26 ms·

Dropbox Could Have One of 2017’s Most Interesting IPOs

168 points by t23 10y ago

chollida1 10y ago
I talked to a friend just before Christmas whose firm made a good portion of their returns on the insight that VC firms, IPO participants and the market in general all have gaps in how they evaluate the worth of a company and the fact that this gap has grown significantly in the past 5 years. Previously, companies went public much sooner and you could expect a match, not an exact one, but in the same ball park, between the VC valuation and wall street valuations. This helped lead to rising share prices after the IPO. Now with longer gestation periods leading to more fund raises, the VC's get paid, but its the IPO participants and the employee's who get screwed. Once a company is public its GAAP that matters and GAAP analysis usually assigns a revenue multiple to a company that is based on its sector and assumed growth. This multiple is almost always much smaller than what the company's publicly stated valuation. This leads to a bunch of broken IPO's as companies stretch to IPO at a certain price to meet mezzanine level funding requirements. If you can get borrow, almost certainly dependent on how much you pay on commissions to brokers, then atleast up until this year you could have made decent money shorting most tech IPO's, most other industries don't yet suffer from a phobia of becoming public.
- Florin_Andrei 10y ago
  > the VC's get paid, but its the IPO participants and the employee's who get screwed How unsurprising.
- 1_2__3 10y ago
  I've gone through 6 startup IPOs since 1999 in the valley, and have watched as it went from a way to reward employees to a whole lot of voodoo bullshit. I'm a little stunned when I see people still talking about the startups they work for and possibly making it big - that doesn't happen anymore. You are being lied to.
  - hkmurakami 10y ago
    Genuinely curious what you think has changed. Liquidity events are certainly much later than they used to be. What else has had negative effects? Late stage ratchet terms?
  - beachstartup 10y ago
    if the founder(s) of the company got really rich, but the company is still owned by VCs, there is almost definitely "voodoo bullshit" going on. it's customary to take some money to alleviate the everyday financial stresses of life and to maybe buy a decent house because people have families, but the original intent behind the IPO was designed to align everyone's incentives. when they aren't aligned i.e. when there is a super-class of owners that already cashed out, it's going to end badly for the people who aren't in control. everyone who got in early is already rich or completely exited, and more idiots keep piling onto the funding rounds... hmm... what does that sound like?
  - xor1 10y ago
    Unless you are extremely close with the founders.
- JumpCrisscross 10y ago
  > GAAP analysis usually assigns a revenue multiple to a company that is based on its sector and assumed growth GAAP is an accounting framework [1]. It defines, for example, how one may and may not recognise revenues [2]. GAAP does not tell investors how to value a company. "GAAP Analysis" isn't a thing (gap analysis is [3], but that's a management tool). That said, yes, public-company investors tend to look at Revenue, EBITDA or P/E multiples. But so do late-stage VCs. Both ascribe high valuations when expected growth provides for it, e.g. Amazon or Tesla or Uber. A multiple gap has emerged between the late-stage private company market (at least at the top end) and comptable public companies. But it has nothing to do with "GAAP analysis" (which isn't a thing) or mezzanine funding (which most VC-backed companies don't take on). [1] https://en.m.wikipedia.org/wiki/Generally_accepted_accounting_principles https://en.m.wikipedia.org/wiki/Generally_accepted_accountin... [2] http://www.fasb.org/jsp/FASB/Page/BridgePage%26cid=1351027207987 http://www.fasb.org/jsp/FASB/Page/BridgePage%26cid=135102720... [3] https://en.m.wikipedia.org/wiki/Gap_analysis https://en.m.wikipedia.org/wiki/Gap_analysis
  - apetresc 10y ago
    It's pretty clear that what he means by "GAAP analysis" is "valuation based on GAAP revenue", as opposed to "valuation based on bullshit cooked revenue metrics", like the fanciful definitions that Groupon tried to convince everyone about.
- pb 10y ago
  VCs don't get to take their profits until after the company exits. If they invest at a high valuation and then it IPOs at some lower price, there is no gain and the VC gets zero carry.
  - rrdharan 10y ago
    That's not true with liquidation preferences? The reported valuations in the press that come out after some random funding round are calculated with simple arithmetic but don't take into account the preferences...
  - kcanini 10y ago
    VC still gets that sweet 2% management fee per year.
- gravyboat 10y ago
  You would have to be an idiot at this point to accept options/stock as an employee for an SF start up. They'll squeeze the options until you make nothing from them.
curiousDog 10y ago
Dropbox is one of those products that is just a pleasure to use (like Stripe). Sync works seamlessly. I've tried all other alternatives and gotten back to being a paid customer of Dropbox. I think it also boils down to most of your employees being passionate, smart folks from MIT, CMU and the like. Good luck to them with the IPO.
- verelo 10y ago
  People say this, but i actually hate it. Every time i use it i get confused, it's UI is slow and weird. I prefer Google Drive, but I might be a weird user.
  - ceejayoz 10y ago
    Why are you using the web UI? Dropbox is at its best as just a folder on your hard drive that works like any other, except it effectively exists simultaneously on all your devices.
    - deleted 10y ago
      [deleted]
    - CN7R 10y ago
      I'm going to guess that the person also uses Google docs and or slides which is mostly web-based -- yes you can download it for offline use but that's a hassle.
      - verelo 10y ago
        I use both the sync client and the web app (depends on the situation). The web app for the google suite is just so much better, the Dropbox website is painful. The sync client for Dropbox I used to find slightly better, but it's not better enough to justify the massive license costs of Dropbox in comparison to google drive. All in all, each to their own!
- orthoganol 10y ago
B1FF_PSUVM 10y ago
