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Yes, his words were chosen very carefully. One has to assume that they spent a lot of money building Magic Pocket and migrating off of Amazon S3. That investmen
by jackgavigan 10y ago
Yes, his words were chosen very carefully. One has to assume that they spent a lot of money building Magic Pocket and migrating off of Amazon S3. That investment will be amortised (and the hardware will depreciate) over several years ()during which time it will show up as a cost in the P&L Account) but because the cash has already been spent, it doesn't show up in today's cashflow. Stock-based compensation also doesn't show up in the cashflow but it certainly impacts P&L.
So, while bring "cash-flow positive" means that the company's cash balance isn't decreasing, it doesn't mean that it's profitable.
- stvswn 10y agoThis seems right to me. A cynical view of why he wouldn't want to go public would be that neither growth rate nor profitability paints a rosy picture, and filing for IPO would force disclosure -- the hope is to accelerate growth using the higher margins they realize after having implemented Magic Pocket. If/when they prove that Magic Pocket was worthwhile, they'll look to IPO. I think they have to IPO, and they would have already if it were good news. Not that every tech company needs to IPO, but Dropbox customers have no switching costs and little feature differentiation, so at some point low prices or great support is going to win the market -- implying scale to me. To achieve competitive scale (of operations, not userbase), you need financing, and Dropbox isn't going to issue AAA rated bonds or anything, so it's a matter of time.
- rabidsnail 10y agoYes, but "cash-flow positive" is the relevant milestone if you're worried about whether the company will be able to stay in business if there's a freeze in the private equity market.