
Dropbox Buys E-Commerce A/B Testing Service Predictive Edge, Shuts It Down - doppp
http://techcrunch.com/2014/07/01/dropbox-buys-e-commerce-ab-testing-service-predictive-edge-shuts-it-down
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s4sharpie
The greatest challenge will be to see how Dropbox is able to integrate so many
teams/developers successfully over time. It will be interesting to revisit
this post in a year from now and see how many Predictive Edge (or their other
acquisitions) former employees are still with Dropbox.

AcquiHire is becoming a real trend in the market. I think the key drivers are
a lack of available talent willing to change companies and misaligned
remuneration. The lack of talent is a common thread. Misaligned remuneration
is something more interesting and likely to affect existing devs and companies
more and more.

If you are in that high echelon of dev talent, you can find someone willing to
offer a good salary and the promise of x% of potentially something large in
the future. Or now, you can launch your own company, throw out a flashy
project to demonstrate your skills, and by acquired by a Dropbox (or it's
ilk). This way, you will likely get the same salary, the same promise, but a
significant signing bonus upfront.

How companies are going to react to this trend will be interesting. Will
signing bonuses and ongoing bonuses make a significant return?

~~~
sudont
Hmm, is there historical data of this sort for many companies? Sounds like it
could make an interesting survival analysis project.

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raverbashing
Ah yes, this acquisition seems to be buzzword compliant

"Dynamic Pricing" using "Machine Learning" in "Cloud computing"

That, or they found a correspondence between a detail in their
offering/capabilities that matches what Dropbox wants to do.

~~~
d357r0y3r
They're going to leverage that synergy, empowering key corporate values to
enable a full service solution. A true game changer.

~~~
w1ntermute
[http://www.youtube.com/watch?v=hsr-
QfgFRh8#t=50](http://www.youtube.com/watch?v=hsr-QfgFRh8#t=50)

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danbucholtz
Alright Dropbox, time to pony up and buy my startup, www.gopaperbox :-D

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startupdeep
One more Talent Acquisition story!!.

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stuaxo
Isn't this an expensive way to hire a team ?

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bitJericho
Maybe it's the only way to guarantee having a rockstar team for the next 5
years or whatever they all agree to.

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ama729
From Predictive Edge website:

    
    
      Many thanks to you all for your feedback & support, and here's to a
      new chapter!
    

From _Our Incredible Journey_
([http://ourincrediblejourney.tumblr.com/](http://ourincrediblejourney.tumblr.com/)):

    
    
      An incredible journey is:
      
          One company buying another and closing its services down. This is a
      purchase of the second company’s staff, rather than their product. An
      acquihire.
      
      If you look through the archives this is what all the incredible
      journeys have in common. A company gets bought, its staff are excited
      (publicly, anyway) about their new home, but sorry that the service
      which brought them to the attention of their new bosses will have to be
      closed. “But thanks for joining us on our incredible journey!”
      
      This is what is galling. A company that can afford to pay millions for
      some new staff but not for what those staff built. The people who used
      the service, and invested their belief and time in uploading photos, or
      forming friendships, or logging data, are left to find new virtual homes
      while their former hosts enjoy a nice (if possibly delayed) payday.
      
      This repeated pattern only encourages more people to create flashy
      services that have no hope of being sustainable businesses in their own
      right, but may survive long enough, with VC funding, to attract the
      attention of a large company eager for new ideas and staff.
      
      It’s one thing for companies to go bust, or to close their service
      after failing to make it work. This is business. It’s capitalism. But
      starting services only to close them a couple of years later when payday
      arrives is a vicious way to treat people.

~~~
patio11
Have you ever seen e.g. a pizza joint, bowling alley, etc shut down? You could
write the letter that gets posted in the window with a Markov chain. It is
practically identical to the widely satirized language used by startups.

"After 43 years in business, Joe's Pizza will be shutting down after July
10th. Thanks for your patronage over the years. We'll miss you."

Modulo individual stylistic choices, this is the appropriate level of social
niceties between a business and a customer. Joe's Pizza is not obligated to
say that their bookkeeper embezzled $300k, they misjudged the pizza market, or
Joe's heart just isn't in pizza anymore. You paid, you got your pie, and you
and Joe _are even_.

~~~
smacktoward
Yes, but most of these companies are selling _services_ , not products. If I
was buying a downloadable software product from them, the you-got-your-pie
analogy would be more apt; sure, the company went out of business, but I still
have the product I bought and can continue to use it. Services don't work like
that; when the company goes away, the product goes "poof" and disappears. Even
if you paid in advance for long term use of it! Which makes people confused
and/or resentful.

This is the downside of the Everything-As-A-Service model: services are a
_commitment._ Customers aren't buying a product, really, so much as they're
buying a relationship with you and your team. The only way you can sell a
relationship is by convincing people that you're _serious_ about it -- that
you're in it for the long haul. So if the next week you announce that you
really weren't...

~~~
patio11
In selling actual services to businesses -- the kind they pay tens of
thousands for -- they'd often prefer to have a relationship with you. And you
do have a relationship. It is a professional relationship and governed by
contracts. They owe you what is written in the invoice, you owe them what is
written in the SOW, and after acceptance _you 're square_.

This actually comes up in negotiations. "We'll need a follow-up engagement in
six months." "I might be available for a follow-up engagement in six months."
"Can you guarantee it?" "I am amenable to selling you a guarantee." "
_Selling_ a guarantee? We don't want to pay extra. We just want to schedule an
engagement six months from now, if we need one." "In that case, you can wait
five months and ask to schedule an engagement. I'll generally try to slot you
in, subject to my then-prevailing rates and availability."

