
Gumroad raises $7 million from KPCB - thoughtpeddler
http://venturebeat.com/2012/05/07/gumroad/
======
btucker
For anyone that doesn't recall, this was how Gumroad started:
<http://news.ycombinator.com/item?id=2406614>

~~~
jenius
It's crazy that there was so much investment for such a simple idea. I mean
the entire product is just a thin wrapper around Stripe. He must have some
really serious plans to move in a new direction in order to attract that much
interest and funding... I wonder what the plans are?

~~~
gravitronic
Based on the description "social payments" I think it's targeting a wider base
than the original "paid link shortener"

~~~
jenius
For sure - are you thinking tighter integration with social networks like fb
and twitter? This definitely has a lot of potential, but I bet they would need
to work out some agreements with the social networks themselves to be able to
do it really right, and without running into trouble...

~~~
skrish
Probably that is where the VC investment and connections come into play, to
get those partnerships in place. These are certain advantages of having VC as
a stakeholder in business than just being a profitable completely bootstrapped
startup.

------
PabloOsinaga
Question to Sahil or anyone with more context. Where is success coming from?
I'd love to learn.

What we see here is a beautifully executed very clever idea - which we all (as
hackers we are) project into "this should be succesful" and then we see KPCB
throwing $7M at it - so it all makes sense and we are happy as hackerdom is
victorious.

However, what I'd really like to learn is where success if coming from in this
case. ie., who is using this today? Who specifically this is being helpful to?

Is it TONS of small transactions, or have you found a high-priced vertical
willing to pay your 30% cut?

I mean, how is growth looking like today? $7M is a lot of money!

Just asking because I am really interested in the details - since we all know
that a "great idea" is not enough - there must have been a lot of dirty and
beautiful tricks to get traction - and that's the part that is interesting!!

~~~
drewonstuff
I think there is not an answer to this question...yet. I built Gumshow.com a
few months ago half-way expecting to update and re-brand the site for whatever
niche really takes off on Gumroad. However, I don't think that this has
happened yet. While our team here is going to give Gumshow a face lift and
$7mil makes me feel good that Gumroad is sure to stay in the game, I'm just
not sure where the explosive growth is going to come from. I think, as one
commenter here said, paying some higher profile artists (musicians, etc.) to
use the site could be a very effective marketing move. It's also possible that
a niche market product (that uses the Gumroad API, like Gumshow) could get
things really rolling.

~~~
joering2
> While our team here is going to give Gumshow a face lift and $7mil makes me
> feel good that Gumroad is sure to stay in the game, I'm just not sure where
> the explosive growth is going to come from

I respect you alot, but shouldn't that be something you just don't simply say,
especially after raising that kind of money? Further, are you saying "nobody
at Gumroad knows", or rather "hey, I don't know I am just an engineer/owner,
but we are raising this money, some guys with other-than-tech skills will come
aboard and they will know where we going".

~~~
drewonstuff
Sorry if I didn't make it clear that Gumshow is in no way part of Gumroad. I
also do not work for Gumroad.

I have just been trying to figure out a way to build products on top of
Gumroad's great and super easy to use api:
<https://gumroad.com/api/authentication>.

I am most definitely cheerleading for Gumroad since I think more people
building markets, etc over their payments system will enable more users making
money for themselves.

Update: Not everyone has a Twitter account with many followers, so
marketplaces combined with other ways of getting old and new products to
Gumroad could go viral.

------
freshfey
For those of you who don't know, Sahil applied for YC and didn't get an
interview [1] (I think this was before Pinterest and turntable.fm) - a great
reminder that YC can help you succeed, but isn't necessary. [1]:
<http://askolo.com/sahil#4f96a68bebceb8b92300000f>

~~~
itsprofitbaron
FWIW Sahil applied to YC with an iPhone app called Dayta

------
helipad
Congrats to Sahil, I think a few of us have been watching this since day 1.
His record speaks for itself.

It's also good that Gumroad was essentially made possible by Stripe's very
accessible API (as far as I know). I think I speak for all Europeans when I
say hurry up and get Stripe over here.

~~~
jusben1369
I'm always interested/a little depressed when I see Europeans telling Stripe
to hurry up and get there. I've seen this comment many times now but have
never come across a European saying "Will someone hurry up and do a Stripe
here in Europe!?" I think if folks in the US saw a great European service that
- due to regulatory issues - just couldn't also be available here in the U.S.
there wouldn't be a lot of sitting around and waiting and hoping......Or maybe
I'm reading way too much into this.

~~~
jayzee
The Samwer brothers don't seem to like waiting, and see the hell that they are
getting.

------
Alex3917
I would love to know what their assumptions are, as well as their vision for
the product. I hate being publicly critical of other peoples' startups, but
from everything I've read I've really seen nothing that convinces me this is a
good idea.

~~~
citricsquid
Not a good idea in what way? It's a terrible idea that people _shouldn't_ use
or it's an idea that should be used but won't take off?

~~~
Alex3917
Basically I see it as a useful product for certain situations. But what I
question is:

\- How big is the market of people who A) have something they want to sell and
B) have a pre-existing audience who would buy it in significant enough volume
to move the needle for both themselves and gumroad?

