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Has dropbox taken money since the $6M in 2008?

Their financials must be incredible. If it costs $2/yr to support a free customer, they must already have 500k paying customers to cover the cost. They could just as easily have 1M paying customers and be wildly profitable.

My guess is they are keeping their financials a massive secret, because if they became public it would invite competition from copycats with a budget for TV ads.




They do have something like 40 employees, so they're spending on the order of $10M/year on salaries + benefits + office + etc.

That said, I get the impression (from how PG talks about them, the fact that they seem to have supported this massive growth in users & employees without more funding, etc) that they are doing very well, and improving quickly.


I don't know - the Backblaze guys did several blog posts on the economics of online file hosting/backups and it came out very expensive in terms of hardware. Plus the custom software and management. Dropbox accounts are generally small, so maybe that's making it easier. I'm not saying they aren't doing fine, just that online backups are low margin (Dropbox is special, they aren't regular 'online backup' providers, I realize; and they operate at a premium price point; but still...


The backup services are a different beast. Huge competition, AdWords cost is $5 per click minimum, frequently as high as $15-20. This translates into an insane customer acquisition cost, $50+ is not unheard of, meaning in turn they need people stay with them for 2-3 years just to turn some profit.

The online backup looks simple, and technically it is. It's the business side that is tough.


Plus, Dropbox isn't doing hardware (they use Amazon's). I'd imagine they are S3's largest customer.


They may be S3's biggest customer, but Netflix is easily AWS' biggest customer overall.


I don't think a Dropbox competitor that tried TV ads would do well. TV ads fall into two broad categories. First there are those that are trying to build up the brand. For instance, when Charmin runs an ad showing bears cleaning up after implicitly answering an age old question, and touts how Charmin leaves less pieces stuck to your ass than the other leading brands, they are not trying to get you to leap off the couch and rush down to buy Charmin.

Rather, they are trying to get you to remember Charmin and its superior ability to keep your ass free of toilet paper pieces when you are next in the market picking up toilet paper.

The second category of ads are those that want to get you to actually buy as soon as possible. They want you to call ("Operators are standing by!") or go to their website right then.

Let's consider the first category. Do those kind of ads work for a Dropbox competitor? I don't think so. They might make people aware of the category Dropbox is in, and some people will remember subsequently when they are online and maybe go looking for the product. Most likely they will then do a search, and if Dropbox has played its cards right, it is going to have sponsored ads in the search results, hitting on the same selling points that the competitors TV ads were hitting. Dropbox will end up capturing much of the benefits of the competitor's ads raising awareness of the category.

As far as the competitor goes, they will have spent a lot of money on TV ads, and have no clue whatsoever if the ads actually brought them any business. When we were doing TV ads for a software-based service, this was a nightmare. At one point we were doing things like calculating signal propagation from the FCC data on antenna height and power for stations that ran our ads, in order to figure out out zip codes might have seen have them, and then trying to look at statistical anomalies in purchases from those zips compared to zips in similar regions that would not have been able to see the ad, and attributing those to the effects of the ads.

Now let's consider the second category--the ads that try to get you to buy right now. If you've got a big budget, you can run ads at times that you know well in advance. You can have operators standing by. You can track call center response as the ad shows. If you are are really big, you can have a control center that looks like something out of NASA (see the first season of "Pitchmen", and watch how Billy Mays and Anthony Sullivan would monitor the results as a new infomercial rolled out). But unless you've got a really big budget, more likely you are buying your ad time via a system where it isn't determined when your ads will run until fairly late, depending on what other people are bidding for the time. It's a lot like the way search ads are sold--you and the other advertisers have a budget with an agency, and they are deciding how to divvy out their inventory of TV slots.

It's hard to have operators standing by for this, especially since a lot of these slots will be well out of prime time. So you are relying on getting people off the couch to your web site. Dream on.

Personally, I'd be happy if I saw competitors doing TV ads.


The notion that TV ads fall into two broad categories, is a false dichotomy.

There are other reasons for TV ads. One is to inform consumers about a product or service that they didn't know existed. Viagra and Swiffer come to mind. There is a difference between why Viagra bought ads (and now no longer does), and Charmin ads.

I'd be willing to bet that Dropbox runs an ad in the 2012 superbowl. It only costs $3M, and they are a new product category that has mass appeal. They need to lock down their brand as the goto place for the service. Much like swiffer is now the brand for disposable mops, dropbox need to be the default brand for "your files available on all your computers and devices".




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