Good question re commodity, I have wondered the same. I.e. they...

Good question re commodity, I have wondered the same. I.e. they sell via a partner, does it really matter to the partner how good the software solution is for data backup? Or only the pricetag? This has proved an issue previously (couple years ago i think) when a large partner has acquired a competing solution and then migrated their customers to it. I think this is the main motivation for them reporting on what % of revenue comes from their top partners, they are trying to diversify their partner specific risk.

One advantage they have here according to management is that they design their software to be very intuitive to use, a user doesnt need any IT skills which is an advantage to the partner and the end customer who struggle with IT staff retention and are both users of the software.

I think their partner network and reputation with those partners will become a strong competitive advantage as they scale. Their partner base is very sticky (partner churn of around 3% annually) so once they have deals with partners it is very difficult for a new market entrant to win partners off dropsuite. Why use something else if dropsuite works well and they are experienced with it? You could quantify this competitive advantage as partner satisfaction or growth in revenue from existing partners.

I think an example of proof they have a competitive product and therefore competitive advantage is that a significant portion of their growth comes from existing partners. Why would existing partners be more commonly going with dropsuite's solution unless there was a benefit to them. I think the ceo said in a recent interview there is no business competing with them who is solely focussed on cloud email data backup like they are, so I consider their focus on this and their leading product for office 365 backup to be a competitive advantage. Something like 70% of their staff are software developers so the quality and further development of their products is clearly the focus for them.

As they scale they will have more free cash to invest in product development, they can further satisfy existing partners, decreasing churn, so it becomes more difficult for competitors to crack their partner base, they also want to invest in expanding their product offering, improving the quality of their offering for new partners, more revenue growth with high gross margins means more money to invest in the product. Sounds like a nice flywheel effect to me strengthening competitive advantage as they go.

I also wonder how their partner strategy affects pricing power, might be difficult to increase ARPU when they have a deal with the partner and the partner has a deal with the end customer. Or maybe that will make it easier because they have the backing of the partner who are just passing the bill onto the end customer but are probably mostly the one making the decision to use dropsuite