\- How often is this actually the best tool for the job as opposed to using
sales tools that tie into external distribution channels?

Again I'm not saying they're wrong, but nothing in any of the articles that
have been written so far convinces me that they're right either.

------
dreamdu5t
Why would they need money for growth? They use Stripe and host on the cloud.
If they aren't profitable now why would they be at 10x the size?

~~~
patio11
Engineers cost $20k a month. They want to hire them faster than they can add
$666,000 of processed transactions a month. This suggests taking investment.

~~~
bignoggins
heard you throw this figure around before. Can you break that out more? How
much of that is salary, and how much is benefits? And this is location
dependent, no?

~~~
solutionyogi
In USA, you can reasonably expect to pay a developer around 100k. Add 50%
overhead and the cost to company is around 150k translating to 12.5k a month.
Adjust this number towards 20k/month if you are hiring in the valley.

------
gavanwoolery
No disrespect to the founder, but it is a strange world where 19 year-olds
raise 7 million in 4 days...

~~~
rudiger
They raised a $1.1 million seed round for Gumroad in just four days, though
obviously the service and the people have been around longer. Three months
later, Gumroad is announcing a $7 million Series A investment.

~~~
jacques_chester
It boggles my mind that $1.1 million is a seed round these days.

------
auston
This is pretty interesting, because Sahil just raised his seed like 3 months
ago...

------
adrianwaj
Is there a Gumroad for bitcoin?

Would be also interesting to encrypt content, keep it hosted somewhere or on a
p2p network but only sell the private keys to access it (for bitcoins?)

Another idea would be to create a new blockchain and you get coins for
uploading content into the network, and the more people that access your
content, or the more content you store, the more coins you get. Maybe there
can be a queue for content that builds up and determines price the moment it's
released. There could also be limited run items such as tickets or coupons
that are all unique and cannot be forged.

If I may say so, Gumroad is not pushing the envelope at all. I hope they do
something revolutionary. Haven't digital goods been around for ages? They're
just streamlining the process for grandma.. okay I'm jumping for joy right
now.

Hasn't clickbank nailed this space already anyhow? <http://www.clickbank.com>

------
dmix
Are there any usage stats out? Are people actually using Gumroad?

~~~
sachitgupta
No stats, but you can get an idea from here:
<https://twitter.com/#!/search/realtime/gumroad.com>

Looks like it's growing like crazy in Japan!

------
minikomi
There is huuuuge attention to this from the pixiv/doujinshi crowds here in
Japan. Great service for them - since they can supplement their twice yearly
Comikett hauls with regular boosts

edit: not to mention a thousand vocaloid / niconico-douga songs with producers
looking for an easy way to monetize

------
sakopov
It's a great idea, and i was actually working on something similar before.
I've said it before, but what scares me to death is when folks start selling
copyrighted material. There is nothing to protect against it and the whole
things pretty much revolves around good user behavior.

~~~
dot
You can fix that with a "report this" link.

~~~
sakopov
But you wouldn't know what's in the file unless you buy it. So you can flag it
after the copyright is infringed and the seller has money in his pocket.

------
dpcan
I have a feeling Gumroad is going to the the In-App Purchasing system for the
WEB.

------
sbashyal
Congrats to Sahil! I have been following his work since he offered to help me
improve one of my hacks I submitted in Hacker News and I kind of saw this
coming.

------
saadmalik01
This kid is on fire.

------
rmATinnovafy
This is going to kill paypal.

I love it.

Going to become a customer soon.

------
igorsyl
What is Gumroad's competitive advantage? It doesn't look like it's its
technology but its brand.

~~~
hansef
Brand and product simplicity, elegance of implementation. What is Dropbox's
competitive advantage, or Instagram's?

~~~
rudiger
Dropbox and Instagram both have much stronger network effects.

~~~
joering2
well, if Gumroad is first of its kind, or the biggest one, and will not turn
out a rip-off, don't you think that people who recommend it would be a
"network effect" ?

~~~
abhaga
Network effect means that the more people use a service, the more useful it
becomes. That doesn't seem to be the case here.

But there is the built-in marketing aspect since every user must send a lot of
people around them to Gumroad in order to benefit from it.

------
tocomment
How much of that 7 million does the founder get to keep no matter what?

------
tocomment
Who did the graphic design for their site? I really like it.

------
EternalFury
Very cool. Hopefully, they'll be more successful than Flattr.

~~~
caseyf
I hope to see something that is is more successful than Flattr.

At 25 cents plus 5% per transaction, Gumroad isn't really addressing
micropayments at all.

------
jusben1369
I wonder what happens when a site wants to use the service but already has an
existing payment gateway/merchant account? I think they'll need to de-couple,
or offer alternatives, if they want to go further up market.

------
sabalaba
Grats Sahil, I remember when you first launched. We've all been captivated
since.

------
thisismyname
Awesome! We have a similar service at www.ClientBiller.com that allows you to
use your paypal, authorize.net, google checkout, and moneybookers accounts.

