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$500 million and countingDive into the tech journey of Gleb Budman, CEO and Co-Founder of Backblaze, a cloud storage and backup giant. From launching the company in 2007 with a bootstrap approach to creating an efficient storage cloud, Budman shares insights into the intersection of technology and business. Learn how Backblaze disrupted the market with its $9 per month unlimited backup service and simplified cloud storage with Backblaze B2’s cost-effective pricing model, breaking free from walled gardens and fostering trust through transparency. Uncover how hard drive statistics and network insights drive top-of-funnel awareness, leading to strategic shifts in content curation and audience engagement.
Backblaze is a cloud storage and computer backup service that’s easy to trust, easy to afford, and easy to use.
Hello, everyone. Welcome to another episode of Wytpod. My name is Harshit and I’m the Director of Business Alliances at Wytlabs. We are a digital agency specializing in SaaS and E-commerce SEO. I’ve got Gleb Budman with me today, CEO and Chairperson of the board of Backblaze. Now, they are a cloud storage and computer backup service that’s easy to trust, easy to afford, and easy to use. A big welcome to you, Gleb, and I’m so happy to have you with me today.
Thanks, Harshit. Good chatting with you.
Now, Gleb, can you please provide a brief overview of your journey to being the Founder and the CEO of Backblaze and how the company has evolved under your leadership?
Sure. I was one of five co-founders of the company. We started the company in 2007. In terms of the journey, it’s not a clear, crisp path to starting this company. I didn’t come from storage, I didn’t come from backup. I did always find technology fascinating and I always found business fascinating and I always wanted to start my own company. Over the years, had started a few different ones in different areas. I started a used car dealership when I was 15, and I started a bicycle component company in college. It was a little bit of a meandering path, but in all cases, I found the intersection of technology and business quite interesting and what we could do with that. I started a company in business school about 25 years ago that was focused on taking advantage of, at the time, there was the ability to all of a sudden embed a toolbar into the browser for the first time. At this time, one of the things that I realized was that Yahoo at the time, as a search engine, was falling behind the scale that the internet was growing and Google didn’t exist at the time.
What I started thinking was that we could take advantage of the fact that we could plug something into the browser and therefore watch what you were doing, learn from that, and use an early version of AI at the time to help you find more of what you were looking for on the Internet in a better way than the search engines were able to do at the time. I got lucky in that I got connected with a couple of people who had a similar idea. We worked together on a startup in ’99 that was acquired in 2000. I jived well with the group that we did that with. A few of us who met at that startup, combined with a couple of people that we met at the company that bought us Excited Home in 2000, ended up starting Backblaze.
Just a minute now. Can you please let the viewers know what was that startup called?
Yeah. There was a company in ’99 called Kendara. Kendarawas acquired by Excited Home. Then after Excited Home, we worked on another company that was in the email security space called MailFrontier. That company was bought by SonicWall. After that company was by SonicWALL, and one of my co-founders, did IT for friends and family. One of his friends called up in a panic and said, My laptop died. You’ve got to help me. It’s crashed. What can I do? He said, No problem. I’ll get you a new laptop. We’ll get you set up. Where is your backup? She starts pounding the table and says, What I don’t need now is a lecture. What I need is for you to get my stuff back. He’s just like, Wait, if you don’t have a backup, I can’t help you. We started talking about this and we realized that everybody had laptops or was going to get one soon. Everything was going digital and nobody was backing up the data. That just felt like a recipe for disaster. We decided to try to solve that problem. We didn’t have a specific solution in mind. We just said, That’s a problem, it’s big and we need to try to figure out how to help there.
Along with four others, we started backing those to solve that problem. What was interesting was, that shortly after we started trying to figure this out, we decided and settled on cloud backup as the ideal solution. We had unique ways in which we were going to help customers with that. But we needed a place to store all of the data. We originally were going to put all the data on Amazon. This was in 2007, so it was early days for Amazon’s Web services, but Amazon S3 had existed and we planned to use Amazon S3 for the storage. But when we did the math, we realized we were going to lose money on every customer. We said that’s not going to work. We looked at it and said a hard drive doesn’t cost that much, but for some reason, Amazon’s web services do. That set us down this journey of designing and building our storage cloud, which for many years was simply the underlying infrastructure that supported our cloud backup service. But we kept having customers come to us and say, I love your cloud backup service, but I have all these other storage needs, give me access to your platform.
