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But this totally negates your point about "there isn't enough money in an email app". Clearly Dropbox thought there was at least a $100MM opportunity...either t

by mbesto 11y ago

But this totally negates your point about "there isn't enough money in an email app". Clearly Dropbox thought there was at least a $100MM opportunity...either talent to produce $100MM+ in value, customers to convert into $100MM+ value, or staving off competition that would result in $100MM in potential loss.

wpietri 11y ago
This seems like a too-generous take. Dropbox could have thought that and just been wrong. Even in the normal economy, per The Economist about half of all acquisitions destroy value. In our little hothouse, I'd expect a much larger percentage of value-destroying takeovers. But there are plenty of other reasons deals get done than a company-wide coherent calculation of economic value. E.g., I've heard of acquisitions happening because a CEO needs to demonstrate to the board that they're doing something. Or incentive structures set up to reward an M&A team based on how many deals they do. Or executives wanting to bring in their old buddies from another company. Or, "gosh, money is so cheap right now we'd better spend it because our competitors are spending."
potatolicious 11y ago
> "Clearly Dropbox thought there was at least a $100MM opportunity" The opportunity was the team, not the product they were producing. Say you had a room full of math prodigies, but all they were doing was watching TV all day. You hire these math prodigies for $X and put them to work solving math problems - this doesn't mean that watching TV is worth $X, in fact it likely means the opposite, that their value is underutilized by whatever they're doing right now. So there isn't enough money in making email apps, but a team capable of producing a great email app can be put to use doing things that do make a lot of money - but it sure isn't making email apps. And that's unfortunate, because as users we're missing out on a lot of great products. The dark side of the immense growth in software (and immense growth in software salaries) is that entire products and services are no longer economical, even though we'd all love to see them. The VC system that drives these early acquisitions and acquihires is just one more factor among many that limit the field of what can be economically produced.
- igorgue 11y ago
  Yeah but that's ridiculous, they had only 13 employees that's 7.6MM per employee over the span of 2.5 years, some of them I'm sure they left already... You tell me when this starts making sense because it just doesn't right now. Too much money! I don't care how big of a genius you are you're not worth that as a developer of an email client, and honestly to write an Email client is not genius level shit. The UI was dope, and their invite process was funny, that's all. Looks like Dropbox fucked up, that's all, bad business decision, trying to copy Google and do better than them in the end they did the same.
  - ohyes 11y ago
    I'm sure some of them are still there, however. They shutdown the product and put the team members to work elsewhere. So it could be prorated over a longer period depending on the acquisition deal.
  - nl 11y ago
    The deal was stock and cash, so it is pretty much impossible to judge how good a deal this was for Dropbox[1]. Stock is a very cheap way for a company to acquire another. [1] http://techcrunch.com/2013/03/15/mailbox-cost-dropbox-around-100-million/ http://techcrunch.com/2013/03/15/mailbox-cost-dropbox-around...
    - jorangreef 11y ago
      "Stock is a very cheap way for a company to acquire another." Not exactly. Could be the other way round too. It depends on whether the stock of the company is worth more or less than cash in the long run.
      - nl 11y ago
        Yes. Except since it is the company issuing stock in itself you can't really think of it as fungible. If it ends up being worth more than the strike price then literally one of the events that led to that price was the purchase stock being issued. Of course that doesn't mean the is a causal link, but in a very real sense the stock was free for the company itself. The only cost to the company is opportunity cost.
untog 11y ago
It's pretty clear that Dropbox valued Mailbox for its potential to be something other than the standalone email app it was. And you might be right - there might well be enough talent on the Mailbox team to produce $100M+ in value - but not making a standalone email app. If we're being ultimately generous with Dropbox then what they are doing is exactly correct - taking a team that can create a $100M+ product and reassigning them somewhere that they can fulfill that potential. But that's of scant consolation to all the people that want to continue using the email app.
- deleted 11y ago
  [deleted]
bdcravens 11y ago
By the same logic not shutting it down would result in greater than a $100M loss.

by mbesto 11y ago

wpietri 11y ago

This seems like a too-generous take. Dropbox could have thought that and just been wrong. Even in the normal economy, per The Economist about half of all acquisitions destroy value. In our little hothouse, I'd expect a much larger percentage of value-destroying takeovers. But there are plenty of other reasons deals get done than a company-wide coherent calculation of economic value. E.g., I've heard of acquisitions happening because a CEO needs to demonstrate to the board that they're doing something. Or incentive structures set up to reward an M&A team based on how many deals they do. Or executives wanting to bring in their old buddies from another company. Or, "gosh, money is so cheap right now we'd better spend it because our competitors are spending."

potatolicious 11y ago

> "Clearly Dropbox thought there was at least a $100MM opportunity" The opportunity was the team, not the product they were producing. Say you had a room full of math prodigies, but all they were doing was watching TV all day. You hire these math prodigies for $X and put them to work solving math problems - this doesn't mean that watching TV is worth $X, in fact it likely means the opposite, that their value is underutilized by whatever they're doing right now. So there isn't enough money in making email apps, but a team capable of producing a great email app can be put to use doing things that do make a lot of money - but it sure isn't making email apps. And that's unfortunate, because as users we're missing out on a lot of great products. The dark side of the immense growth in software (and immense growth in software salaries) is that entire products and services are no longer economical, even though we'd all love to see them. The VC system that drives these early acquisitions and acquihires is just one more factor among many that limit the field of what can be economically produced.

igorgue 11y ago
Yeah but that's ridiculous, they had only 13 employees that's 7.6MM per employee over the span of 2.5 years, some of them I'm sure they left already... You tell me when this starts making sense because it just doesn't right now. Too much money! I don't care how big of a genius you are you're not worth that as a developer of an email client, and honestly to write an Email client is not genius level shit. The UI was dope, and their invite process was funny, that's all. Looks like Dropbox fucked up, that's all, bad business decision, trying to copy Google and do better than them in the end they did the same.
- ohyes 11y ago
  I'm sure some of them are still there, however. They shutdown the product and put the team members to work elsewhere. So it could be prorated over a longer period depending on the acquisition deal.
- nl 11y ago
  The deal was stock and cash, so it is pretty much impossible to judge how good a deal this was for Dropbox[1]. Stock is a very cheap way for a company to acquire another. [1] http://techcrunch.com/2013/03/15/mailbox-cost-dropbox-around-100-million/ http://techcrunch.com/2013/03/15/mailbox-cost-dropbox-around...
  - jorangreef 11y ago
    "Stock is a very cheap way for a company to acquire another." Not exactly. Could be the other way round too. It depends on whether the stock of the company is worth more or less than cash in the long run.
    - nl 11y ago
      Yes. Except since it is the company issuing stock in itself you can't really think of it as fungible. If it ends up being worth more than the strike price then literally one of the events that led to that price was the purchase stock being issued. Of course that doesn't mean the is a causal link, but in a very real sense the stock was free for the company itself. The only cost to the company is opportunity cost.

untog 11y ago

It's pretty clear that Dropbox valued Mailbox for its potential to be something other than the standalone email app it was. And you might be right - there might well be enough talent on the Mailbox team to produce $100M+ in value - but not making a standalone email app. If we're being ultimately generous with Dropbox then what they are doing is exactly correct - taking a team that can create a $100M+ product and reassigning them somewhere that they can fulfill that potential. But that's of scant consolation to all the people that want to continue using the email app.

deleted 11y ago
[deleted]

bdcravens 11y ago

By the same logic not shutting it down would result in greater than a $100M loss.