

Dropbox (YC S07) Raises $7.25M, Crosses 3M Users - hshah
http://gigaom.com/2009/11/24/dropbox-raises-7-25m-crosses-3m-users/

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icey
Dropbox 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!

~~~
ujjwalg
I agree and congratulations to the whole team. I have been a huge fan and
loved their free service. However, as soon as I moved to the paid service and
increased my backed up data to 10GB my computer became extremely slow. Dropbox
is using 98% of CPU both on windows XP and Mac. It has been a week and not
everything is backed up yet. Moreover, if I move a directory within my dropbox
folder, it takes it as a new folder completely and tries to delete and back it
up again which is completely opposite to their philosophy. Also, if you want
to back up 2-3 computers at the same time everything screws up. So, a word of
advice while using dropbox, be patient, dont get too excited after using their
free service and jump the gun from 2GB to 20GB, do it slowly and carefully and
hopefully things will work out great.

~~~
steveitis
Me too, and I was only on the free version. After trying to copy a couple of
thousand tiny text files, I had to force kill explorer repeatedly until I gave
up and uninstalled Dropbox.

In the end I just signed up for a $9.99 a year hosting plan with 20 gig of
storage and WebDAV. Cheaper, faster, and no funky software to crash my boxen.

Honestly I'm not even really sure how Dropbox ever became so popular.

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netcan
\- _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?

~~~
patio11
_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> ]

~~~
netcan
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.

~~~
mattmaroon
What he's saying is that perhaps Dropbox can buy a user for $1 (via adsense,
whatever) and make $2 off them. In that case, it makes sense to take all the
money you can and plow it into customer acquisition.

At some point the law of big numbers becomes a limiting factor, but probably
not at any point that would make it unwise to take $7m.

~~~
uuilly
Not to mention that there is a _lot_ more that can be done in that space from
an engineering perspective. Files syncing could be just the beginning. What
about consumer MVC from files to web services? Edit a photo on iphoto and it
automatically changes on every service that uses it.

The "data keeper" role is like an octopus, big in the middle, tentacles
everywhere. I could imagine a world where that role becomes as important if
not more than the OS / services.

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staunch
I'm betting Dropbox will be the biggest YC exit for quite some time.

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mikebo
Dropbox is really awesome. I'm very impressed with how well they execute. Lots
of companies big and small have offered the same basic service, but nobody has
built a product nearly as good.

~~~
greyman
What about Live Mesh? (When assumed that all your computers run windows). As I
see it, there is basically all the functionality of Dropbox, plus 5GB free
space, ability to sync several folders, and remote desktop functionality.

~~~
gboyer
I believe Live Mesh has an OS X client now. I tried it (on both OS X and
Windows), and while it has most of same basic functionality as Dropbox, I
found the interface off-putting.

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st3fan
"1.3 million gigabytes" - is that correct? If it is .. wow!

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nixme
_"And Dropbox ... says it will offer tools for corporate collaboration in a
more formal fashion early next year."_

Any Dropbox folks here who could comment on what those tools might be?

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mikek
It seems that this article is inaccurate:

[http://www.techcrunch.com/2009/11/24/dropbox-sequoia-
funding...](http://www.techcrunch.com/2009/11/24/dropbox-sequoia-funding/)

"Dropbox did close a Series A funding round, but it was for $6 million, and it
was back in October 2008. And it was led by Sequoia, not Accel (though Accel
did participate in the round)."

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mattmaroon
Grats 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.

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jlk
Agree, Dropbox is amazing. Cheap version control for the rest of us. Made my
USB drives useless.