We launched Backblaze B2 as the cloud storage offering, which is accessible through an API and useful for lots of cases. That has been a core focus for the last probably seven years at this point at the company, which would have never happened if we hadn’t originally built that storage cloud infrastructure for our computer backup service.
I would love to know because you’re in a very competitive space, at least in now and today’s age for sure. I would love to know how exactly you basically set your company apart from other cloud storage and backup services out there in the market and how exactly your main USPs contribute to your company’s success, please?
Sure. We have two offerings. We have a computer backup offering, and that computer backup offering backs up laptops and desktops for consumers and businesses. There are several companies or solutions for backing up your data. However, most of them are hard to ensure that all of your data is safe. There are things like iCloud, Dropbox, and Google Drive, and there are a variety of things, but in all those things, you need to put your data into the right places. You’re usually charged based on the amount that you’re storing, so you have to think about how much data you’re storing and how much it’s going to cost you and maybe you get to a T or all this stuff. Backblaze computer backup just makes it simple. You download it, pick an email and a password, enter a credit card, you’re done. That’s the entire experience. We back up all of the data on your computer, we’ll back up external hard drives. If you have them plugged in, it’ll happen continuously. It’s silent. You don’t have to think about it, worry about it. Then you can always access all of that data through your phone, through the website, through having a FedEx you can have a hard drive with all of your data on it.
It’s just very simple. It’s nine bucks a month. It’s an unlimited amount of data. We have people storing terabytes and terabytes of data for that nine bucks a month. It’s a really easy way to just sleep peacefully at night, whether you’re an individual consumer taking care of your home things, or whether you’re an IT person taking care of everything for your business and all of your employees. It’s very simple. That’s on the computer backup side. On the Backblaze B2 side, it’s similar in that it’s really easy and it’s affordable. A report found that our customers saved 92 % of their time by using Backblaze B2 versus the traditional clouds, and it’s much less expensive. It’s about one-fifth the price of Amazon or Google or Microsoft for that cloud storage offering. We don’t charge egress fees, we don’t charge you to get your data out. We believe that data is yours and you should be able to use it how you want to use it and that you should be able to use it with other services. Amazon, Google, and Microsoft, all charge you these crazy egregious fees to get your data out of their systems once you put it in.
That means that it prevents you not only from downloading your data, but it prevents you from using other services that you might want to use as a developer building out your infrastructure or as an IT person leveraging other services.
Okay, I’m interested in knowing a bit more about the pricing front-end. Because you said $9 is a fixed price. It doesn’t matter how much space you need. Are there any other models around? Say, for example, a business, definitely will need much more size for sure for storing their data compared to a regular job like mine, like a person, a user. Are there any other offerings concerning the end-to-end that differ concerning the pricing? How exactly does that work? For you as well. Yeah, to be honest, that’s a little unbalanced in a way, it’s hard for me as well.
Yeah, for the computer backup offering, it’s very simple. It’s nine bucks a month per computer. If you’ve got a company and you’ve got 100 people and they each have a laptop and you want to make sure that all of the data on all of your employees’ laptops is protected and safe and you just don’t have to worry about it. It’s $9 a month times 100 people, it’s 900 bucks a month. All the data from all the laptops is safe. For a 100-person company, that is a great way of just taking care of it and not having to worry about it. For other things that are not computer backup, not backing up your laptops, but for any other storage needs, common ones that customers use this for backing up servers, backing up virtual machines with things like VIM, archiving data, and media management. A lot of companies, they do podcasts and videos and they shoot photography. They create training videos for their customers. They create commercials. They create educational material that lives on their website. All of that content needs to live somewhere. Backblaze B2 is a common place where companies use to keep all their data.
Application developers build their actual applications using us for storage. We have customers who start on AWS and then they say, Oh, it’s complicated and it’s really expensive. I want to also use Fastly, Cloudflare, Alchemy, or something for networking. I want to use CoreWeave or Vulture or somebody else for computing or GPUs for AI. I want to use these other services. But if my data is stuck inside Amazon, then it’s really expensive to get it out, so I can’t use any of the other services. They’ll move their storage infrastructure onto us, which enables them to break free from that walled garden and use the data the way they want to use it.
