The Astonishing Rise of Dropbox

Today San Francisco-based Dropbox announced reaching the 4 million user mark and the hiring of Adam Gross, formerly of SalesForce, as SVP Sales and Marketing.  The user milestone is remarkable considering that the company touted 3 million users in November 2009 and 2 million in September 2009.

The announcement comes despite an overall decline in traffic to Dropbox’s sites in December according to Compete (in November 2009 the company acquired dropbox.com and discontinued the use of getdropbox.com).  Interestingly, Compete reports only 2.3 million unique visitors since September; adding 2 million registrants in that time would indicate either 1) errors in Compete’s measurements, so extreme as to be toxic, 2) massive growth coming from iPhone or other peripheral sources, 3) a conversion rate so incredible it has never before been seen on the web.

Dropbox users are given 2 GB of storage for free, 50 GB for $9.95, or 100 GB for $99.95.  Both paid tiers, at $0.20 per GB per month, closely mirror the $0.15 per GBM storage cost of Amazon S3, which the company uses as its storage backend.  Loading transfer and request costs, margins for paying users are even slimmer.  Presumably the company is betting on both paid and free users using far less capacity than their plans allow or gaining economies of scale from Amazon (who drops storage pricing as much as 75% at higher tiers of storage).  Storing 2GB for 4 million users equals 8 petabytes, which would cost roughly $600K per month for storage alone.  The company previously raised $7.2 million from Sequoia Capital and Accel Partners.

More Dropbox coverage here.