Responding to the Cynics
Well, there have been a ton of both positive and negative comments related to my post on our monthly profit figures. I’d like to take some time to respond to the negative comments.
Here we go …
As others have noted, the “profit” really isn’t a real number. There is no accounting for support, future development, company overhead etc. If you assume everything can be handled by two people — an engineer at $60k and an admin person at $30k — your entire profit is gone. And you don’t even have an office, phones, foosball table or any of the stuff that makes a business fun.
The current high bidders for DropSend do not plan on running it as stand-alone company. It simply does not have the revenue to support this. Therefore, the costs for management are assumed to be absorbed by someone who is already on their staff.
While the revenue growth is impressive, there is less than a year of history. The projected numbers are very nice, but completely unprovable at this point. Anyone with Excel and itchy fingers can build the same model.
Our growth estimates are very conservative. We do not, in any way, have “itchy fingers”. If that was the case, I’d be bumping those growth figures up by a few percentage points. It’s perfectly reasonable to predict that revenue would grow with increased advertising. However, just to be safe, we’ve left the current revenue growth at 8.6% and not increased it.
3) The product is a one-trick pony, not a platform driving broader adoption. That puts a limit on the multiple you’re going to get too.
Wrong. This is what makes DropSend so valuable. It’s damn good at one thing: sending large files.
Selling is one way to make money with a business, but running a Business that is profitable is usually better. I think this is the source of some of the skepticism about this sale. If it is indeed profitable then why the need to sell?
When a business is sold (in the UK), you enjoy 75% tax relief on the sale. This is because the government wants to encourage citizens to build businesses, sell them and thus bolster the economy. This is why I said “Businesses are built to be sold.” If you don’t plan on selling your business at some point, you’re missing out on a perfectly legal way to enjoy the profit you’ve created.
the fact that its not being advertised means project mostly depends on Ryan’s connections and exposure for publicity, which makes it even less attractive once it is disconnected from Carson’s.
This is just not true. I’d say that 99% of DropSend customers have never even heard of “Ryan Carson”. Why is DropSend growing? Because it’s viral. Every time you send a file to someone, it says “File sent by dropsend.com” at the bottom of the email. This virality is enough to achieve our 8.6% growth per month. If someone to invest, say, $10K on a concerted marketing campaign, those figures could increase substantially.
Thanks for your openness.
If you would’ve sold dropsend without telling it, the people would’ve said the same things.
(He is trying to hide this and that. What is his real intention. etc.)
It is just very normal to make business and make money.
So keep on.
Thanks
Comment by Tamim — November 9, 2006 @ 12:23 am
Ryan - You’re opening yourself up in a forum where it is easy for people to take potshots. Keep addressing people in an open and straightforward nature, you’re really doing something differently by handling all of this publicly in a “naked” way. I thought the commenter yesterday made a good point about the Ryan Carson brand value, but my take on it is a little different. The growth of DropSend is not dependent on your own brand, but the sale of DropSend is. DropSend can and will grow without you, but the sale of it in this fashion would not. - Cheers, Chris
Comment by Chris Schultz — November 9, 2006 @ 3:51 am
Hi Ryan
It’s your website. It’s your business. You can do whatever you want. with it.
All the cynics just being jealous. Including me - jealous.
You don’t have to answer them.
All the best. Good luck.
Comment by john — November 9, 2006 @ 4:43 am
Thanks guys :-)
Comment by Ryan Carson — November 9, 2006 @ 5:43 am
Ryan, it’s been awesome watching you build Amigo on this blog, and now selling Drop Send. It’s very generous of you to share your journey with us, and it is appriciated! The silent majority is very stoked!
Comment by Eric — November 9, 2006 @ 1:42 pm
I think the majority of people are stoked actually. Many of the negative or cynical comments are people trying to learn something from someone who has done several things really well (and has the patience/willingness to share). The cynics and negatives are a good part of the process, better than those who simply nod their heads and agree all the time. But they are usually more effective when they handle themselves responsibly.
Comment by Chris D — November 9, 2006 @ 3:12 pm
Isn’t 75% tax relief actually taper relief on business assets not actually tax relief on selling a businesses? When you sell a business you are subject to Capital Gains Tax on your profit however you are able to offset some CGT with the disposal of assets, although those assets need to have been held for 2 years or more. Anyway, I’m sure you’ve taken appropriate advice so just a comment really!!
I didn’t think the UK Govt has a policy to encourage people to build and sell businesses as such.
Its your business, so ignore everyone who is negative, you should do what you want to do when you want to do it. That’s the point of running YOUR business not someone elses.
Good luck -
Comment by Paul — November 9, 2006 @ 4:24 pm
I find this blog, and insights posted here, extremely helpful and inspirational. This site has inspired us to blog about our transition from marketing/print/webshop to releasing our own products to fellow agencies and freelancers. Thank you for your openness.
As I have built up my own small company over the past 5 years, and start to branch out into launching a couple of others, I have been able to expeirence first hand what separates the truly great entreprenures from the rest. Being an “arm chair” quarterback is easy. Leading the team to the superbowl can only be accomplished by select few. You’ll throw an interception and fumble the ball a few times along the way but you learn from the mistakes and move forward.
Thank you.
Comment by Paulo — November 10, 2006 @ 10:49 pm
Whether or not a ‘network’ or ‘good pr’ count as ‘not being advertised’, what would you call a full page ad in Creative Review?
http://www.dkltd.net/spending-zero-money-on-advertising/
Comment by Andy — November 15, 2006 @ 11:39 am