Does anyone here still use Dropbox? (I signed up in 2009, and probably last touched it in 2011 ...) P.S. their studiously ignoring user-side encryption was a factor - if I'm getting my files exposed, might as well go with the big default services.
- artmageddon 10y ago
  While my folder could use a bit of a spring cleaning, I do. It's been damn useful the last 7-8 years.
- lowglow 10y ago
  A lot of non-tech-savvy people use it for pirating stuff. I've seen some people coordinate larger files across it. But for the most part, I haven't seen it out in the wild for a few. That might be because it's use is low, OR that it's so well integrated as people's workflow, it sort has just sunk into the background.
- PStamatiou 10y ago
  Every single day.
- quantisan 10y ago
  not anymore
- toomuchtodo 10y ago
  I pay $100/year for Pro. Cheaper and easier to have 1TB of remote storage than SD cards, USB sticks, etc, and no excessive bandwidth charges such that AWS has. EDIT: I don't care if my files are encrypted. EDIT 2: Dropbox sync is rock solid. Every experience with the Google Drive sync client has been trash. I can (and do) pay for convenience.
  - mikeevans 10y ago
    Any reason that you use it over Google Drive?
bsharitt 10y ago
Being the one cloud service that sync across Linux, Windows, OS X with a native client, Dropbox is the service I'd like to give money for about 100GB of space for a couple of bucks a month, but I just don't need 1TB for $10 a month. So instead I use Google and wait in vain for a native Linux client that's probably never coming.
- Retric 10y ago
  Pro is $8.25 / month for 1TB on annual billing. I rarely see monthly pricing for under 5$. So, I don't think it's going to drop much at this point. https://www.dropbox.com/business/plans-comparison?_tk=dbv1 https://www.dropbox.com/business/plans-comparison?_tk=dbv1 IMO, 1TB is completly reasonble. You can get ~10 GB of storage several places for free which covers most things and minmaxing 2-3$ per month is generally a waste of time.
  - apetresc 10y ago
    What a lot of us want is more granularity. I'm totally fine with their per-GB pricing, but if I (as a personal user) want more than 1TB, it is literally impossible to buy it from Dropbox. I would have to upgrade to a business plan, which makes no sense as I'm not a business. Basically, there are only 3 Dropbox tiers: 0, 1TB, or infinity.
    - ohazi 10y ago
      I gave up and just started using AWS S3 directly. I use a few GB, pay a few pennies for storage, a few more pennies for bandwidth if I'm moving stuff around, and that's it. I've never paid more than $10/month, and it's usually under $1/month.
      - ktta 10y ago
        that defeats the whole purpose of dropbox though. You can have a cheap ftp server for $10/year if you look hard enough. But the argument for dropbox is that you have a client for almost every platform you can use. With S3 you'll have to use a 3rd-party software, which might not function properly.
AndrewKemendo 10y ago
I've always wondered why BOX did their IPO before Dropbox. I know Box is two years older but it seems like age is only a relative determinant in IPO timing (FB IPO at 8 years, Google 6 years...).
hellofunk 10y ago
I've been using Dropbox as a real handy remote git host using the fantastic git-remote-dropbox utility. It's really great to create a remote repo right from the command line and immediately push to it without the hassle of going to a site like GH or BB and setting up the repo first and all that jazz. Make DB worth the money I spend (and unlimited private repos, of course, and with easy sharing by many developers with Dropbox's shared folders). https://github.com/anishathalye/git-remote-dropbox https://github.com/anishathalye/git-remote-dropbox
yawniek 10y ago
dropbox lost me when i started to get hyper targeted spam to email addresses i only used for dropbox and haven't used for years. they seem to use a remarkably persistent cookie syncing technology.
- kbuck 10y ago
  DropBox was hacked in 2012 (and all email addresses were leaked)[0], so you might have just been getting spam from regular spammers that got a copy of this list. [0]: https://www.troyhunt.com/the-dropbox-hack-is-real/ https://www.troyhunt.com/the-dropbox-hack-is-real/
JohnJamesRambo 10y ago
As a former Dropbox user, I can't imagine investing in them. For me, their plans are just way out of line with regard to pricing. So out of line that I'm going to go to the trouble of moving all of my stuff to Google Drive or OneDrive. And I hate their ransom policy of giving you free space for a while due to phone promotions or whatever and then taking it away. You are screwed and can't access your own stuff until you pay the ransom. I just don't think a company formed on those sorts of policies and pricing strategies is a good investment.
- asher_ 10y ago
  I agree. Dropbox are massively more expensive than competitors like Google Drive. I stopped using Dropbox years ago when I realised that shared files and folders take up quota for ALL people that have access to it. This is absurd, and is a terrible experience when you're trying to share something with someone and they then have to upgrade their account. I used to love Dropbox, but the pricing model is terrible.
  - JohnJamesRambo 10y ago
    Wow, I did not even know about the shared part.
ipunchghosts 10y ago
I use owncloud -- done.
raiyu 10y ago
The fact that Dropbox's revenue is well above Box's if the rumors in the article are true is a great positive sign. As is being cash flow positive which would indicate that if they are burning cash it isn't at the rate of 2x revenue that Box has been a victim of. However, the vision they are selling will not come to pass. That of them being a collaborative platform. Google docs, slack, and a myriad of other tools have already taken that place and there isn't a large enough disruption in Dropbox to unseat that. In the meantime Dropbox's core offering of syncing and sharing files seamlessly as well as providing more security minded options for businesses is something that no one else has quite gotten right. Box targeted the high-end enterprise users and Dropbox ceded that market to them rather early on. But the massive number of individual users coupled with SMBs that do not need the complexity that Box entails is a large market. The only question is are those two markets combined larger than the enterprise market that Box is chasing. According to the revenue reported it seems that currently on the revenue side it is. And given that investors do value profitability and with only a 200 sales person team their burn should be within controllable limits should make them overall both on the profitability and revenue side more attractive than Box. However if they grew revenue from $400 -> $750 they simply do not have the growth trajectory that gets Wall St excited because due to their maturity and larger revenue you get a more consistent view point into their future growth. Then again if they are compared more to Atlassian that is trading at 10x revenue then they certainly maybe get justified in their close to $10B private valuation.
