I'm betting Dropbox will be the biggest YC exit for quite some time.
Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
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Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#12I'm betting Dropbox will be the biggest YC exit for quite some time.
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Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#13- 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 understand the principle of taking investment to enable growth. It is not just a principle. It has mechanics to it.
one option A common way this works is putting that money to work acquiring more customers. This can mean sales staff. It might mean advertising. It might mean outlets. etc. It works if you have some way of converting money in to customers in a reliable way. Since dropbox appears to be growing virally through referrals, I don't see how this can be the case here. You cannot easily turn cash in to referrals. If it is a case of putting money to work acquiring customers, there is something I don't understand going one.
The other option I can see is funding the free accounts while you wait for premium accounts to open. If you are in a fast growth period, you might have a higher ratio of free/paid customers then what you expect the long term average to be. If you are growing very fast or your profit margins are relatively narrow, you might need some funding. IE, you might dip under profitable temporarily while you wait for the many new customers to convert. This kind of a need is short term & marginal. $7.25m is not marginal.
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#14Earlier quoted context omitted.
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…
Sure. With adwords you can know the COC. But not with referrals.
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#15Earlier quoted context omitted.
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…
George literally stole the words out of my mouth. $12 to $15 via AdWords, incidentally.
Unhappily for me, I'm capable of saturating all of Google's advertising inventory conveniently available at $15 per customer. (Its sort of like oil: the more you are willing to spend, the more exists in the world. I guess if I were an environmentalist I would describe my current state of affairs as Peak Bingo, but with some sustained effort into AdWords I could probably locate more sources of customers between $15 and $30, or alternatively in different mini-verticals.)
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#16Earlier quoted context omitted.
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…
Sure. With adwords you can know the COC. But not with referrals.
Perhaps not, but you can calculate the chance that a given customer will refer a friend, and factor that into their lifetime value.
Even more interesting, you can see which actions are predictive of referring friends (e.g., leaving a comment on the suggested features list). You can use the same strategy to predict the conversion rate from free to paid.
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#17Earlier quoted context omitted.
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…
George literally stole the words out of my mouth. $12 to $15 via AdWords, incidentally. Unhappily for me, I'm capable of saturating all of Google's advertising inventory conveniently available at $15 per customer. (Its sort of like oil: the more you are willing to spend, the more exists in the world. I guess if I were an environmentalist I would describe my current state of affairs as Peak Bingo, but with some sustai…
Thanks for sharing your customer acquisition cost. Do you ever buy traffic from anywhere else or are you happy with the volume from AdWords?
BTW, still chuckling at Peak Bingo. Well put.
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#18Earlier quoted context omitted.
George literally stole the words out of my mouth. $12 to $15 via AdWords, incidentally. Unhappily for me, I'm capable of saturating all of Google's advertising inventory conveniently available at $15 per customer. (Its sort of like oil: the more you are willing to spend, the more exists in the world. I guess if I were an environmentalist I would describe my current state of affairs as Peak Bingo, but with some sustai…
Thanks for sharing your customer acquisition cost. Do you ever buy traffic from anywhere else or are you happy with the volume from AdWords? BTW, still chuckling at Peak Bingo. Well put.
Today is November 25th. A click on November 25th turns into a purchase by, on average, November 27th. I have to pay Google on December 20th, with a credit card. My next statement date is January 7th, and my payment is due somewhere around January 20th. So, basically, if I get N clicks today, I get $30 two days from now and have to pay $15 two months from now.
This is a long way of saying that, while I'm happy with my volume, I'd be more happy with, oh, enough volume to hit the limits on my credit cards. In fact, I'd avail myself of pretty much every source of credit less odious than juice loans from yakuza or opening an account with CapitalOne.
I have paid for advertising elsewhere. The main issue is that a) Google has a de-facto monopoly on it in no small part due to the fact that b) their competitors s 10) %>ck. Microsoft, for example, takes every bit as much work to get right as AdWords does, but you have to do it within their application, and they have less than one tenth the inventory Google does. To add insult to injury, it is at higher prices. I got a note in the email from them that my credit card had expired and could not bring myself to logging in to give them the updated credit card number, that is how useless they are to me.
Re: Dropbox (YC S07) Raises $7.25M, Crosses 3M Users
#19Grats guys! Just out of curiosity, how did you come up with $7,252,763? Everyone knows its good luck to end with a 4. You could be $1 away from an IPO there.