Okay. Gleb, what are the price deciding factors for your B2 side of things? What are those? Can you please list them down? At least the primary ones.
For B2, it’s very simple. We charge six dollars per terabyte per month. Simple. You upload the data free, delete the data, free, download the data, free, but we just charge you six bucks per terabyte per month for the storage of the data. It’s very simple.
It’s very easy. Then we go ahead and decide on buying a space. I have to consider senior developers within the company. There are so many specifications and everything that needs to be taken care of. But I’m glad that there’s a company out there that simplified things for people who are not that technical and have that technical know-how altogether.
Concerning the traffic generation on your side, and you’ve been in business for a while, I’m sure there’s a really good authority that has been built, a lot of content that you have created to educate your target audience. Concerning keeping an inbound perspective, I would love to know what specific tactics have been proven to be successful and growing your online visibility.
When we started the company, one of the things that we had decided was, unlike the last two companies, which we raised venture funding for and had venture funding from the beginning, we decided to start Backblaze and Bootstrap. The five of us quit our jobs and committed to each other for one year without salary. We would each put a little bit of money in, but that would be it. We weren’t going to do any pitching. We weren’t going to do any PowerPoints. We were going to focus on building the product, understanding the customers, and building the culture of the company. What that meant also was we didn’t have $10 million in a bank account to go and spend on marketing. When we started in this bootstrap approach, one of the things that I did on day one before we had any product was I just started writing blog posts about storage, backup, about the industry. Frankly, nobody read them. Maybe if I was lucky, my mom, my brother, and a couple of friends would read them out of kindness. That was the case for a little while. Then we started talking about this thing that was happening, which was we launched this unlimited backup service and customers loved it, but they were sometimes also skeptical.
They said, It’s impossible. You can’t offer unlimited backup at the price that you’re offering it. We’ve looked at Amazon and clearly, you would be losing a ton of money if the data is stored on Amazon. So it’s not possible. They said one of three things must be happening. Either Backblaze has rated the ton of venture funding, they’re burning cash and they’re going to go out of business when they run out of cash. Or they are silently using and selling all my data and doing something nefarious. Or maybe they’re not even storing the data at all. Maybe they’re just hoping I never need it back. We said we want to allay some of those fears and we want to share something about how we developed this efficient storage cloud. This efficient storage cloud is enabling us to do that. We started talking about how to do that and we said, okay, maybe we’ll write a blog post saying that and said people are probably going to go, Yeah, I don’t believe it. We said maybe we’ll open it up a little bit and explain some of what we did. After talking more and more about it, we decided we were going to fully open up and share what we did and what we designed, what we built.
We even open-source the hardware, and the servers themselves, and explain how to build them yourselves for the underlying storage cloud. In that blog post, we thought about how to craft it well and how to write it well. We reached out to some press, people that we thought might be interested in it. That one blog post, a million people read it. A million people read that blog post compared to maybe a couple of hundred people on any blog post before that. That was a massive eye-opener of the possibility. It’s not that all a million of those people became customers, but we had a flood of customer traffic because so many people became aware of Backblaze through that. Now, the good part was, this is great. We didn’t have to pay for all that awareness. People not only became aware, but they trusted us because they understood what we were doing and they understood that there was a lot of technical expertise and depth. The challenge was it took us all this time to develop this storage cloud. We wrote this one blog post, we got this great publicity around it, but then what? What we learned over time was there was a lot of interest in this area and we had a lot of expertise in this area at this point.
We dug in more and deeper into it. We started publishing a series that focused on the storage server design. People wanted to know the different versions. People started asking questions around, How do the hard drives perform in these storage servers? One of the things that we did was we started introducing hard drive stats. Hard drive stats are where we publish the reliability statistics behind all of the hard drives that we have. We have over 200,000 hard drives. We publish the reliable statistics and insights that we learned from that, which is the only place on the internet you can get that data. People love that data and it goes viral and we share that every quarter. We just started a new series called Network Stats because people also want to know not just how the data lives on these hard drives, but how it gets there. How does it get around the internet? We have a lot of information on how that happens, and so we’re starting a new series called Network Stats for that. By curating and sharing more information and listening to people about what things they want to know, it became this virtuous cycle where we would publish a blog post, we’d get comments, we’d get questions, we’d get engagement on Reddit, on Hacker.