- gcb0 10y ago
  Aren't they rushing to disable public folders just so they can write off their biggest money drain from the books just for the IPO? this is «any IPOed startup from last decade» all over again.
  - mafuyu 10y ago
    Shame, too, as it was the Dropbox feature I used the most. I hate having to link people to the clunky, slow-to-load viewer interface that Dropbox presents when you make a share link. I also don't want comments! (which always takes up an entire sidebar and has to be manually closed)
amelius 10y ago
I wonder why we haven't seen good open-source imitations of Dropbox yet, and why there isn't a good open protocol for file sharing. The last such protocol I've heard of is WebDAV, but it seemed to have been neglected by OS implementers (Apple's implementation was particularly bad). Also WebDAV was missing many modern features.
- niftich 10y ago
  Because most people pay them for the hosting, and the UI/UX is just a bonus. There are plenty of open protocols for file sharing, like HTTP or SFTP. What unmet requirements do you envision?
  - amelius 10y ago
    > What unmet requirements do you envision? Well, for starters, automatic synchronization in the background.
    - niftich 10y ago
      That's not a protocol, though. That's a userspace application.
      - amelius 10y ago
        I'm not sure if that is correct. I suspect that (efficient) synchronization needs some sort of protocol.
- 4rtemis 10y ago
  I agree, and by no means is it a replacement, but https://syncthing.net https://syncthing.net is pretty damn interesting if you want to control your own data. https://www.syncany.org https://www.syncany.org [now abandonded] was a cool twist on the idea using cloud storage in a secure way.
  - LeoPanthera 10y ago
username223 10y ago
> In addition to selling utilities to keep digital files safe and accessible, Dropbox intends to offer software that businesspeople use for hours each day to create content and get work done. Aaaaagghh!!! Just... no. Dropbox used to do one thing well (modulo creepy stuff [1]): sync a directory across multiple computers. This wasn't so hard to do, but shockingly, Apple and Google didn't just implement this feature and make them obsolete. They could have been satisfied with owning that market, but now they want to create yet another office suite? Ugh... [1] http://venturebeat.com/2016/09/20/dropbox-now-asks-for-accessibility-permission-in-macos-sierra-and-os-x/ http://venturebeat.com/2016/09/20/dropbox-now-asks-for-acces...
- megablast 10y ago
  Of course, you have to grow. You have to move into new areas. That is what everyone does, that is how the world works.
  - yardie 10y ago
    No, everyone does not do that and the rest of the world does not work that way. This train of thought is specific to capitalism (not to be confused with free market). Most large companies do a few things well and everything else mediocre or poorly. Most small companies do a few things well and everything else poorly. The difference is a small company recognizes it can't afford to do those things poorly and won't pursue it. Large companies will keep dumping money into bad, poorly planned products. See Apple and cloud, Google and everything not Pagerank, Microsoft and mobile. The world has more small companies than large ones.
joshmn 10y ago
When they (finally) moved off S3 to their own setup it really said to me that they're going to IPO. Sure, a lot of companies the size of Dropbox (in terms of rev) do it, but a lot of those companies don't have profit margins that are directly related to S3.
Yrlec 10y ago
I'd be very surprised if Dropbox manages to IPO at $10B valuation. The growth simply isn't there. They're big on platforms and markets with no growth but they're getting killed in growth markets. E.g. my cloud storage startup Degoo recently surpassed Dropbox on the Android grossing rank in India (http://imgur.com/HsII1KK http://imgur.com/HsII1KK) and we're only 5 people.
- uiri 10y ago
  Their revenue according to the article is $750 million a year. You really think that their P/E ratio is less than 13? Most tech companies trade at a P/E between 25 and 30 these days. I wouldn't be surprised if DropBox's valuation was around $20B.
  - jazzyk 10y ago
    I think you are confusing revenues with earnings...
  - umeshunni 10y ago
    As the other response said, you're confusing revenue with earnings. Very few companies have a revenue multiple of 13x. Looking at this chart https://blog.intercom.com/wp-content/uploads/2014/07/4-forward-revenue-growth-1000.png https://blog.intercom.com/wp-content/uploads/2014/07/4-forwa... it looks like Dropbox can expect something in the 6x-10x range, valuing them at $4.5-7.5B.
    - uiri 10y ago
      Seems that you are correct - earnings refers to profit (bottom line) rather than reveneu (top line). Thanks! That being the case, DropBox probably isn't profitable yet which would throw their P/E through the roof and make that a useless metric. Box is already public and it has revenue around $300 million and a valuation of ~$1.9B. DropBox will probably get a better revenue multiplier since their customer acquisition cost is lower than and their overall network effects and future outlook is better than Box. I'd place DropBox at a ~$6B valuation. Hopefully their revenue grows enough between now and IPO to support something closer to $10 or $12B.
yueq 10y ago
Dropbox is anti-SaaS -- it expects users will have more 'files' and use more storage, but users are actually moving to SaaS services where the concept of files just doesn't exist. Many usages from hackernews readers are too techy and not for consumers -- like cross-platform or using as git repo. iCloud, Google Photos, Facebook and YouTube took majority of consumer storage needs aka large photos and videos. I think enterprise market is their best bet but Box /Google/Microsoft are dominating in this space.
deleted 10y ago
[deleted]
em3rgent0rdr 10y ago
