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Ask YC: YC (Dropbox) vs YC (ZumoDrive)?

29 points by startingup ↗ HN
Sorry for the attempt to be cute with the title :) but seriously, isn't there a substantial overlap between these two? Does it matter if two YC companies end up directly competing? As a very occasional angel, I wonder how this works ...

34 comments

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qhoxie
I believe that PG has said in the past that YC has no problem investing in companies within the same market. If they are promising enough and the market is sufficiently large, it won't be an issue.

The storage market with these two companies seems like a pretty good example.

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pg
Originally they weren't competing. ZumoDrive evolved out of Versionate. Even now there are significant differences in the way the two work. They should be able to both succeed.
wensing
Will those significant differences be obvious to the consumer?
pg
I would expect so in this case, because they'll cause the two startups to market their services differently.
nailer
Have you encouraged them to join? Dropbox has more customers and awareness. Zumodrive has better technology. They'd be stronger together than apart.
pxlpshr
Hmmm, I'd like to see a formal comparison of the two. I haven't used zumodrive but I'm soooooo impressed with Dropbox. It's amazing.

I know this is against the grain, but Dropbox replaced SVN for our development projects. It's a lot easier for designers to use... SVN is too tedious.

andreyf
I haven't used zumodrive but I'm soooooo impressed with Dropbox.

One fundamental difference is that Dropbox syncs things between drives and cloud. Zumodrive only uses your local machine as cache. The difference is when you have 20 gigs in the service, a Zumodrive doesn't actually use up any of your HD space. On the other hand, you don't have to be connected to the internet to see/edit your Dropbox files, only to sync.

sunilbhargava
While is it true that Zumodrive by default uses local storage as a cache, if you have enough space you can set it to keep everything local.
albertni
What makes you think it would make sense for two small startups to just "join", especially in this space, where it's not like you can just plug the technology of one into the other.
nailer
What makes you think they can't? They have the same target audience, some of the same investors, and are working on the same problem - universal access to one's files.

I'd:

* Rebrand Zumodrive as a future version of Dropbox

* Use Dropbox's syncing model to ensure the local cache is kept up to date to a user-configurable percentage.

This would allow speedy access where the local device has the space, and still allow access where the local device doesn't have the space.

mattmaroon
Due the fact that companies often evolve substantially from their original business models, it is impossible to make a lot of investments without at some point having clashes among your portfolios. A group that makes 40 per year couldn't possibly avoid such a thing.
rokhayakebe
And given the current funding climate, it would be great for such companies to merge.
fallentimes
Why?

Don't you think the transition period would dramatically hurt productivity? What about clashing cultures? M&A usually fails.

jwilliams
M&A usually fails.

Yet a lot of YC companies will end up getting acquired.

staunch
A big company can accept that some of its acquisitions won't work out well. Small companies aren't as strong.
jwilliams
So what you're saying is that when it works, the reward is enough to offset the failures.

Given this, there is no reason startups should avoid merging simply because it "usually fails" (as the post above was suggesting)... In fact, it's a risk in the same league as doing a startup in the first place.

staunch
It's enough to offset the failures for a big company if they're any good at acquisition. For a startup the payoff has to be a heck of a lot more. The odds of the merger going bad are higher (too many chefs) and going bad means a total failure of both companies.
jwilliams
I think we're debating at cross-purposes.

The original statement was along the lines of - M&A usually fail, so there is no point in doing this for startups.

Now, maybe being a startup modifies the M&A rules in some or many ways - but I don't think it precludes M&A as a worthwhile option.

A merger in a high risk field might be a tipping factor - might improve your chances or getting a critical mass of users, funding, or some other key factor - so whilst the merger is risky, it modifies the chance of success in some critical way.

In the highly competitive field such as online storage, this kind of advantage may well be something worth pursuing -- I'm not 100% convinced in this case, but it does have some interesting implications.

So - totally agree - might be risky. Might be risky most of the time... But certainly not worth dismissing.

fallentimes
More like: they usually fail so proceed with caution
fallentimes
Not really.

The risk & reward don't usually work out right (regardless of size). But business development people love them.

You shouldn't always avoid them, you just need to understand the majority fail without the reward to make up for it.

rokhayakebe
I am assuming the majority of YC startups are teams of 3-4 and merging would mean teams of 6-8 working together, fixing the same problem-set.
perezd
I'd like to know the answer to this too, I feel like there are a ton of viable options out there now, but I am waiting to see who stands out as defacto.

The ZumoDrive/iTunes integration is truly innovative, though. Majorly cool!

Dilpil
Nothing wrong with diversification. If it is good for the economy at large to have so many competing smaller entities, then perhaps it is good for an individual fund to have stakes in many competing smaller entities as well.
crad
ZumoDrive is notably down right now.

500 - Internal Server Error Oops, something went wrong on the server. We'll investigate this ASAP. In the mean time, click here to go to our home page.

On every page :-(

crad
It's back now :)
shergill
Cloud living is pretty expensive :(
Rabidmonkey1
I would love to see ZumoDrive support Linux. I've recently adopted Linux pretty much full time, and the Dropbox client for it is great; it really offers seamless integration.

Does anyone know if ZumoDrive plans to offer Linux support in the future? I have a huge flac library I'd love to be able to stream to my lower storage laptop. Heck, I'd store a ton of stuff in the cloud.

davidz
We are looking to support Linux soon :)
whalesalad
ZumoDrive turned me off instantly with their horrible Mac offering. I like the idea, but Dropbox actually has a real nice client on Mac.
keevon
I'm curious what it is you don't like about the ZumoDrive Mac client.