I think the conversion rates used in this analysis are an ineffective way to examine services like Dropbox.
Given that most users probably convert once they have filled up their Dropbox (which takes time), a cohort analysis done by segmenting users based on how long they have used the service would probably paint a much more accurate (and attractive) picture of Dropbox's business model.
For example, while the global conversion rate might 2%, the average conversion rate for customers who have used the service for 1 month might be .1%, 6 months: .5%, 12 months: 2%, 18 months: 5% etc etc.
If you are only using the global conversion rate to model the business accelerating growth will drag down the average conversion rate, incorrectly making the unit economics appear less attractive. On the other hand, if your model uses cohort analysis you will see accelerating growth accurately translated into future cash flows.
I forget where I read it but I am pretty sure a cohort analysis of this sort was used by Evernote when they raised their round from Sequoia.
Given that most users probably convert once they have filled up their Dropbox (which takes time), a cohort analysis done by segmenting users based on how long they have used the service would probably paint a much more accurate (and attractive) picture of Dropbox's business model.
For example, while the global conversion rate might 2%, the average conversion rate for customers who have used the service for 1 month might be .1%, 6 months: .5%, 12 months: 2%, 18 months: 5% etc etc.
If you are only using the global conversion rate to model the business accelerating growth will drag down the average conversion rate, incorrectly making the unit economics appear less attractive. On the other hand, if your model uses cohort analysis you will see accelerating growth accurately translated into future cash flows.
I forget where I read it but I am pretty sure a cohort analysis of this sort was used by Evernote when they raised their round from Sequoia.
Edit: Clarity