I predict the quality of free Dropbox service will go down (or not significantly improve) after they become publicly-traded, similar to what happened to Facebook, since the stockholders will force them to monetize the free accounts. They why I avoid using free but proprietary services.
- danieldk 10y ago
  The quality of the Pro service already went down considerably: it has advertisement for the business version in all places. I guess that they want to drive up value for the IPO. I just don't understand why they are annoying Pro users. Not every Pro user uses Dropbox for company work. Not every Pro user is in a company/organization that will ever switch to Dropbox.
  - em3rgent0rdr 10y ago
    Maybe they annoy the pro users with ads for the business version because they know the pro users have money and are willing to pay...somewhat targeted advertising.
- chmaynard 10y ago
  > I avoid using free but proprietary services. That eliminates a rather large fraction of the most popular online services, including Twitter, Skype, Spotify, Google Search, Square Cash, OKCupid, GitHub, and so on. Oh well, there's always Hacker News. Oops, Y Combinator owns that.
jaequery 10y ago
Dropbox was definitely a good product and for the most part it still is. But with Google and Amazon going towards the free unlimited storage plans, I have my doubts on Dropbox from here on out. IPO just looks like a way out to me.
chj 10y ago
Of all the major players, Dropbox has the sanest cloud storage API. That says a lot.
mikeytown2 10y ago
I'm moving away from Dropbox as a consumer. Google Photos [1] for jpg and video; Prime Photos [2] for raw and jpg. Uploading raw and jpg to google photos causes a lot of duplicates, plus it gets recompressed. [1] https://photos.google.com/ https://photos.google.com/ [2] https://www.amazon.com/photos/home https://www.amazon.com/photos/home
new299 10y ago
I'm slightly shocked that tech-types who in general seem to be against mass state sponsored surveillance continue to support Dropbox. Dropbox appointed Condoleezza Rice to their board. Rice supports warrentless surveillance [1]. They've made no moves to encrypt data service side. I hope their IPO fails spectacularly so that support of warrentless surveillance does not become the norm in tech companies. [1] Condoleezza Rice (http://www.drop-dropbox.com/ http://www.drop-dropbox.com/)
- edanm 10y ago
  I think most people recognize that they don't necessarily agree with everyone, especially when it comes to politics, and that refusing to work with people because you dislike their politics is, in general, not a smart thing to do. Not to mention not supporting companies because one of their board members takes a position you dislike on an issue.
  - drewrv 10y ago
    I'm happy to work with people whom I disagree with politically. But if you're concerned about privacy, giving all your files unencrypted to a company that is uninterested in your privacy (as demonstrated by their board) is just bonkers.
  - new299 10y ago
    In generally, absolutely. But it's quite clear that Rice's value to Dropbox is based around her background in politics. And in particular, her background in politics is one that is diametrically opposed to what Dropbox should be providing its users. A secure, private storage service.
  - gurkendoktor 10y ago
    There is a difference between disagreeing with positions and judging past actions. Rice didn't have fringe opinions that she occasionally ranted about on Facebook. The stuff on drop-dropbox.com was her full-time job, her life's work. > refusing to work with people because you dislike their politics is, in general, not a smart thing to do Like vaccinations, it can be effective when most people do it. I think (hope) many companies would have declined the chance to work with her.
gumby 10y ago
I find Dropbox by far the most straightforward and convenient of the cloud storage providers (DB, Box, iCloud, OneDrive, Google in order of exponentially increasing frustration level). But at the end of the day it's just a feature. I assume they haven't yet gone public because they have been tap dancing hoping to find a way to break out of the feature ghetto. If there were an easy way to attach to S3, iot devices, etc (credentials management is a pain) they could probably go out on the strength of that.
automatwon 10y ago
My primary use case for Dropbox, actually, is getting videos onto my iPhone. You can't simply drag and drop a video file into the phone as a mass storage device. With ITunes, the sync feature purportedly sync the video to the device, and consumes space accordingly, but there's no way to access the video on the device. It's actually way faster for me to upload a video to Dropbox from my computer, and download the video on the Dropbox app into my photos. The video quality is excellent, too!
- douche 10y ago
  What a magnificent Goldbergian solution! The needless complexity of simple tasks is sometimes breathtaking.
  - puranjay 10y ago
    This is one reason why I sold my iPad. I just couldn't figure out its cloud storage system. Android makes it so much easier - just install a file manager and you're good to go.
- ulfw 10y ago
  This drives me crazy too and it is embarassing that on iOS after ten versions we still can't easily add a video media file easily. When I am short on time or not on my personal Mac I airdrop a video file to the iPhone/iPad. Sadly it ends up in the PHOTOS sphere, not the Videos app/internal directory. So the play controls are odd and it does not continue playing when exiting out. But it works. Kind of.
- sksksk 10y ago
  If you're using a Mac, you can now AirDrop from your mac to iPhone
- wunki 10y ago
  I'm using Waltr[0] for this, works great. [0]: https://softorino.com/w2 https://softorino.com/w2
  - 10y ago
wycx 10y ago
I use dropbox with Zotero almost every day. You can get them to play together relatively easily, using Dropbox for syncing pdfs, and your Zotero account for syncing the references. This was my initial motivation for using Zotero, as other reference managers, such as Mendeley, which made not using Mendeley's storage very difficult. It is very convenient to be able to add references at work, then come home to find it all up to date on my home PC. Dropbox integration with the camera on my phone is something I also use a lot. Take a photo of something in the lab, it is waiting for me on my PC by the time I am back at my desk. The only thing that I really find lacking is a linux armhf cli client...
baccheion 10y ago
Dropbox's growth potential (revenue-wise) is finite. Their IPO will be similar to Twitter's (though maybe not as bad).