I think you think that using a SaaS gives you a free option on service next
month. This is... an _unusual_ understanding of how business services work.

If you absolutely need continuity of service that is something you can buy.
Many HNers do not understand that it is _really freaking expensive_. If you
are paying $29 a month and don't remember signing custom language guaranteeing
it _you probably have not bought it_.

~~~
Silhouette
_I think you think that using a SaaS gives you a free option on service next
month. This is... an_ unusual _understanding of how business services work._

That might be true technically, but it's certainly a common expectation among
organisations that use SaaS offerings.

Moreover, it is a _necessary_ expectation for many of those services to be
commercially viable. Frequently the time and resources invested in integrating
someone else's service will take a significant period to generate a net
positive return and outsourcing will incur a significant degree of risk. If
decision makers didn't have a good faith belief that a service they were
planning to integrate would remain available for a useful period of time,
approximately no-one would ever sign up in the first place.

Obviously many businesses do offer services that, according to their fine
print, do not provide any such guarantee. They rely on their potential
customers either not noticing or not caring enough to prevent them from
buying.

(If you disagree, then if you'll forgive me for using a personal example for a
moment, I invite you A/B test Appointment Reminder's current home page against
a factually accurate version that does not make any claim that is undermined
by the fine print in your Terms of Service. For example, instead of "Clients
get a reminder call or text message prior to their appointment" in your main
graphic, you could write "Clients might get a reminder call or text message
prior to their appointment, or they might get it late or not at all.")

IMHO, current trends like launching MVPs and exiting via acquihires are
therefore poisoning the well. Potential customers of future services will,
quite rightly, be suspicious of those services' reliability and longevity, and
otherwise viable businesses may fail purely because of trust issues.

In the interests of fair disclosure: My own businesses depend on very few such
services, and without any exception I can immediately think of, either those
services are conveniences rather than critical to business operations or their
providers have given legally actionable guarantees about their intentions/exit
scenarios.

~~~
patio11
I wasn't going to mention it, but since you asked, my answer when somebody
asks this for AR on the publicly available plans is: "I have been in business
since 2006. AR has been my main product focus since 2010. I don't have any
current plans of exiting the business any time soon. At the same time, I'm a
one-man operation. If you were to say you feel less sure that I'm going to be
around than $COMPETITOR, I'd say you're probably right. I'd also say that you
can always get me to answer your email and their CEO wouldn't even know much
less care that you exist. Your call." ($COMPETITOR is a well-known company in
the space with eight figures in revenue whose minimum buy-in is close to the
maximum I've ever charged a client.)

If you were on one of the non-publicly-available plans, you'd get language
similar to "Vendor agrees to provide services as per the attached Statement of
Work for the Contract Term as specified in the attached Statement of Work."
That means exactly what it and related contractual terms say. It isn't like
continuity of service is something that e.g. hospital systems suddenly
realized they needed in 2004. They quite literally have similar contractual
guarantees written in their contract for garbage disposal.

~~~
Silhouette
You rather deftly sidestepped my main point there. :-)

Again, I don't really want to focus on Appointment Reminder specifically
because obviously it's not as if you're running the only service in the world
that does this, but it does make a good example here. Objectively, almost
every major claim on the Appointment Reminder home page -- meaning the things
that really matter to a prospective customer, including literally the _entire
benefit_ someone would get from signing up to use the service -- is undermined
by the wording in the Terms of Service.

It may be true that if someone asks explicitly then you give them an honest
answer about your situation. I've certainly no reason to doubt you do. On the
other hand, does an average small business outside the start-up world actually
ask? I can't imagine anyone working the reception desk at my dentist or
optician is going to be sufficiently aware of the legal and business
environment to consider that a service advertised as Appointment Reminder is
might not actually promise to do anything of value at all.

At this point, AR is becoming a bad example, simply because by its nature it
falls into the category I described as being convenient but not critical. (No
slight is intended by this comment, but I imagine any business that has so
many missed appointments that it would be in serious trouble without AR has
bigger problems than anything we're discussing here.) However, if we were
talking about a service that hosted the professional's calendar of
appointments, or their CRM database, or their payment system, and these
services were known to be at significant risk of disappearing overnight, how
many other small businesses would really sign up to use them?

~~~
patio11
I'm attempting to avoid engaging in your main point, because it would require
taking notice of the accusation of fraud.

 _On the other hand, does an average small business outside the start-up world
actually ask?_

No. They don't ask for AR's continuity plan, for the same reason they don't
ask for their accountant's continuity plan, or their lawyer's continuity plan,
etc. Would the good doctor prefer to deal with the same accountant every year,
to avoid having to re-explain every decision made in 6 years to a new
accountant? Certainly. Are there accounting firms who they could purchase
ongoing services with contractually guaranteed continuity from? Yes. Dr.
Carter's Dental Office is welcome to call up the Big Five any time Dr. Carter
gets worried about his good buddy Ralph closing up shop before tax season next
year. He doesn't, partly because he prefers Ralph to the Big Five, and partly
because the Big Five is way the heck out of his price range. Dr. Carter and
his team of professionals are, in fact, _actually_ in business, and they're
fully capable of making decisions like this. If you're of the opinion that
Appointment Reminder is the first time Dr. Carter got into a services
relationship you're _wildly mistaken_.

(n.b. I spend about as much on accounting as a small dental practice, and have
a great working relationship with my accountant. I also read my contract with
him prior to signing. It has specific contractual language about termination
which is effectively identical to AR's.)

~~~
jschulenklopper
Good example on the Big Five: they became known as the Big Four after the
demise of Arthur Andersen in 2002 :-)

