3 ms·

Winter has come. It's sad to see companies that are providing real, important products getting hammered for not meeting potentially impossible expectations. Pe

by entee 11y ago

Winter has come. It's sad to see companies that are providing real, important products getting hammered for not meeting potentially impossible expectations. People have been talking about Dropbox struggling to meet its valuation for a while now. I'm a little more surprised at the Cloudera markdown, they seem to be a pretty important company in a sector that only keeps growing. Any insights as to why Cloudera was marked down?

jcdavis 11y ago
> It's sad to see companies that are providing real, important products getting hammered for not meeting potentially impossible expectations They signed on to those expectations when they took those sky high valuation investments. Thats not going to make the employees feel all that much better, of course
IndianAstronaut 11y ago
The cloudera devaluation is quite concerning. They seem to hire high quality candidates and have a growing customer base.
p4wnc6 11y ago
I see the markdown more as a reflection that customers, at large, actually aren't getting value from these companies, or at least less value than previously assumed. I know it's only anecdotal, but with e.g. Dropbox, I don't know a single person who pays for Dropbox, and every Dropbox user I know claims they would be content to migrate to some other free service or just buy external hard drives and deal with lesser accessibility before they would pay on a subscription basis for arbitrary cloud storage. So then the question is about enterprise clients, and it seems the value proposition for enterprise cloud data management is just good enough. Many other enterprise cloud services provide the same thing as merely a tiny add on to a whole suite of other cloud tools and services. I even remember in a past job once I asked if my team could have a tiny budget (on the order of like $100/yr for our team size) to have a private work-related Dropbox set up. Various managers got involved and shut it down right away, claiming that the $100/yr was just not something they could approve, even though we probably paid at least 5x to 10x that per person for various other cloud services. They basically said, make due with this other legacy enterprise thing that has some crappy Dropbox clone buried somewhere inside it. More surprising than Dropbox being marked down is that it was ever valued at those levels in the first place, IMO.
gumby 11y ago
> I'm a little more surprised at the Cloudera markdown, they seem to be a pretty important company in a sector that only keeps growing. Any insights as to why Cloudera was marked down? More generally than Cloudera: this can be a reasonable thing to happen to an important company in a sector that only keeps growing. Examples: - someone got a little excited, or got in a bidding war, so paid an amount that upon post-deal reflection seems high. Yes, this is #1 bubble behavior, but it can just happen (in a slightly less extreme fashion) on public stocks as well. - A company can be perfectly good but its customer base may be sagging for other reasons. So the assumptions that applied last time the stock was purchased may now be invalid... until the company finds a new group of customers to sell to or external conditions otherwise change. - Investor A puts money in under certain assumptions. Investor B comes in in a later round at a higher valuation because Investor B likes the widget market and thinks it will grow at 20% p.a. over the next few years. Investor A still likes the company but doesn't think the widget market is as strong yet...but the price has now been set by Investor B. So Investor A legitimately marks it down even though Investor B legitimately doesn't. Note that all this is crazy anyway -- VCs typically don't mark their investments down anyway since it's all hypothetical until there's a liquidity event or shutdown. These are large private equity entities who have to report for other reasons and have their own reasons for assigning valuation (see my last point above).

by entee 11y ago

jcdavis 11y ago

> It's sad to see companies that are providing real, important products getting hammered for not meeting potentially impossible expectations They signed on to those expectations when they took those sky high valuation investments. Thats not going to make the employees feel all that much better, of course

IndianAstronaut 11y ago

The cloudera devaluation is quite concerning. They seem to hire high quality candidates and have a growing customer base.

p4wnc6 11y ago

I see the markdown more as a reflection that customers, at large, actually aren't getting value from these companies, or at least less value than previously assumed. I know it's only anecdotal, but with e.g. Dropbox, I don't know a single person who pays for Dropbox, and every Dropbox user I know claims they would be content to migrate to some other free service or just buy external hard drives and deal with lesser accessibility before they would pay on a subscription basis for arbitrary cloud storage. So then the question is about enterprise clients, and it seems the value proposition for enterprise cloud data management is just good enough. Many other enterprise cloud services provide the same thing as merely a tiny add on to a whole suite of other cloud tools and services. I even remember in a past job once I asked if my team could have a tiny budget (on the order of like $100/yr for our team size) to have a private work-related Dropbox set up. Various managers got involved and shut it down right away, claiming that the $100/yr was just not something they could approve, even though we probably paid at least 5x to 10x that per person for various other cloud services. They basically said, make due with this other legacy enterprise thing that has some crappy Dropbox clone buried somewhere inside it. More surprising than Dropbox being marked down is that it was ever valued at those levels in the first place, IMO.

gumby 11y ago

> I'm a little more surprised at the Cloudera markdown, they seem to be a pretty important company in a sector that only keeps growing. Any insights as to why Cloudera was marked down? More generally than Cloudera: this can be a reasonable thing to happen to an important company in a sector that only keeps growing. Examples: - someone got a little excited, or got in a bidding war, so paid an amount that upon post-deal reflection seems high. Yes, this is #1 bubble behavior, but it can just happen (in a slightly less extreme fashion) on public stocks as well. - A company can be perfectly good but its customer base may be sagging for other reasons. So the assumptions that applied last time the stock was purchased may now be invalid... until the company finds a new group of customers to sell to or external conditions otherwise change. - Investor A puts money in under certain assumptions. Investor B comes in in a later round at a higher valuation because Investor B likes the widget market and thinks it will grow at 20% p.a. over the next few years. Investor A still likes the company but doesn't think the widget market is as strong yet...but the price has now been set by Investor B. So Investor A legitimately marks it down even though Investor B legitimately doesn't. Note that all this is crazy anyway -- VCs typically don't mark their investments down anyway since it's all hypothetical until there's a liquidity event or shutdown. These are large private equity entities who have to report for other reasons and have their own reasons for assigning valuation (see my last point above).