168 points by t23 10y ago

I talked to a friend just before Christmas whose firm made a good portion of their returns on the insight that VC firms, IPO participants and the market in general all have gaps in how they evaluate the worth of a company and the fact that this gap has grown significantly in the past 5 years. Previously, companies went public much sooner and you could expect a match, not an exact one, but in the same ball park, between the VC valuation and wall street valuations. This helped lead to rising share prices after the IPO. Now with longer gestation periods leading to more fund raises, the VC's get paid, but its the IPO participants and the employee's who get screwed. Once a company is public its GAAP that matters and GAAP analysis usually assigns a revenue multiple to a company that is based on its sector and assumed growth. This multiple is almost always much smaller than what the company's publicly stated valuation. This leads to a bunch of broken IPO's as companies stretch to IPO at a certain price to meet mezzanine level funding requirements. If you can get borrow, almost certainly dependent on how much you pay on commissions to brokers, then atleast up until this year you could have made decent money shorting most tech IPO's, most other industries don't yet suffer from a phobia of becoming public.

Florin_Andrei 10y ago
> the VC's get paid, but its the IPO participants and the employee's who get screwed How unsurprising.
1_2__3 10y ago
I've gone through 6 startup IPOs since 1999 in the valley, and have watched as it went from a way to reward employees to a whole lot of voodoo bullshit. I'm a little stunned when I see people still talking about the startups they work for and possibly making it big - that doesn't happen anymore. You are being lied to.
- hkmurakami 10y ago
  Genuinely curious what you think has changed. Liquidity events are certainly much later than they used to be. What else has had negative effects? Late stage ratchet terms?
- beachstartup 10y ago
  if the founder(s) of the company got really rich, but the company is still owned by VCs, there is almost definitely "voodoo bullshit" going on. it's customary to take some money to alleviate the everyday financial stresses of life and to maybe buy a decent house because people have families, but the original intent behind the IPO was designed to align everyone's incentives. when they aren't aligned i.e. when there is a super-class of owners that already cashed out, it's going to end badly for the people who aren't in control. everyone who got in early is already rich or completely exited, and more idiots keep piling onto the funding rounds... hmm... what does that sound like?
- xor1 10y ago
  Unless you are extremely close with the founders.
JumpCrisscross 10y ago
> GAAP analysis usually assigns a revenue multiple to a company that is based on its sector and assumed growth GAAP is an accounting framework [1]. It defines, for example, how one may and may not recognise revenues [2]. GAAP does not tell investors how to value a company. "GAAP Analysis" isn't a thing (gap analysis is [3], but that's a management tool). That said, yes, public-company investors tend to look at Revenue, EBITDA or P/E multiples. But so do late-stage VCs. Both ascribe high valuations when expected growth provides for it, e.g. Amazon or Tesla or Uber. A multiple gap has emerged between the late-stage private company market (at least at the top end) and comptable public companies. But it has nothing to do with "GAAP analysis" (which isn't a thing) or mezzanine funding (which most VC-backed companies don't take on). [1] https://en.m.wikipedia.org/wiki/Generally_accepted_accounting_principles https://en.m.wikipedia.org/wiki/Generally_accepted_accountin... [2] http://www.fasb.org/jsp/FASB/Page/BridgePage%26cid=1351027207987 http://www.fasb.org/jsp/FASB/Page/BridgePage%26cid=135102720... [3] https://en.m.wikipedia.org/wiki/Gap_analysis https://en.m.wikipedia.org/wiki/Gap_analysis
- apetresc 10y ago
  It's pretty clear that what he means by "GAAP analysis" is "valuation based on GAAP revenue", as opposed to "valuation based on bullshit cooked revenue metrics", like the fanciful definitions that Groupon tried to convince everyone about.
pb 10y ago
VCs don't get to take their profits until after the company exits. If they invest at a high valuation and then it IPOs at some lower price, there is no gain and the VC gets zero carry.
- rrdharan 10y ago
  That's not true with liquidation preferences? The reported valuations in the press that come out after some random funding round are calculated with simple arithmetic but don't take into account the preferences...
- kcanini 10y ago
  VC still gets that sweet 2% management fee per year.
gravyboat 10y ago
You would have to be an idiot at this point to accept options/stock as an employee for an SF start up. They'll squeeze the options until you make nothing from them.

curiousDog 10y ago

Dropbox is one of those products that is just a pleasure to use (like Stripe). Sync works seamlessly. I've tried all other alternatives and gotten back to being a paid customer of Dropbox. I think it also boils down to most of your employees being passionate, smart folks from MIT, CMU and the like. Good luck to them with the IPO.

verelo 10y ago
People say this, but i actually hate it. Every time i use it i get confused, it's UI is slow and weird. I prefer Google Drive, but I might be a weird user.
- ceejayoz 10y ago
  Why are you using the web UI? Dropbox is at its best as just a folder on your hard drive that works like any other, except it effectively exists simultaneously on all your devices.
  - deleted 10y ago
    [deleted]
  - CN7R 10y ago
    I'm going to guess that the person also uses Google docs and or slides which is mostly web-based -- yes you can download it for offline use but that's a hassle.
    - verelo 10y ago
      I use both the sync client and the web app (depends on the situation). The web app for the google suite is just so much better, the Dropbox website is painful. The sync client for Dropbox I used to find slightly better, but it's not better enough to justify the massive license costs of Dropbox in comparison to google drive. All in all, each to their own!
orthoganol 10y ago

