DropSend sold – but how easy is it to flip a web app these days?

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I’m a little late to this, but it is worth noting that events guru Ryan Carson – co-founder of the Carsonified conference and training company which does the rocking FOWA – recently sold his web app DropSend, some two years after putting it on the block.

The buyer is Webminds who, I understand, picked the app up for an undisclosed amount, though I gather it was in the low six figures. I hear Webminds plans to take on the much larger and well funded YouSendIt which has $34 million in backing.

Ryan says he plans to plough the money from DropSend back into Carsonified, possibly to build more web apps.

Ryan – who for the record I like and I credit with being one of the guys who kicked off Web 2.0 in the UK – and I have had philosophical differences in the past. Hell, we’re going to be on a panel at FOWA together. But I actually agree with his view that web developers can take an alternative route to venture/angel funding and build a Web app from scratch and then sell it, in the process retaining control and owning 100% of the equity. Ryan has proved this himself, clearly. That is great if, like Ryan, you built an app for friends and family money – or even in your spare time? – and then sell it for a couple of times more than it cost to build. Indeed, as Carson has often said, DropSend cost in the region of £50-60,000 to build. And he has continued to try to put his money where his mouth is – apparently building a Web app in 4 days from scratch called Matt which allows you to post to multiple Twitter accounts. But I think there is also an argument to say that having a smaller share of a larger company pie works too – and that can only be achieved with backing. I also think it’s going to be tough to just ‘flip’ a web app in the current market conditions, but I suppose we are all changing our thoughts on that issue daily at the moment.

I guess it depends on your whole approach. Carsonified is famous for giving it’s workers a 4 day week, a new Mac and iPhone when they join and a harmonious work/life balance. ‘Tis a consummation devoutly to be wished. To work; to sleep;
To sleep: perchance to dream of Web apps…

Let’s hear your views in the comments.

  • http://ontechnology.wordpress.com/ Robleh

    I think he’s right that you don’t get the best out of people by riding them into the dirt. If you are doing something difficult which requires a lot of ingenuity and thought you need a break to perform at your best.

    In these conditions an app without a solid business model is going to be a pretty hard sell. Maybe you can pull it off if you have a good network and track record in building apps like Ryan but not without.

  • http://carsonified.com Ryan Carson

    The best thing about DropSend is that it was bringing in a large amount of revenue every month. It wasn’t a ‘Build a big audience and worry about monetizing it later’ kind of app. It was bringing revenue in from Day One.

    We decided to sell because we could get a large infusion of cash into Carsonified right away, instead of having to wait for that revenue to come in over a period of time.

    My hope is that this sale will encourage other European start-ups that they can do it! They can bootstrap, grow and eventually sell (if they want). Let’s get rockin Europe! :)

  • http://nazimjamil.com Nazim Jamil

    Ryan rocks!

  • http://www.picturetheuk.com James Penman

    Yep, agree it depends upon one’s approach and what you want from your years. The venture/angel route is (understandably) overplayed IMO so it was refreshing to have the other view argued when you had the ‘differences’. He always comes across as a nice bloke as well so congrats to him and his family.

  • http://www.safetygoat.co.uk kat neville

    There seems to be a lot of talk about bootstrapping the past little while. I heard Ryan talk about it at the last geek dinner and there was a talk about it at Barcamplondon5 this weekend.

    I like the idea of it because of the empowerment: I’m a designer working with developers, and as many ideas as I have, so too do developers, but struggle to get their ideas out because of management holding the creative reigns, or because the project is already so defined, there isn’t any space for anything new within it. So many people have started working at a company and been excited about it, but lost their spark after a while. Working on other projects gets you passionate about what you do again. I think many companies would really benefit from allowing small developer-led projects without “board/management” influence… if only because it means you can probably keep all your brilliant, creative employees.

    • http://www.carbongraffiti.com/ Jon Aizlewood

      I couldn’t agree more with you Kat!

