‘Seagate is now an investor in Wasabi as the result of this transaction. And that is very important to us because there are two main suppliers of disk drives in the world, Seagate and Western Digital. And now both of them are investors in Wasabi, in addition to Everpure, which is the old Pure Storage who invested in our most recent equity round,’ says David Friend, Wasabi’s CEO and co-founder.
Cloud storage provider Wasabi Technologies, which claims to offer S3-compatible cloud capacity at a fraction the price hyperscalers charge, Thursday unveiled its plan to acquire the Lyve cloud storage business from Seagate.
As part of the deal, Seagate is also becoming a shareholder in Wasabi. Financial terms of the deal were not disclosed.
David Friend, CEO and co-founder of Boston-based Wasabi, told CRN in an interview that Lyve was a relatively minor competitor when it came to cloud storage, making the deal more of a move to acquire some new customers while boosting the infrastructure and capacity that Wasabi can offer to all its customers.
But, as Friend pointed out, the deal brings a few less obvious but equally significant benefits to Wasabi.
First, Seagate joins fellow hard drive manufacturer Western Digital and leading flash storage vendor Everpure as investors, which can help during the on-going shortage of storage components. “As you know, the supply chain in storage is a mess right now, and to have the world’s major providers as stockholders in Wasabi is strategically important for us,” he told CRN.
The acquisition of Lyve also paves the way for future acquisitions, Friend said. “It’s good practice for us as well because we haven’t really done much M&A,” he said. “Back at [my former company] Carbonite, I did a lot of M&A. So I thought it would be a good chance to get the team fired up to learn how to do this kind of stuff.”
There’s a lot going on in cloud storage and at Wasabi. To learn more, read CRN’s complete conversation with Friend which has been lightly edited for clarity.
Why did Wasabi decide to acquire Seagate’s Lyve business?
Seagate’s cloud storage competes directly with our Hot Cloud storage product. And we saw an opportunity to get a competitor out of the market and add to our run rate at a good price. It made a lot of sense.
When you say Lyve was a competitor for Wasabi, how much of a competitor was it?
I mean, a very small one. And it didn’t affect our business, really. But there they were. And from time to time we would run into them in the field. They’re very small compared to Wasabi, a few percentage points. But it’s good practice for us as well because we haven’t really done much M&A. Back at [my former company] Carbonite, I did a lot of M&A. So I thought it would be a good chance to get the team fired up to learn how to do this kind of stuff.
This isn’t Wasabi’s first acquisition, right?
Well, we did a small acquisition when we bought the AI technology behind Wasabi AiR, the Curio AI technology from GrayMeta, but that was pretty small. There wasn’t a big staff to integrate. It was a bunch of engineers. What Wasabi AiR does is, if you give me a million hours of video, photos, audio, PDFs, whatever, AiR uses machine learning to transcribe the voice, find all the Nike logos, find people, recognize spaces. So it’s got a whole bunch of stuff. And it’s been very popular and successful with sports teams who need to be able to go through a gazillion hours of old Red Sox games and find a particular player in a particular city, or whatever. So it helps us attract storage because you put all your stuff in Wasabi, and then you grind through it. Now you can find something.
What does Lyve bring Wasabi?
Wasabi provides S3-compatible storage. Seagate Lyve uses S3-compatible storage. So it’s very easy for us to migrate the Seagate customers over to our platform.
So this is primarily a customer acquisition play?
Yeah, primarily. Nothing major from the technology side.
Does the acquisition of Lyve change the definition of Wasabi?
Not really, not at all. But Seagate is now an investor in Wasabi as the result of this transaction. And that is very important to us because there are two main suppliers of disk drives in the world, Seagate and Western Digital. And now both of them are investors in Wasabi, in addition to Everpure, which is the old Pure Storage who invested in our most recent equity round. Everpure represents the high-performance SSD end of the market where we recently entered with Wasabi Fire. As you know, the supply chain in storage is a mess right now, and to have the world’s major providers as stockholders in Wasabi is strategically important for us.
Did the Seagate equity investment in Wasabi come because of Wasabi’s acquisition of Lyve? Is it a major investment?
Yes, but it’s not a big percentage. Low single-digit percentage.
When did WD become an investor?
They’ve been an investor for seven or eight years, since very early on, and that’s been extremely helpful over the years. Nothing would be worse for a cloud storage company than to have to turn away business because you don’t have the capacity.
Did the Lyve acquisition also include the storage capacity that Lyve was using for its customers?
We bought all of that infrastructure. That adds significantly to the pool of disk drives and other stuff that we can turn to. So yeah, we got a whole bunch of CapEx.
Earlier in our conversation, you said it was nice to do this acquisition to give your team a chance to work on acquisitions. Does that mean that we can expect to see Wasabi be more acquisitive going forward?
We don’t have any other immediate plans. But when you get to our size, especially now, with all the stuff going on in AI, there are a lot of products out there that are very interesting from the standpoint of being facilitating the use of Wasabi in various markets, like AiR, for example, which is all about storage. You’re not going to see us getting into other businesses [unless it] makes storage useful or accessible to the people that need storage. That’s the kind of stuff we’re interested in. And there are lots of interesting opportunities. Let me put it that way. We’re not working on anything at the moment because we have to digest this Seagate thing first. But I’m sure we’ll be looking at other opportunities downstream.
What are some of your strategic priorities for the rest of 2026?
Well, we just launched Wasabi Fire, which is our first all-SSD class of storage in San Jose. So we need to roll that out. And we have a couple of other new products in the works that will be coming out in the next few months. You’ll be hearing more about those when we’re ready to talk about them. So strategic priorities are, just keep the platform stable, rock solid. The hardest thing about any cloud storage is, it’s very difficult to do storage at the exabyte scale. It’s easy to do it at a small scale. It’s very hard to do it at exabyte scale. A lot of people have tried and fallen over. We have 20 years of cloud storage expertise between Wasabi and Carbonite, my previous company. And so the priority really is just to continue to pull ahead of the hyperscalers on features, security, functionality, things of that sort, to keep driving our costs down because we want to have a very attractive price point in the market relative to the hyperscalers. We are also continuing to expand our geographic footprint. We’ve got a pretty good presence now in Asia and Europe. Europe and Asia are both doing a bang-up job. But we don’t have any presence in some other pretty good-sized markets. So we continue to look for those opportunities.
Was Seagate Lyve a profitable organization or not?
I don’t know. They didn’t break it out separately. And it’s pretty hard to know because they had a lot of costs that were shared between Seagate Lyve and their other businesses. But we will make it profitable. We know what we’re doing with it, but I don’t know how they viewed it. I don’t know what they were doing in that business, really. I mean, we thought it was not a good idea, because people who are primarily manufacturing companies are typically not that good at running services. And I think they realized that running storage at small scale, making a box they can sell through distribution, is a very different thing from running a public cloud with all the security that’s needed. It’s very complicated at this scale, with 100,000-plus customers, 18,000 channel partners, data centers all over the world. It gets to be pretty complicated from an operational standpoint. Only the hyper scalers and Wasabi have managed to really do a good job of it.
One more question. From my understanding, probably the majority of cloud storage providers use Wasabi on their back end. Is that correct? How many of those relationships do you have?
I think there’s about 350 what we call technology alliance partners. These are companies who, in one way or another, use Wasabi as a storage element in their own products. They range all the way from backup companies to surveillance companies to things like medical imaging.