B1FF_PSUVM 10y ago

Does anyone here still use Dropbox? (I signed up in 2009, and probably last touched it in 2011 ...) P.S. their studiously ignoring user-side encryption was a factor - if I'm getting my files exposed, might as well go with the big default services.

artmageddon 10y ago
While my folder could use a bit of a spring cleaning, I do. It's been damn useful the last 7-8 years.
lowglow 10y ago
A lot of non-tech-savvy people use it for pirating stuff. I've seen some people coordinate larger files across it. But for the most part, I haven't seen it out in the wild for a few. That might be because it's use is low, OR that it's so well integrated as people's workflow, it sort has just sunk into the background.
PStamatiou 10y ago
Every single day.
quantisan 10y ago
not anymore
toomuchtodo 10y ago
I pay $100/year for Pro. Cheaper and easier to have 1TB of remote storage than SD cards, USB sticks, etc, and no excessive bandwidth charges such that AWS has. EDIT: I don't care if my files are encrypted. EDIT 2: Dropbox sync is rock solid. Every experience with the Google Drive sync client has been trash. I can (and do) pay for convenience.
- mikeevans 10y ago
  Any reason that you use it over Google Drive?

bsharitt 10y ago

Being the one cloud service that sync across Linux, Windows, OS X with a native client, Dropbox is the service I'd like to give money for about 100GB of space for a couple of bucks a month, but I just don't need 1TB for $10 a month. So instead I use Google and wait in vain for a native Linux client that's probably never coming.

Retric 10y ago
Pro is $8.25 / month for 1TB on annual billing. I rarely see monthly pricing for under 5$. So, I don't think it's going to drop much at this point. https://www.dropbox.com/business/plans-comparison?_tk=dbv1 https://www.dropbox.com/business/plans-comparison?_tk=dbv1 IMO, 1TB is completly reasonble. You can get ~10 GB of storage several places for free which covers most things and minmaxing 2-3$ per month is generally a waste of time.
- apetresc 10y ago
  What a lot of us want is more granularity. I'm totally fine with their per-GB pricing, but if I (as a personal user) want more than 1TB, it is literally impossible to buy it from Dropbox. I would have to upgrade to a business plan, which makes no sense as I'm not a business. Basically, there are only 3 Dropbox tiers: 0, 1TB, or infinity.
  - ohazi 10y ago
    I gave up and just started using AWS S3 directly. I use a few GB, pay a few pennies for storage, a few more pennies for bandwidth if I'm moving stuff around, and that's it. I've never paid more than $10/month, and it's usually under $1/month.
    - ktta 10y ago
      that defeats the whole purpose of dropbox though. You can have a cheap ftp server for $10/year if you look hard enough. But the argument for dropbox is that you have a client for almost every platform you can use. With S3 you'll have to use a 3rd-party software, which might not function properly.

AndrewKemendo 10y ago

I've always wondered why BOX did their IPO before Dropbox. I know Box is two years older but it seems like age is only a relative determinant in IPO timing (FB IPO at 8 years, Google 6 years...).

hellofunk 10y ago

I've been using Dropbox as a real handy remote git host using the fantastic git-remote-dropbox utility. It's really great to create a remote repo right from the command line and immediately push to it without the hassle of going to a site like GH or BB and setting up the repo first and all that jazz. Make DB worth the money I spend (and unlimited private repos, of course, and with easy sharing by many developers with Dropbox's shared folders). https://github.com/anishathalye/git-remote-dropbox https://github.com/anishathalye/git-remote-dropbox

yawniek 10y ago

dropbox lost me when i started to get hyper targeted spam to email addresses i only used for dropbox and haven't used for years. they seem to use a remarkably persistent cookie syncing technology.

kbuck 10y ago
DropBox was hacked in 2012 (and all email addresses were leaked)[0], so you might have just been getting spam from regular spammers that got a copy of this list. [0]: https://www.troyhunt.com/the-dropbox-hack-is-real/ https://www.troyhunt.com/the-dropbox-hack-is-real/

JohnJamesRambo 10y ago

As a former Dropbox user, I can't imagine investing in them. For me, their plans are just way out of line with regard to pricing. So out of line that I'm going to go to the trouble of moving all of my stuff to Google Drive or OneDrive. And I hate their ransom policy of giving you free space for a while due to phone promotions or whatever and then taking it away. You are screwed and can't access your own stuff until you pay the ransom. I just don't think a company formed on those sorts of policies and pricing strategies is a good investment.

asher_ 10y ago
I agree. Dropbox are massively more expensive than competitors like Google Drive. I stopped using Dropbox years ago when I realised that shared files and folders take up quota for ALL people that have access to it. This is absurd, and is a terrible experience when you're trying to share something with someone and they then have to upgrade their account. I used to love Dropbox, but the pricing model is terrible.
- JohnJamesRambo 10y ago
  Wow, I did not even know about the shared part.

ipunchghosts 10y ago

I use owncloud -- done.

raiyu 10y ago

The fact that Dropbox's revenue is well above Box's if the rumors in the article are true is a great positive sign. As is being cash flow positive which would indicate that if they are burning cash it isn't at the rate of 2x revenue that Box has been a victim of. However, the vision they are selling will not come to pass. That of them being a collaborative platform. Google docs, slack, and a myriad of other tools have already taken that place and there isn't a large enough disruption in Dropbox to unseat that. In the meantime Dropbox's core offering of syncing and sharing files seamlessly as well as providing more security minded options for businesses is something that no one else has quite gotten right. Box targeted the high-end enterprise users and Dropbox ceded that market to them rather early on. But the massive number of individual users coupled with SMBs that do not need the complexity that Box entails is a large market. The only question is are those two markets combined larger than the enterprise market that Box is chasing. According to the revenue reported it seems that currently on the revenue side it is. And given that investors do value profitability and with only a 200 sales person team their burn should be within controllable limits should make them overall both on the profitability and revenue side more attractive than Box. However if they grew revenue from $400 -> $750 they simply do not have the growth trajectory that gets Wall St excited because due to their maturity and larger revenue you get a more consistent view point into their future growth. Then again if they are compared more to Atlassian that is trading at 10x revenue then they certainly maybe get justified in their close to $10B private valuation.