SlashDot, on other places. We would engage in those conversations. We’d learn what people wanted to know that would inform us on what other blog posts to write. We’d write both blog posts and we would engage that community. That drove a lot of top-of-funnel awareness and a lot of warmth toward the company, which then translated into some percentage of those people becoming customers and sharing with other people what they wanted. Over time, that went from me part-time writing these blog posts to a couple of people internally doing that, to us hiring a managing editor away from a publishing company who runs that process for us now and makes sure that we have really good quality content on a good regular cadence.
That’s amazing. Any challenges, like any significant challenges that you have faced either in the past that were hard for you to overcome concerning your traffic generation, of course, or anything that you’re facing currently that you’re trying to overcome?
It’s always a challenge, right? I look at it and I go, The storage cloud space that we are in is a roughly $100 billion market. Yeah, easily. It’s a very big market and obviously, we have only scratched the tiniest bit of the surface of that market. So even though we’ve got over half a million paying customers, we’ve got over 500 billion files that we store for those customers, it’s still just a teeny-tiny portion of the overall market. I believe that we should have many more customers using us because our value proposition is so crisp. We’re one-fifth the price of Amazon to go Microsoft. We don’t lock you in with all these crazy fees. So customers can use all these other services. We’re much easier to use. We don’t compete with you the way that those services do. It works the same in terms of API compatibility. You can just switch right over and it’s easy. We even have a program where we will pay to get your data out of those providers and help you out. With all of that and the $100 billion market, it should be an even dramatically bigger company with dramatically more customers.
I think the main reason it’s not yet is awareness, and it takes time to build up that awareness. In terms of traffic and other kinds of branding and awareness, there’s always a question of how we get more people to understand and learn about this. I would say there’s no single concrete like this particular thing is a challenge. It’s more of the general. There’s a big space out there in a big market. We have about 3 million people a year who read our blog today, but why isn’t it 30 million? There’s a lot of value in the information and people tend to love it, but it’s just we’re competing for people’s attention in a world where everything is constantly competing for their attention. I would say that’s the challenge.
What do you think? How many touchpoints does it take for a user to become your customer? Say, for example, I got to know about your company today. We read one article. How many touchpoints would it take me ideally? What’s the average on that?
Yeah, I don’t know that I have any better data than the standard industry data. I think it says seven is a common number of touchpoints. I don’t know that I have better data. We’ve seen it go all over the place. We’ve seen people, the first time they see it, they go, Oh, my God, that’s great. That makes perfect sense. And they convert. We’ve also seen where people have been familiar with the company for years and years, and they’ve looked at it and said, Oh, that makes sense. I should do that. Then they’ve lost data. Then with somebody else, they’ve lost data because they didn’t ensure that their data was protected. After the second time of losing data, they’re like, Oh, my God, this is so painful. I’m going to sign up. We see it in all kinds of ways.
Okay. What’s the lifetime in months for a personal use scenario as well as a business with your platform and your solution altogether?
First of all, we’re a public company. We bootstrap to IPO. We’re trying to do that. As part of that, we share various metrics publicly. One of the metrics that we share publicly is our gross retention, which is if you just take how many customers were here a year ago, how many customers are here today, what’s that retention? We have about a 90% annual gross customer retention. 90% of our customers year-on-year stay with us. On average, they stay with us for a very long time. We have customers that are 10, 12, 13, and more years with us at this point. We have a very long customer retention with it. Then the net revenue retention, which is another metric that we also publish, is how many dollars the customer paid us a year ago and how many dollars are they paying us today. That number is north of 100%. Even when you take out the customers that have left us over the last year, the remaining customers store more data and buy more licenses on average, and therefore they’re paying us more today than they did a year ago.
Yeah, that’s brilliant. That’s a brilliant matrix as well. I would love to know, with the growing concerns about data security, how does your company address these issues and how is this reflected in your marketing and messaging?
We take security very seriously. We’ve hired a chief information security officer. He’s someone who has helped protect various government agencies and other large corporations. He has a team that works for him, and that team does all kinds of things, including sourcing outside folks to try and hack our systems. We pay for bug bounties. We have a knock-in-a-sock that is constantly a secure operation center that’s constantly monitoring our network traffic and systems. We encrypt the data. All data that’s in transit is always encrypted. We offer customers the ability, and the choice to keep data encrypted always on our systems. We go to great lengths to make sure that the three-plus exabytes of customer data that they entrust us with is safe.
