DropSend on the Block

• November 6th, 2006 /
•  Chris Schultz

Our friends over at Carson Systems have announced that they are selling their online files storage solution DropSend. It’s exciting to hear that they are selling this service, as it has grown over the last year to 45,000 users (as reported by Ryan Carson at the Future of Web Apps Conference Aug 06).

As only a master of online buzz building can do, Ryan is live blogging the sale at BareNakedApp.com, which is the site where he live-blogged the development of their most recent product Amigo. In what some on his blog have characterized as a misstep, he revealed that he was having IM conversations with Flock, the alternative browser company, as potential buyers. This lead to the story breaking over the weekend on TechCrunch, which has undoubtedly driven a tremendous amount of awareness of the sale.

Since we have a little experience with this whole “project selling” thing, we thought we’d offer some unsolicited advice to the any potential buyers and to Carson Systems team.

To All Potential DropSend Buyers:

1. We’ve used DropSend and we love it. We’ve tried other services and we’ve tried sharing files through FTP uploads and downloads. But for some reason we keep plugging our credit card number in for DropSend, so I guess we just like it that much. This is test number one, will users pay for it, and in our experience yes, not to mention that Ryan has said that the service is profitable so other users must be doing the same thing.
2. Yes, Google & Microsoft are rumored to be getting into the space, but remember YouTube? People like dead simple solutions that work, if you can keep scaling DropSend, there will be a loyal user base.
3. Metrics to look at (IMHO):
• Registered users
• Conversion from free accounts to paid accounts
• User growth (monthly new accounts)
• User turnover (monthly account closures)
• Account breakdown for revenue levels
• Revenue growth vs. storage cost growth – hopefully revenue is growing exponentially faster
4. Bottom line to us is that DropSend has created a brand, has a business model, and is profitable. If offering a storage solution is a strategic fit to your company, DropSend is a great opportunity.

To Carson Systems:

1. Keep up the live blogging. Clearly, this is what got our attention. It seems obvious, but the more eyeballs and buzz you have around the sale the more competition you will have for it, and the higher the offers will be.
2. Reveal as much as you can, but don’t tip your cards. This is a fine balance, I personally think the Flock reveal probably helped more than it hurt, but you don’t want to upset your potential acquirers. One way to avoid this is for anyone you are in serious discussions with, ask them what level of confidentiality they want. But by the same token, don’t just clam up about everyone you are talking with because talking/blogging breeds interest and excitement around the sale.
3. Be honest and transparent about all numbers and metrics. This is a no brainer, but you’d be surprised how many people told us to “fudge” a little about the numbers with Huckabuck. This is terrible advice, don’t do it.
4. Don’t apologize for selling it. Everyone will ask, why are you selling it? Do you see something with it that you aren’t sharing. From experience, we understand that this is not the case for you. You simply have developed it and taken it to a certain level and are not ready to hand off the reins to someone who can take it to the next level. Stand strongly by your rationale for selling. Selling is a success, not a failure. And DropSend can and will be a success (maybe more of one) under someone else’s guidance.

Best of luck with the sale to Ryan, Gill, and all of Carson Systems. We’ll be watching BareNakedApp.

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