gcb0 10y ago
Aren't they rushing to disable public folders just so they can write off their biggest money drain from the books just for the IPO? this is «any IPOed startup from last decade» all over again.
- mafuyu 10y ago
  Shame, too, as it was the Dropbox feature I used the most. I hate having to link people to the clunky, slow-to-load viewer interface that Dropbox presents when you make a share link. I also don't want comments! (which always takes up an entire sidebar and has to be manually closed)

amelius 10y ago

I wonder why we haven't seen good open-source imitations of Dropbox yet, and why there isn't a good open protocol for file sharing. The last such protocol I've heard of is WebDAV, but it seemed to have been neglected by OS implementers (Apple's implementation was particularly bad). Also WebDAV was missing many modern features.

niftich 10y ago
Because most people pay them for the hosting, and the UI/UX is just a bonus. There are plenty of open protocols for file sharing, like HTTP or SFTP. What unmet requirements do you envision?
- amelius 10y ago
  > What unmet requirements do you envision? Well, for starters, automatic synchronization in the background.
  - niftich 10y ago
    That's not a protocol, though. That's a userspace application.
    - amelius 10y ago
      I'm not sure if that is correct. I suspect that (efficient) synchronization needs some sort of protocol.
4rtemis 10y ago
I agree, and by no means is it a replacement, but https://syncthing.net https://syncthing.net is pretty damn interesting if you want to control your own data. https://www.syncany.org https://www.syncany.org [now abandonded] was a cool twist on the idea using cloud storage in a secure way.
- LeoPanthera 10y ago

username223 10y ago

> In addition to selling utilities to keep digital files safe and accessible, Dropbox intends to offer software that businesspeople use for hours each day to create content and get work done. Aaaaagghh!!! Just... no. Dropbox used to do one thing well (modulo creepy stuff [1]): sync a directory across multiple computers. This wasn't so hard to do, but shockingly, Apple and Google didn't just implement this feature and make them obsolete. They could have been satisfied with owning that market, but now they want to create yet another office suite? Ugh... [1] http://venturebeat.com/2016/09/20/dropbox-now-asks-for-accessibility-permission-in-macos-sierra-and-os-x/ http://venturebeat.com/2016/09/20/dropbox-now-asks-for-acces...

megablast 10y ago
Of course, you have to grow. You have to move into new areas. That is what everyone does, that is how the world works.
- yardie 10y ago
  No, everyone does not do that and the rest of the world does not work that way. This train of thought is specific to capitalism (not to be confused with free market). Most large companies do a few things well and everything else mediocre or poorly. Most small companies do a few things well and everything else poorly. The difference is a small company recognizes it can't afford to do those things poorly and won't pursue it. Large companies will keep dumping money into bad, poorly planned products. See Apple and cloud, Google and everything not Pagerank, Microsoft and mobile. The world has more small companies than large ones.

joshmn 10y ago

When they (finally) moved off S3 to their own setup it really said to me that they're going to IPO. Sure, a lot of companies the size of Dropbox (in terms of rev) do it, but a lot of those companies don't have profit margins that are directly related to S3.

Yrlec 10y ago

I'd be very surprised if Dropbox manages to IPO at $10B valuation. The growth simply isn't there. They're big on platforms and markets with no growth but they're getting killed in growth markets. E.g. my cloud storage startup Degoo recently surpassed Dropbox on the Android grossing rank in India (http://imgur.com/HsII1KK http://imgur.com/HsII1KK) and we're only 5 people.

uiri 10y ago
Their revenue according to the article is $750 million a year. You really think that their P/E ratio is less than 13? Most tech companies trade at a P/E between 25 and 30 these days. I wouldn't be surprised if DropBox's valuation was around $20B.
- jazzyk 10y ago
  I think you are confusing revenues with earnings...
- umeshunni 10y ago
  As the other response said, you're confusing revenue with earnings. Very few companies have a revenue multiple of 13x. Looking at this chart https://blog.intercom.com/wp-content/uploads/2014/07/4-forward-revenue-growth-1000.png https://blog.intercom.com/wp-content/uploads/2014/07/4-forwa... it looks like Dropbox can expect something in the 6x-10x range, valuing them at $4.5-7.5B.
  - uiri 10y ago
    Seems that you are correct - earnings refers to profit (bottom line) rather than reveneu (top line). Thanks! That being the case, DropBox probably isn't profitable yet which would throw their P/E through the roof and make that a useless metric. Box is already public and it has revenue around $300 million and a valuation of ~$1.9B. DropBox will probably get a better revenue multiplier since their customer acquisition cost is lower than and their overall network effects and future outlook is better than Box. I'd place DropBox at a ~$6B valuation. Hopefully their revenue grows enough between now and IPO to support something closer to $10 or $12B.

yueq 10y ago

Dropbox is anti-SaaS -- it expects users will have more 'files' and use more storage, but users are actually moving to SaaS services where the concept of files just doesn't exist. Many usages from hackernews readers are too techy and not for consumers -- like cross-platform or using as git repo. iCloud, Google Photos, Facebook and YouTube took majority of consumer storage needs aka large photos and videos. I think enterprise market is their best bet but Box /Google/Microsoft are dominating in this space.

