotlight to the Intronis team. "It’s gotta be the team; it’s clearly not me." His proof points: Intronis has more than doubled headcount in R&D while also bolstering tech support, sales and marketing.

Moreover, Intronis team members have shifted into new roles amid the company growth. Co-founder Neal Bradbury, for instance, previously ran both tech support and hosting. But now Bradbury focuses entirely on data operations and IT, while VP Rick Burnett joined the company to take on the tech support role.

Meanwhile, Intronis has hired Smitty Kirsten to lead user interface design. Kirsten previously held top user design positions at Intuit and EMC. Plunkett's key point: Intronis believes its cloud user interface has a lead over the competition, Smitty will help to maintain or extend that lead.

While Plunkett preaches teamwork, the Intronis team seems to respect Plunkett's management style. "This is what Kent is good at," said Ferrari. "He's grown companies from very small to very large. He creates a mission and a culture that cultivates teamwork. Plus, he puts processes in place to ensure quality."

The R&D Process

Intronis recently updated its cloud storage service with a so-called Fall 2011 release. I asked Plunkett if launch cycles raise stress levels within the halls of Intronis. His reply: An adjusted development process -- involving three major releases a year -- ensures plenty of time for Intronis developers to polish the system and kill software bugs before each upgrade debuts.

Intronis has a hard stop on new coding/new features roughly 60 to 90 days before each launch. "That gives us 60 to 90 days to be in beta and harden the software. We have 10 QA [quality assurance] people to really pound the product."

Maintaining Focus vs. Rivals

Plunkett didn't mention any rivals by name. But he kept reinforcing an intensely focused business strategy. It involves:
  • North America: Intronis is maintaining a focus on product R&D -- purely for MSP use -- to drive dominance in North America. "There's signifiant upside inside North America for the foreseeable future," he said. Avoiding the temptation to go global right now. Yes, Intronis has MSP partners in roughly two-dozen countries. But it's not part of an intense business push. That international push will potentially be explored around 2013.
  • Serving MSPs: Delivering reliability, focus and serviceability for the MSP. "We're reinvesting every dime we have back into making sure our system is designed for MSPs."
  • Embracing Mobile -- In Stages: This is a two-part strategy. Near term, Intronis plans to make sure MSPs can use their own mobile devices to manage cloud storage. Longer term, Intronis will explore how to help MSPs potentially manage storage across customers' tablets and smart phones. But right now, Plunkett said, he thinks that market opportunity is a bit too early.
  • Thinking Long-Term: Plunkett said Intronis does not need to raise more cash, but the company's financial backers stand ready to assist if Intronis wanted to pursue additional capital. "When your product is growing like crazy like ours, you don't have a financing problem. We've got the potential to be a large, great company." And that company, he said, doesn't necessarily need to IPO.

Reality Check

On the one hand, I'm impressed with the simplicity of Plunkett's intensely focused strategy. On the other, I want to be careful not to hype the strategy -- which also involves its share of risks. Some reality checks:

1. Revenues and Rivals: In 2010, Intronis apparently had about $5.9 million in revenues, according to the Inc. 5000 list. Assuming roughly 50 percent growth in 2011, Intronis's annual revenues will be about $9 million to $10 million this year. Impressive... but I suspect there are dozens of cloud storage and online backup companies that currently generate between $1 million and $10 million in annual revenues so this game is far from over. Note: The revenue figures I've mentioned are educated guesses and they could be off the mark; Intronis is privately held and does not have to disclose revenue figures.

2. Profits: What type of cash flow does Intronis generate? What about EBITDA (earnings before interest, taxes, depreciation and amortization) and the net income? It's impossible to say since the company is private.

3. Focus: Sometimes, a laser-like focus can be a double-edged sword. By selling entirely through MSPs, mostly in North America, Intronis could overlook key direct sales or international opportunities that rivals exploit. I'm all for channel-friendly sales models. But I'm also realistic: There are multiple scenarios where Intronis potentially wins the North America MSP battle, but loses the global online backup war.

4. Mobile: Generally speaking, I agree with Plunkett's reasoning in the mobile market. Right now, MSPs do want to use their own tablets to manage cloud applications. On the flip side, it may be a bit early for MSPs to manage customer storage across customers' mobile devices like tablets and smartphones. Still, I think that tipping point is nearly here. And I believe some rival cloud storage companies already help MSPs to address customers' mobile device management needs in the market.

Next Moves

Where is Intronis heading next? It's safe to expect plenty of clues during this week's Tigerpaw User Conference in Dallas, plus upcoming events hosted by ASCII, ConnectWise and more.