YouSendIt CEO: We will win because users love our service

Brad Garlinghouse, YouSendIt's CEO. Credit: Fortune Live Media via Flickr Creative Commons

YouSendIt has quietly become a giant among file-sharing services, claiming more than 37 million registered users, and 30,000 to 50,000 new registrations every day.

That would place it behind only consumer giant Dropbox, which claims more than 100 million users, and ahead of Box, which boasted 14 million users as of October. But you don't hear about the company nearly as much as these two big names.

YouSendIt CEO Brad Garlinghouse, who took over six months ago after three years leading product development at AOL, said he's OK with the lower profile.

"You look on what's happened to Zynga, or what's happened to Groupon. The hype on these companies got so far ahead of reality, then you go public and the transparency of the public markets forces upon them a reset, where hype and reality have to get back in balance."

Referring to some of Box CEO Aaron Levie's more controversial remarks, he said, "You're never going to hear me say Microsoft's going out of business. You're never going to hear me say no one should use SharePoint…. I think it's unfortunate that some startups feel they have to overreach to get attention instead of letting the products and experiences speak for themselves by how customers choose to engage."

YouSendIt started in 2003 as a way to send files that were too large for email. It received its first outside funding in 2005, and since then it's added online storage, syncing, apps for mobile platforms, administrative controls, and even a document signing service.

The founders never imagined that the tech landscape would evolve to play right into YouSendIt's strengths, but the company is now poised to take advantage of the move to the cloud and mobile devices.

"By serendipity YouSendIt finds itself as a consequential participant in that evolution. Why? Because for years and years and years we've been helping users move files around."

Garlinghouse has a strong background in consumer services -- both at AOL and at Yahoo, where he became briefly famous as the author of an internal memo criticizing its culture. So it makes sense that he's a firm believer in the power of consumerization – allowing users to choose the tools they want to use. About 80 percent of YouSendIt's registered users are using the free service, but the company has almost no marketing costs, which has allowed it to come "very very" close to break even. Revenues, meanwhile, are on track to grow from $35 million in 2011 to $55 or $60 million this year.

"We focus on the professional end user. Those are the people who pay us. That ranges from the single-seat architect in Topeka, Kansas, to the five-person law firm in Ann Arbor to the videographer in LA."

He continues, "If Dropbox helps me store my stuff, and Box helps me store 'our stuff' within one company, at some point I want to share with a client, or another company, I want to collaborate outside the firewall. That's typically where YouSendIt has really differentiated itself, and has mindshare."

The classic move for such companies is to start with a freemium viral adoption model, then try to upsell companies to a paid site license. Garlinghouse definitely sees opportunities there.

"We have about 4,000 active users across NBC in the last 30 days. That's been pretty consistent," says Garlinghouse. "They transferred 54,000 files over the last 30 days representing 2 and a half terabytes of data. About 300 of those seats are paid seats. These are people pulling out a credit card, saying I'll pay directly. My guess is that's going on somebody's expense report. We look at that as an opportunity to say to NBC's IT organization, hey, our set of tools, ranging from Send to Store to Sync to Sign, they're solving a problem inside your workflows. Let's talk about how we can put an Active Directory integration around that, give you admin controls and usability, that in some cases potentially reduces your total cost."

But Garlinghouse says that YouSendIt is not planning to build up a big enterprise sales force like Box has done.

"We have a small field sales group, numbering single digits, and only a slightly larger inside sales organization," who looks for prospects based on current usage models. "One of the ironies of some of our competitors, they'll say they believe in the consumerization of IT, but then they build out a 200 person enterprise sales force."

He also thinks that there's plenty of room for multiple players in the space.

"We're not going to live in a homogenous world where everybody's going to use one system. The echo chamber of Silicon Valley dramatically overstates the idea that we have a couple of winners."

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