Wasabi and theExit Fee

The usual way to compete in storage

Cloud storage is usually sold on the price per gigabyte, and the large providers have cut it repeatedly while adding tiers, discounts and special classes to optimize a customer's bill. Putting data in is cheap. Taking it out is not. Providers charge for egress, the cost of moving a customer's own data out of their system, and for the requests made along the way.

What Wasabi did differently

David Friend and Jeff Flowers founded Wasabi in 2015. They had co-founded the online backup company Carbonite and had paid cloud storage fees for years (Wikipedia). Wasabi sells S3-compatible object storage, which means software written for Amazon's storage works with Wasabi unchanged. It is hot storage, with every object available at the same speed and no cold archive tier to wait on. Its price is a flat rate per terabyte per month with no egress fees and no per-request fees.

A storage unit that charged only for the space, and never for opening the door or taking things out, would be a different kind of product from one that charged for each access. Competing on the exit fee changes what the customer is buying, because the fee was also a way of keeping customers in place. A vendor built without it gives up that source of lock-in and sells the customer's freedom to leave.

Changing the premise of the bill

Amazon, Microsoft and Google each tried to win storage by lowering the price per gigabyte and adding tiers and discounts, and every improvement worked inside the same model, in which storing is cheap and moving is costly. Cars did not win by being better horses, and Wasabi did not try to be a cheaper version of Amazon's storage. It asked what storage looks like if the meter on leaving does not exist.

That is the Trojan Horse in this deal. It arrives as a cheaper storage vendor, which customers welcome for the lower bill. What it attacks is how the incumbents make money, because the egress fee is a lock-in tool as much as a revenue line, and the incumbents' own business models make it hard to match. The product changes from storage to a place where data can live without a toll.

The adviser

A BofA Securities banker lists a $70 million Series D1 for Wasabi among their transactions. Public coverage calls the January 2026 round an equity round, I found no source using the D1 label, and the sources name Foley & Lardner as Wasabi's legal adviser and no bank (Foley). For the 2022 round of $250 million, which combined about $125 million of Series D equity with a debt facility, Barclays was the sole placement agent (BusinessWire).

What an adviser does in a follow-on round like this is position the company for investors by answering what has changed since the last one. In 2026 the available answer was AI, since data lakes, training sets and model checkpoints need somewhere cheap and always available to live, and nobody wants an exit fee on a petabyte. L2 Point led both rounds, and Pure Storage, a flash storage vendor, taking part signals that the backing is strategic as well as financial.

Why $1.8 billion

I could not find Wasabi's revenue in the sources I checked, so I will not offer a multiple. The case for the price rests on how the business works. Storage is sticky, because data does not move casually, so revenue compounds. The flat pricing shortens sales cycles. AI workloads increase demand for cheap, always-available data, and a strategic investor in the round gives the valuation support beyond the financial funds.

How the incumbents responded

Google announced in January 2024 that it would waive data transfer fees for customers leaving its cloud, AWS followed in March, and Microsoft after that. Reporting links all three moves to new European Union rules, and the waivers carry conditions. They apply to customers who leave entirely and not to those who stay (The Register, Light Reading).

So the advantage is narrower and not gone. A customer who keeps data on Amazon's cloud and uses it actively still pays to move it. What remains for Wasabi is the price, the simplicity and its focus, which are real but less structural than a gap in how the business model works.

Competition

From my own reading, Wasabi competes with AWS S3, Microsoft Azure Blob Storage and Google Cloud Storage, along with Backblaze B2, Cloudflare R2 and the object-storage lines of Dell, NetApp and Pure Storage.

The strongest objection

The objection is that storage is a scale business and the hyperscalers have far more scale. They can cut prices below what a smaller vendor can sustain, and pure-play storage vendors have historically earned thin margins. On that view the $1.8 billion rewards a position that the incumbents can eventually erode.

The evidence that would decide it is Wasabi's price and growth relative to the large providers over the next several quarters, and whether customers that stayed on Amazon despite the waivers still pay to move data to a cheaper store. The record I found does not yet answer either.

What a reader should take from it

When a vendor competes on its pricing model, check whether the incumbents' own policies make the model costly to copy, because that determines how long the advantage lasts. The adviser, the round label and the revenue are not established by the sources I found.