Droplet closing down... :(

(Greg Robson) #1

I must admit I hadn’t used it, nonetheless it’s a shame to see a local business disappear.

Full details on the website: https://dropletpay.com/

I guess it was going to take a lot more money to achieve critical mass to take the company to scale? Apple Pay probably didn’t help either?

(Marc Cooper) #2

Yes, I wanted them to have a good run too. That said, I approached them with some ideas linked to things I was working on and never received a reply. Nada. Given they’re in my back yard, that seemed odd, since Valley Cos, half a world away, always respond within 24 hrs ¯\(ツ)/¯ I also once i/vd for some freelance work with them (which was very messy tbh), and then they just went silent and didn’t respond.

Perhaps unfair, but I got the impression they were run by a bunch of marketing brand junkies rather than boots on the ground pragmatists. Telling a good story is very cool and all, but getting shit done is what counts in the end.

tl;dr; Collaboration is powerful. Use it.

(Greg Robson) #3

Especially if you are a business based on a platform.

(Daveyon Mayne) #4

So if they have tens of thousands of paying customers, why hasn’t it worked? I’m still new in this game and want to know what is considered to be a scalable amount? Millions? So if my platform do not have millions of paying customers then I should close down? Maybe they have too many salaries paying out. No?

(Richard Cunningham) #5

I suspect the problem was the rate of growth was too slow and too expensive. Inherently they had a chicken and egg problem, which is true of many platforms. Customers need vendors/shops that support the platform before it is of use to them and vendors/shops need customers with app.

Signing up vendors time consuming, such that it is a significant cost. Additionally, the payback time is most likely very slow. Visa charges around 2% on a transaction, so they’d need £25m of transactions to pay for a £500k wage bill. It seemed that droplet wasn’t even charging a commission, so it’s unclear how much they were bringing in, probably less.

@SylarRuby Most likely droplet wasn’t profitable. Companies shutdown usually because they can’t get profitabe before they run out of money. Scalable businesses are about how easy it is for you to grow, e.g. you spend $1000 on adverts and you get $2000 in gross margin, so you keep repeating that as fast as possible till it stops working. Whether you need thousands or millions of customers, to break even, depends on the revenue/margin per customer, i.e. if you have a very low margin product (e.g. based on advertising), you need millions of users, if you can charge real money e.g. £100/user/year you might only need 1,000 customers.

(Daveyon Mayne) #6

Guess it’s hard to push a business without first having many potential customers. Seeing this makes me wanna forget about my projects and go look a job :joy:

(Greg Robson) #7

I agree @rythie

In addition you have the Coca Cola/Wrigleys/{other billion $ brand name} issue… once you are big enough to get noticed, you’ll have people try to stop you. Banks (especially new ones) have already woken up this - apps are getting better, we’re moving towards banks with open APIs. Apple Pay will soon be accepted on the web. All these other people can reach far more people, faster with a smaller %age spent on advertising.

It also raises a good point about runway - if you won’t be profitable by the end of your runway you have a crises on your hands. You need to improve revenue, cut costs or raise more money. Sadly it looks like this wasn’t going to be possible.

(Marc Cooper) #8

Yes, the traditional two-sided market problem that platforms run into (though not only platforms).

@SylarRuby Two-sided market platforms were easier (though not easy) to establish when the internet was smaller and there were less incumbents. It’s always been hard to get attention, but it’s much harder now. I liked that Droplet were tackling the problem by focussing locally. It’ll be interesting to hear/read their post mortem if or when they have the will to write it.

(Daveyon Mayne) #9

So that’s what it’s called.

I guess startups need money, loads of it to be successful and scale year after year. But I’m sure they mush have made some sort of profit to stay afloat.

(Will Grant) #10

Apologies if we didn’t get back to you - it was nothing personal, but running Droplet was very intense at times and we did get a LOT of inbound offers from all over the world.

(Will Grant) #11

Definitely don’t do that! :smile:

(Will Grant) #12

Happy to answer (almost) anything - @reply me and I’ll get back to you.

(Marc Cooper) #13

No problem, Will. However, I was pounding the streets talking to local high street businesses not far from Droplet geographically. It may not be sexy on the world stage – where is when you get there? – yet the classic approach to the two-sided problem is to first gain traction locally, so it seemed at least worth a cup of coffee and a conversation.

(Daveyon Mayne) #14

Nahh I wouldn’t. I love to learn and these projects are doing it :wink: