The app was created and launched in November 2015 by Mount Maunganui brothers Peter Howell and Brendan Howell, who previously were the brains behind Sellshed.
Dropit is now valued at $30 million thanks to signing a distribution deal with Daktronics, the world’s leading manufacturer of scoreboards and digital signage, earlier this year.
In March, it tested out its auction app in front of a 20,000-strong American audience for the first time at two Major League baseball games in Phoenix, Arizona.
The item up for grabs was a 2017 Mitsubishi Outlander Sport, which retails at US$22,280 and sold for US$11,850.
The company is also in the midst of raising equity capital and wants to raise US$3.6 million to US$5.0 million, at a price of US$6.30 per share.
Below, we have a chat with co-founder Peter Howell about how the app actually works, as well as why the US market was ripe for targeting.
Where did the idea for Dropit come from?
We didn't have any capital for marketing so we decided we had to build a mechanism to attract users to return to the app on a daily basis. We then spent two months designing the architecture for a drop auction. After initial testing and running several focus groups we realised we had created something highly engaging that could be a stand alone product and three months later we pivoted the company from a focus on growing SellShed, to launching and growing Dropit.
What’s innovative or unique about it?
Dropit connects fans on their mobile phones to the video boards in a venue; it’s an adrenaline pumping 60 second activation where players compete, live, to win products or unique experiences provided by sponsors. Dropit is a unique, world-first mobile app providing a game-changing solution to fan disengagement – a major problem impacting both sponsors and teams in the sports industry.
Advertising on big screens in stadiums is failing to deliver on its potential with fans disengaged and distracted by their phones and game attendance levels stagnating. This places Dropit at the leading edge of the interactive advertising market with our app being intuitive, easy to use and can be used stand-alone or integrated into other apps and branding.
The Dropit platform delivers fan engagement and immersion by creating pre-event anticipation and excitement followed by multiple “adrenaline pumping” reverse auction, in-stadium experiences during breaks in-game. Dropit has proven its IT platform performance with defensible patent-pending technology.
Why did you set your sights on the US market? What about Dropit’s offering works especially well there?
When we launched in New Zealand back in 2015 we looked at our analytics and we were getting 92.5 percent of users returning on a daily basis. These metrics were as good as Facebook and any of the big players. It was then we realised we were on to something.
We decided to go big internationally and that meant aiming straight for the United States - the world's biggest consumer market. Our belief was that if you can make it in the States, the rest of the world will chase it.
So, Brendan moved to San Francisco in 2016 and began building contacts in the start-up scene. Dropit was accepted into Rocket Space which is the former home of success stories including Spotify and Uber - rare "unicorns" ($1 billion companies) of the IT industry.
This strategic positioning paid off when a colleague talked us up to the San Francisco 49ers draft party at Levi's Stadium - this is where we got our first break and we haven't looked back since.
I think Dropit’s offering works really well in the US because it offers a solution to disengagement – a major problem impacting both sponsors and teams in the sports industry.
US corporate spending on sports sponsorship is estimated at US$15 – $20 billion per year, and forecast to grow 3.5% per annum through to 2020. The digital activation segment is projected to increase from 20% to 28% of sponsorship spend by 2020. These market segments provide Dropit with very significant scope for growth.
What are the biggest challenges you’ve faced along the way while scaling up from start-up to international company?
We have established a strong network of prolific New Zealand investors and advisors who have continued their backing of Dropit from day one and actively encouraged our expansion into the US.
Additionally, the synergy of skills and expertise of myself and our Chief Operations Officer, Brendan Howell, combined with our experience working together for the past 17 years as entrepreneurs, assisted in our progression from a start-up to an international company.
What’s on the horizon for the next year or so? What are you focusing on?
Dropit, now valued at $30million, has a bright future ahead as it continues to disrupt the lucrative US sports sponsorship market with its interactive content – which is our immediate focus.
We have recently signed a two-year distribution deal with Daktronics, the world’s leading manufacturer of electronic scoreboards and digital signage, and are in talks with some of the biggest names in the US sporting arena.
The Daktronics' partnership means that millions of people are expected to interact with the app at Major League and collegiate level games this coming season. These will see fans engaging with live auctions of premium sponsored items during game breaks, via massive scoreboards and the DROPIT app installed on their phones.
It's fantastic to see fans actively engaging with the app and sponsors’ brands instead of checking social media or grabbing a hot dog which I'm sure we are all guilty of at one point or another while at a live event. Being a Kiwi-owned and operated start-up, we would love to be able to bring the app back home to help nurture future innovation and are currently in negotiations with several major New Zealand & Australian sporting franchises.
What is your advice for NZ tech businesses that want to go global like you did?
Kiwis are world renowned as innovators and Dropit is proud to instill that as part of our core business. As a country, we continue to reach new heights. This is testament not only to the 'No 8 wire' Kiwi ingenuity of problem-solving with few resources but visionary and limitless ideas.
Just like many other successful companies, Dropit is a start-up that has worked extremely hard and is a New Zealand success story in the diverse and advanced technology sector. I would say to anyone looking to set up a start-up that ideas are just the beginning. However, great ideas are brought to fruition by the creative application of advanced digital technologies supported by capital investment and strong business acumen.
I hope to strengthen this by sharing my knowledge and experience of the technology business space with others, to inspire future generations and to invest to bring wider success to the industry.