Brilliant. Because your industry is evolving and is rapidly evolving. I would love to know how exactly you stay agile and respond to significant changes in technology and market trends.
The main thing that we do is talk to customers. That’s probably the number one thing. We talk to customers through our product team, our support team, through our customer success team, through social, and we try to understand what’s important to them. We monitor the other things as well. We look at analyst reports, we look at competitive moves. I try to pay attention to people who are forward-leaning in terms of experimenting and seeing people in the hacker communities and other places where they’re playing with things that are on the forefront, but not yet in any meaningful sense in the corporate world. It’s a lot of keeping our ears and eyes open.
Okay. Now looking ahead, what do you see as the most impactful trend in cloud storage and how is your company positioning itself to stay ahead of these developments?
I think one of the biggest trends that we see is this shift to wanting to use different cloud services for different things. Ai is frankly accelerating this. It used to be for a long time, everybody thought AWS, Amazon’s Web services was the only cloud. They thought that was the cloud. Then there was Azure and then there was Google Cloud. People started going, okay, AWS is not the cloud, it’s a cloud. And so maybe there are other clouds out there and we may want to use them for certain things. But there are also all these other best-of-breed cloud services, Cloudflare and Fastly and Akamai and DigitalOcean and there’s a whole plethora of other companies that specialize in different aspects of cloud services. And customers are starting to increasingly realize that there are these different services and they want to use them for certain things. AI is accelerating because of the GPUs, there is a limited number of them, and different companies are getting access to them. One of our partners is a company called CoreWeave. Coreweave is a GPU cloud, and so customers want to use them because they have great GPUs and they have a great platform for using those GPUs.
Coreweave is not inside of Amazon, Google, or Microsoft. They are their own independent company. This desire to use these different providers is something we see accelerating as a trend. How that plays out in the cloud storage space is that if you want to use all these things, you have to have your data free from the lock-in of the traditional cloud providers. Google, Microsoft, and Amazon don’t want that. They want to say, You have to keep your data with us and use only our services. I think we’re seeing an increasing trend of that changing.
Can you elaborate on how your company targets its marketing strategy for individual customers versus the businesses? To be honest, that’s way too broad. Your targeting, again, is way too broad. One of the wonderful things is everyone is niche nowadays. I would love to know how exactly you approach that and cater to such a big audience of guests.
Yeah. Part of it is we do appeal to a broad audience through some of the things. We try to write our blog post in a way that’s accessible to a broad base of people who are what we call storage enthusiasts. That doesn’t mean you have to be a developer. That doesn’t mean you have to be an expert. That doesn’t mean you have to be an IT person. It just means you think storage things are interesting. We try to keep it at that broad level. Then down from there, there are a lot of subdivision segments. We’ll focus on specific areas. Even inside of B2B, we focus on specific verticals that we find customers want to adopt more rapidly. We’ll do custom trade shows and events in those spaces. We’ll create case studies focused on those. We’ll create dedicated landing pages for those things. We speak to those kinds of audiences directly. On the consumer side, Salespeople don’t engage and we don’t have as much in the way of alliance partners channel partners, and the like on the consumer side. The consumer side is more about just top-of-funnel awareness, combined with making it really to go through the self-serve experience.
Prioritization is done in a way, like looking into your existing customer segmentation and then prioritizing any upcoming content or any marketing campaign in general.
Exactly, yeah. Since we have half a million customers, there’s a lot of data that we can look at to say which types of customers are the ones to target. The thing that we have to be careful of is sometimes we see success within the audience because of something. But if we only focus on our world. There’s the opportunity to miss a segment that doesn’t know about us yet. That we can be very helpful. I’ll give you an example. A long time ago, one of the things that we found was that genealogy was an interesting target for our consumer base because genealogists care a lot about the data. They spend time curating their data. They want to make sure it’s safe and doesn’t get lost, and they’re willing to typically pay for services that would help them do that. That was a niche that we had found inside of the consumer base to focus on. But we were increasingly focused on going after IT and application developer-type use cases along with media-type use cases because that’s where we can help people with the whole B2 platform.
