Comments on: When Fake Money is Greater Than Real Money

By: If You Were 37Signals Would You Sell? » Wisdump

If You Were 37Signals Would You Sell? » Wisdump — Mon, 08 Jan 2007 17:00:50 +0000

[...] Looking at the list 37signals is the only one that stands out as a subscription-based company. They are making real money over fake money and you can count all of their employees with your fingers. The only investment that I am aware of was done by Jeff Bezos and that was more of a partnership than a traditional VC stuck up your ass type of deal. [...]

By: Zach Katkin

Zach Katkin — Fri, 05 Jan 2007 03:00:10 +0000

If the sale drama has been generating enough buzz, Ryan has no incentive to sell the company (as long as that buzz is translating into additional paid signups).

The whole idea, situation, and continued attention has been a great guerrilla marketing ploy.

By: andrew wee

andrew wee — Fri, 05 Jan 2007 00:53:25 +0000

It boils down to the motives of the company making the acquisition.

If it’s acquiring a key technology (usually when the majors acquire a start up), they do a napkin valuation and value the technology and it’s place in the company’s plan, rather than financial stats. Which was the case when Microsoft acquired Hotmail.

If it’s for an existing customer base, they’d calculate the lifetime value of each customer, apply a discount to that and make an offer.

If it’s to increase mindshare (“marketing”), it’d depend on how conservative or aggressive the board is and the offer will either be perceived to be extraordinary or underwhelming.

In the case of the YouSendIt board, it sounds more like a matter of effecting a ‘perception shift’ more than anything else.

By: Paul

Paul — Thu, 04 Jan 2007 19:57:26 +0000

I don’t understand why they want to sell DropSend anyway – if you read Ryan’s posts about the subject it sounds as if the site more or less runs itself and turns over a tidy profit with very little effort. I know they want to concentrate on other things, but if I owned something like DropSend I’d just leave it running and slowly build up a stockpile of cash using the profits or invest it into another business.

In my opinion the reason they can’t find a buyer is that the market is already dominated by one or two other big companies, one of which was in negiations to buy DropSend. Why would an external company want to spend a lot of money purchasing another business which doesn’t do anything terribly original or innovative and has a limited potential for growth?

By: Ben

Ben — Thu, 04 Jan 2007 19:56:50 +0000

It’s not a matter of DropSend attracting bigger companies. The point Scrivs makes is the lack of good business principles in the potential second dot com bubble. If the ROI of DropSend is acceptable to a company it does make good business sense to acquire it (given they have the capital and only then does the size of a company come in).

I don’t think Google does care if a business made or lost a $1 million in the prior as that might be an indication that this business is not going to give us any return. DropSend has not only been profitable but is showing an increase in profit and that’s where I agree with the confusion of it not getting acquired yet.

By: notsofast100

notsofast100 — Thu, 04 Jan 2007 19:09:56 +0000

I think the characteristics, especially size, of the acquiring entity have a lot to do with it. Measure Map was scooped up by Google, which doesn’t care if a business made or lost $1 million last year. They’re both insignificant. So the question is – Why can’t DropSend attract bigger companies? My guess (from what I’ve read) is that they don’t have much unique technology that the big guns don’t already have. Their profitability will help them in negotiations with smaller companies, and I think they’ll find a suitor eventually.

By: franticindustries

franticindustries — Thu, 04 Jan 2007 17:54:49 +0000

The colors at DropSend aren’t pastel enough (;