deleted 10y ago

[deleted]

em3rgent0rdr 10y ago

I predict the quality of free Dropbox service will go down (or not significantly improve) after they become publicly-traded, similar to what happened to Facebook, since the stockholders will force them to monetize the free accounts. They why I avoid using free but proprietary services.

danieldk 10y ago
The quality of the Pro service already went down considerably: it has advertisement for the business version in all places. I guess that they want to drive up value for the IPO. I just don't understand why they are annoying Pro users. Not every Pro user uses Dropbox for company work. Not every Pro user is in a company/organization that will ever switch to Dropbox.
- em3rgent0rdr 10y ago
  Maybe they annoy the pro users with ads for the business version because they know the pro users have money and are willing to pay...somewhat targeted advertising.
chmaynard 10y ago
> I avoid using free but proprietary services. That eliminates a rather large fraction of the most popular online services, including Twitter, Skype, Spotify, Google Search, Square Cash, OKCupid, GitHub, and so on. Oh well, there's always Hacker News. Oops, Y Combinator owns that.

jaequery 10y ago

Dropbox was definitely a good product and for the most part it still is. But with Google and Amazon going towards the free unlimited storage plans, I have my doubts on Dropbox from here on out. IPO just looks like a way out to me.

chj 10y ago

Of all the major players, Dropbox has the sanest cloud storage API. That says a lot.

mikeytown2 10y ago

I'm moving away from Dropbox as a consumer. Google Photos [1] for jpg and video; Prime Photos [2] for raw and jpg. Uploading raw and jpg to google photos causes a lot of duplicates, plus it gets recompressed. [1] https://photos.google.com/ https://photos.google.com/ [2] https://www.amazon.com/photos/home https://www.amazon.com/photos/home

new299 10y ago

I'm slightly shocked that tech-types who in general seem to be against mass state sponsored surveillance continue to support Dropbox. Dropbox appointed Condoleezza Rice to their board. Rice supports warrentless surveillance [1]. They've made no moves to encrypt data service side. I hope their IPO fails spectacularly so that support of warrentless surveillance does not become the norm in tech companies. [1] Condoleezza Rice (http://www.drop-dropbox.com/ http://www.drop-dropbox.com/)

edanm 10y ago
I think most people recognize that they don't necessarily agree with everyone, especially when it comes to politics, and that refusing to work with people because you dislike their politics is, in general, not a smart thing to do. Not to mention not supporting companies because one of their board members takes a position you dislike on an issue.
- drewrv 10y ago
  I'm happy to work with people whom I disagree with politically. But if you're concerned about privacy, giving all your files unencrypted to a company that is uninterested in your privacy (as demonstrated by their board) is just bonkers.
- new299 10y ago
  In generally, absolutely. But it's quite clear that Rice's value to Dropbox is based around her background in politics. And in particular, her background in politics is one that is diametrically opposed to what Dropbox should be providing its users. A secure, private storage service.
- gurkendoktor 10y ago
  There is a difference between disagreeing with positions and judging past actions. Rice didn't have fringe opinions that she occasionally ranted about on Facebook. The stuff on drop-dropbox.com was her full-time job, her life's work. > refusing to work with people because you dislike their politics is, in general, not a smart thing to do Like vaccinations, it can be effective when most people do it. I think (hope) many companies would have declined the chance to work with her.

gumby 10y ago

I find Dropbox by far the most straightforward and convenient of the cloud storage providers (DB, Box, iCloud, OneDrive, Google in order of exponentially increasing frustration level). But at the end of the day it's just a feature. I assume they haven't yet gone public because they have been tap dancing hoping to find a way to break out of the feature ghetto. If there were an easy way to attach to S3, iot devices, etc (credentials management is a pain) they could probably go out on the strength of that.

automatwon 10y ago

My primary use case for Dropbox, actually, is getting videos onto my iPhone. You can't simply drag and drop a video file into the phone as a mass storage device. With ITunes, the sync feature purportedly sync the video to the device, and consumes space accordingly, but there's no way to access the video on the device. It's actually way faster for me to upload a video to Dropbox from my computer, and download the video on the Dropbox app into my photos. The video quality is excellent, too!

douche 10y ago
What a magnificent Goldbergian solution! The needless complexity of simple tasks is sometimes breathtaking.
- puranjay 10y ago
  This is one reason why I sold my iPad. I just couldn't figure out its cloud storage system. Android makes it so much easier - just install a file manager and you're good to go.
ulfw 10y ago
This drives me crazy too and it is embarassing that on iOS after ten versions we still can't easily add a video media file easily. When I am short on time or not on my personal Mac I airdrop a video file to the iPhone/iPad. Sadly it ends up in the PHOTOS sphere, not the Videos app/internal directory. So the play controls are odd and it does not continue playing when exiting out. But it works. Kind of.
sksksk 10y ago
If you're using a Mac, you can now AirDrop from your mac to iPhone
wunki 10y ago
I'm using Waltr[0] for this, works great. [0]: https://softorino.com/w2 https://softorino.com/w2
- 10y ago

wycx 10y ago

I use dropbox with Zotero almost every day. You can get them to play together relatively easily, using Dropbox for syncing pdfs, and your Zotero account for syncing the references. This was my initial motivation for using Zotero, as other reference managers, such as Mendeley, which made not using Mendeley's storage very difficult. It is very convenient to be able to add references at work, then come home to find it all up to date on my home PC. Dropbox integration with the camera on my phone is something I also use a lot. Take a photo of something in the lab, it is waiting for me on my PC by the time I am back at my desk. The only thing that I really find lacking is a linux armhf cli client...

baccheion 10y ago

Dropbox's growth potential (revenue-wise) is finite. Their IPO will be similar to Twitter's (though maybe not as bad).