Makes sense. Now then, because you’re catering to such a big number of users is pretty huge. One of the critical things when you’re catering to such a high number of people is the user experience and the user interface. How do you go about that? And how do you go about optimizing the interface? What are the parameters that you primarily look into?
One of the things that I think we were strong at is the group of us that started the company focused on ease of use at both of the prior companies that we worked on together. One of the things that, like I said, we didn’t come from storage as our initial background. What we did come from is making technology easy to use and scalable. That was true in both of the prior companies. We brought that here and focused on thinking of it as even if you’re an application developer, even if you’re a top IT expert, even if you’re a corporation, at the end of the day, you’re a human being who is busy with lots of things to do, and our job is to make it as easy as possible for you to get your work done. We come to it from a consumer SaaS service mindset, even if we’re serving the needs of a very senior enterprise IT person. We focus on what is the user flow to help do that, and then we use tools to help figure that out along the way. We use tools that help us show where people get confused in the user interface and then provide either different paths for them that’ll make it easier or provide tooltips and other suggestions on how to make that process easier.
As I said, there was this analyst firm that found that our customers saved 92% of their time versus the traditional cloud providers. We’ve focused on making that experience easy. One of the things you mentioned about the pricing, so if you try to figure out Amazon’s pricing for storage, first you go to Amazon, then you have to figure out Amazon Web Services, then you find their storage offering, then you find the sub-segment, which is the object storage. Then you find that the object storage has eight different tiers that you choose from, and then you find the pricing for that. I don’t know if you find the simplified pricing for just that one subsurface, it’s like a page and a half long with questions that you probably have no way of knowing the answers to. Part of it is the user interface, and part of it is just designing the whole experience, whether it’s the account creation, whether it’s the pricing, whether it’s the way you interact with our team, all of it focusing on the ease of use of that.
Makes sense. I would love to know because you mentioned some of the pointers on customer retention and the matrix. I would love to know what exactly the key strategies you have in place for the excellently good retention rate that you have currently.
Fundamentally, we try to make sure that the customer experience is good. Retention is primarily about, whether is the customer happy with the product. We listen to what are the things that the customers like and we try to solve for them. What are the things that make them frustrated we try to solve those? We also provide customer service. We have a team, they’re in the US, they’re highly trained, and they’re available by email and chat. They are accessible to help address things. We also aim to price the offering in a way where the customers feel, that not only is it not confusing, it’s not surprising. There aren’t got yous. Some of the companies in this space, have these got yous where there’s a headline price point you think you’re paying. But then, Oh, there’s this hidden retention number or this hidden throttle number and you find out later that you’re being charged more. That’s the thing where it makes you unhappy and then makes you churn. We try to make sure that things are clear that we’re crisp about, here’s what we can do for you, here’s what we can’t do for you, and make sure that we communicate that upfront.
That makes sense. All right, so we’re coming to an end and I would love to have a quick rapid-fire with you. Are you ready for that?
Let’s try it.
What’s not a big deal to most people, but is torture to you?
Oh, I see. I think probably having friction between people that feels unnecessary and personal. I think tension is good where we tug on things from different viewpoints and perspectives, but friction where it’s just sand in the gears is pretty tortuous.
That’s deep, man. Okay, for Guinness World Record do you think you have a shot at a meeting?
Probably consuming chocolate in large quantities.
Okay. Are you more cautious or bold?
I think I’m probably leaning toward the more cautious side. I think I aim to have a good dose of boldness, but because we are responsible for protecting customers’ data, a certain level of caution of making sure that we are building a solid and sustainable company, that we have a durable platform, that we don’t take any risks that would risk the customer’s data, it’s job one. The bold bets are job two in areas that we feel are safe without compromising any of those areas.
That’s very well answered. Okay, what is your hidden talent?
I’m not sure if it’s super hidden, but I think my ability to stay calm through tumultuous situations is something that I’ve been told people find supportive and unusual.
Now coming to my very last question. What never fails to make you laugh?
I’d say my kids never fail to make me laugh at what they can come up with. Yesterday we were doing riddles of all kinds, which were good fun.
How many kids have you got and how old are they?
I have two kids 10 and six. That’s nice.
Thank you so much, Gleb. Thank you so much for all the time, all the lessons, and all the wisdom that you’ve shared in today’s session. I enjoyed this conversation and I appreciate your time. Thank you so much.
Thanks, Harshit. Good chatting with you.
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