      Creativity can so easily seep out of the skin like a tan when working in a corporate environment. You need stimulation that’s not governed or impeded by a bureaucratic organization, and that’s 95% of the reason why I freelance by night as I work full-time by day. If I had just the 9-5’er, I’d actually burn out much faster and easier.

      Also, congrats to you Ryan on the sale… and curse you for offering the only 4-day week I’ve seen that actually seems to work. Oh, and those other little bonuses for new employees makes me want to be sick, but I mean that in the nicest possible way. In all seriousness I think you represent the way forward for the ‘next gen workplace’. Relaxed, savvy bosses who understand that the working environment is just as important as the work. Kudos to you and your team for inspiring others.


  • http://scottpurdie.com Scott Purdie

    I think if you are going to bootstrap, make sure the app can make money. Then you can run it, stay small and grow revenue.

    Companies that follow this type of strategy have far better chances than free services hoping to be bought.

    The content i read from them has encouraged me to bootstrap, hopefully grow while making revenue. Then i have the option to sell a business with revenue or keep making revenue.

    Well done.

  • http://ontechnology.wordpress.com/ Robleh

    It all depends on scale and objectives. If you are aiming at a particular niche get some traction and revenues within that market and can find a buyer looking for a presence there then you can go direct to sale. If you are building something with broad application and are looking to move quickly beyond a small base then you generally can’t do that with a trickle of revenue.

    Taking outside investment works as long as you and the investor are on the same page. Not taking investment when you are trying to build somehting big will choke the business when you need to accelerate, taking investment when you want to grow more slowly will frustrate an investor who wants to scale towards a big exit.

  • http://www.futurescape.co.uk Colin Donald

    Mike – I won’t say that I predicted this, but I certainly gave the alternative view, ironically at a Future of Web Apps panel in Feb 07.

    As I recollect, you were chairing and the panel included Mike Arrington and Saul Klein.

    Before the FOWA debate, on the UK vs the US start-up scenes, I did some research into what kinds of online properties had actually sold in the previous two years and how much they had sold for.

    The sites were very functional – classifieds, recruitment etc – and selling for millions to major media companies, such as News Corp. The total amount of the sales was a staggering £274m – plus another £120m in the ITV/Friends Reunited deal

    The list is here: Great exits for UK Internet start-ups


    But the developers seemed pretty indifferent. Then the penny dropped. The previous day, they’d all been cheering Digg founder Kevin Rose – and of course, they all wanted to BE Kevin, the rock star Web app developer. No-one wanted to make a boring jobs site and cash in for a few million.

    Personally, I think much of the action is now shifting over to online video and Web shows, a part of the creative economy in which the UK has considerable strength – British television producers have a formidable record in exporting formats to the USA and there’s every reason to believe that they can replicate it on the Internet.

    And as for Web apps, what did Kevin do next? Of course, he started his own Web show production company, Revision3, and now he’s an Internet TV star, too!

  • http://www.phoload.com Jamie

    The DropSend story is definitely an inspiration to those who are building web apps from scratch without external funding.

    Re the Carsonified working hours… The four day week is a great idea for employees. Startups can sometimes have too much of a culture where you have to be working 24/7. This is fine for founders who have a decent stake in the business, but it can be wrongly imposed on employees who may then become dissatisfied. But, giving employees a four day week must be a hard leap to take as there is always so much work to be done in a startup.

    I am in France at the moment where the last vestiges of the 35 hour week are disappearing. Many French programmers came to London because the job market was good, but also because they felt that they could earn more by working more. Also, some people just like to work all the time, and you would not necessarily want to restrict these guys to a four day maximum.

  • jas

    If you can sell any kind of app for any kind of money take it because as long as you are controlled by another platform you app/business is at the mercy of who controls the platform……..so get in and out as quick as you can before the platform pulls the plug on you as has happened previously to other money making successful platforms…

  • http://carsonified.com Ryan Carson

    @Jon – Thanks for the kind words re: Carsonified. Much appreciated.

