Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
1–10 of 38 posts
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#2- Over the summer Dropbox raised a $7.25 million Series A round from Accel, adding to $1.5 million in seed money it brought in from Sequoia Capital and Y Combinator in 2007
- San Francisco-based Dropbox has just 20 employees.
I wonder why they need so much money. If the Freemium model is working, shouldn't they at least be breaking even?
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#3- Over the summer Dropbox raised a $7.25 million Series A round from Accel, adding to $1.5 million in seed money it brought in from Sequoia Capital and Y Combinator in 2007 - San Francisco-based Dropbox has just 20 employees. I wonder why they need so much money. If the Freemium model is working, shouldn't they at least be breaking even?
Marketing? They could be huge if more people knew about 'em.
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#4- Over the summer Dropbox raised a $7.25 million Series A round from Accel, adding to $1.5 million in seed money it brought in from Sequoia Capital and Y Combinator in 2007 - San Francisco-based Dropbox has just 20 employees. I wonder why they need so much money. If the Freemium model is working, shouldn't they at least be breaking even?
Raising money isn't always a reaction to bleeding money. Maybe they've nailed down their customer LTV and customer acquisition costs. In that case, they'll want a big stack of cash to start buying up customers whereever cost < LTV.
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#5Dropbox is hands down the best piece of software I've installed in the past few years. It's the first product I've ever been able to recommend to both friends (geeks) and family (categorically not geeks whatsoever) without having to change my explanation of why it's so awesome.
Congrats guys!
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#6- Over the summer Dropbox raised a $7.25 million Series A round from Accel, adding to $1.5 million in seed money it brought in from Sequoia Capital and Y Combinator in 2007 - San Francisco-based Dropbox has just 20 employees. I wonder why they need so much money. If the Freemium model is working, shouldn't they at least be breaking even?
I wonder why they need so much money.
Pretend I have a machine where you insert a quarter and, a year later, a dollar pops out. Do you a) insert the quarter you have in your pocket, wait a year, and then put all four quarters back in or b) go to the bank, borrow as much money as they'll give you, get it changed into quarters, and start stuffing the machine?
A freemium startup which has a good idea of what customer lifetime value is and what customer acquisition costs are is, essentially, a quarter-into-dollar machine.
This factor becomes particularly acute when the ultimate goal of the startup is to sell their quarter-into-dollar machine for some multiple of the number of dollars it has produced in the most recent year.
[Edited in response to the above post going grey: Please do not downvote the post above me. He isn't being malicious. The big picture strategic view is non-obvious and many smart people need to have it explained a few times for it to sink in. If you wish to correct the misconception, either explain it or upvote an explanation.]
[Edited to add: P.S. The expert on "(LTV > COCA) + source of capital => blow the doors off" is Dharmesh Shah. He has been banging the drum for a few years now. Example: http://tinyurl.com/doors-blown-clean-off ]
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#7- Over the summer Dropbox raised a $7.25 million Series A round from Accel, adding to $1.5 million in seed money it brought in from Sequoia Capital and Y Combinator in 2007 - San Francisco-based Dropbox has just 20 employees. I wonder why they need so much money. If the Freemium model is working, shouldn't they at least be breaking even?
I wonder why they need so much money. Pretend I have a machine where you insert a quarter and, a year later, a dollar pops out. Do you a) insert the quarter you have in your pocket, wait a year, and then put all four quarters back in or b) go to the bank, borrow as much money as they'll give you, get it changed into quarters, and start stuffing the machine? A freemium startup which has a good idea of what customer li…
I appreciate the tone.
That aside, you are assuming growth is constrained in some way that money relieves. IE they need money to promote or they need money to support their free users until they mature into premium users. Either one of those is a sufficient answer.
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#8- Over the summer Dropbox raised a $7.25 million Series A round from Accel, adding to $1.5 million in seed money it brought in from Sequoia Capital and Y Combinator in 2007 - San Francisco-based Dropbox has just 20 employees. I wonder why they need so much money. If the Freemium model is working, shouldn't they at least be breaking even?
Raising money isn't always a reaction to bleeding money. Maybe they've nailed down their customer LTV and customer acquisition costs. In that case, they'll want a big stack of cash to start buying up customers whereever cost < LTV.
Maybe they did nail down the lifetime value of a customer. But I doubt they nailed down the acquisition cost.
It's not like you can pay to have your customers refer more friends.
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#9"1.3 million gigabytes" - is that correct? If it is .. wow!
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#10Earlier quoted context omitted.
Raising money isn't always a reaction to bleeding money. Maybe they've nailed down their customer LTV and customer acquisition costs. In that case, they'll want a big stack of cash to start buying up customers whereever cost < LTV.
Maybe they did nail down the lifetime value of a customer. But I doubt they nailed down the acquisition cost. It's not like you can pay to have your customers refer more friends.
Its not as hard as you might think. I'm sure Patrick (patio11/bingocardcreator.com) knows the cost of acquisition for 1 customer. If you're good with AdWords, its pretty doable.
Anecdotally, I've heard Amazon shoots for $23. Thus they'll put basically unlimited money into any system bringing in customers for You can run into a problem of volume though, i.e., you overfish the pond. Then you'll need to find new sources of customers (e.g., Facebook ads if you've only done SEM).