  • http://benmetcalfe.com/blog Ben Metcalfe

    I’m a big fan and supporter of Ryan and the Carsonified team. They key take-away for me when I look at the values of Carsonified is that is not about a different way to run a startup. It’s about having a different measurement for success in the first place… which you either gotta buy into or not.

    I read Jason Calananis’ post recently about, well, effectively working every last drop of productivity out of your employees. Jason recommended in the falling economy that founders call a Sunday breakfast meeting to see who turns up – those that don’t are not committed and perhaps should be fired he suggested. He also joked that 9-5’ers are fine ‘for the post office’ – not startups.

    At the end of the day both points are valid (though I do think the a sunday meeting thing is crosses the line of what is acceptable) – but assuming the quality of your idea is successful it is more likely that Jason’s approach will make you the 10’s(/100’s of millions). But at a cost.

    It comes down to what you are content with. People like Jason Calacanis are not going to be interested in “low 6 figure” exits, nor is he the type of person who wants to work 4 days a week. On the other hand Ryan doesn’t strike me as the type of person who is working his way in life for that $100 million exit – clearly his goals are very different.

    Everything is valid, you gotta choose what is right for you AND align yourself with like minded people.

  • JonH

    Don’t all employees get the use of a laptop when they join a company? I don’t know what all the fuss is about!

  • http://carsonified.com Ryan Carson

    @Ben – You hit it on the head (and thanks for the nice words). We’ve decided how we define ‘Success’ and are acting accordingly, and we’re having a lot of fun in the process. What more could you want?

  • http://www.twitter.com/lakey Chris Lake

    I guess we should look at Ryan’s ‘large amount of revenue’ comment and figure out how much ‘large is’.

    If, for example, £5k is large, and much of that is profit, then you could quite easily get to a £500k valuation based on a 10x profits multiple.

    Working backwards, if Mike’s ‘low six figures’ is correct then perhaps Dropsend was pulling in only a couple of grand a month in profit, which doesn’t seem especially large (but a profit is a profit).

    In any case, the sale makes sense for Ryan and his company and in the current climate I wouldn’t be surprised to see more sales like this going through. Take the money, move on, do something wonderful all over again…

  • http://www.bootlaw.com Danvers Baillieu

    @chris – £500k is a 100x multiple of £5k…

  • http://www.twitter.com/lakey Chris Lake

    £5k / month X 12 *months* = £60k, less some costs, times 10.

  • http://www.iinclude.com iinclude.com

    My model has been about developing initially a free version then and upgraded paid version of plugins for CMS (Content Management System) i.e. Joomla, wordpress, etc. The model has worked and I guess this is not dissimilar to what a service like basecamp will do by giving you one account with limited use for free. If your service holds value then others will use it.

    There is an advantage to be able to create a service that has minimum competition and grow prior to some big gun coming into the market with more money and resources. Ryan’s creativity and approach to promoting his service in my opinion had an indirect influence on the growth of the service.
    if you look at ‘truemors’ and the negative press it got that contributed to its growth, the founder wells a personality well known to the online world therefore received the necessary publicity.

    Start-ups although are creative need to look very much into the marketing model, it is essential and crucial to the success. There are plenty of sites that have made it to techcrunch, mashable, etc but have not survived or are struggling.

    Sustainable funding is about not putting your eggs in one basket and Ryan’s exit strategy or contingency plan reflects diversity.

    In conclusion this post has strengthened my stance on the ‘premium’ model from the outset. Thanks Ryan


  • baah-baah-the-black-sheep

    Common, spill the beans – tell us how much!

  • http://www.twitter.com/PJWilkinson Philip Wilkinson

    Yeh – come on Ryan – how much? ;-)

  • http://knopok.net/measures/in-barrel-in-gallon-in-litres.html In Barrel

    “More than 5 million people trust YouSendIt every day to instantly and securely send, receive and track their valuable business and personal…”

    Yeah-yeah. Sure… http://trends.google.com/websites?q=yousendit.com

  • http://www.edhatstore.com caps

    Yeh – come on top quality MLB caps

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