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Dropbox Secures $600M Credit Line Ahead of Expected IPO

293 points by rayuela 10y ago

adtac 10y ago
I'll never understand why a company has to keep growing. Obviously I don't have a degree in economics, but why can't a company do well and then continue being so without having the need to innovate all the time? Sorry if I'm missing something big.
- martin_bech 10y ago
  It only does if it cant pay the bills.. right now some of these unicorns have large amounts of debt, or similar obligations, that they cant payback unless they grow.
- patrickthebold 10y ago
  It doesn't. It's a choice the owners/shareholders can make, which increases (hopefully) the value of the thing they own.
- droopyEyelids 10y ago
  What you're missing is you're looking for too abstract of an answer. A company has to keep growing because of unique demands on that company. A different company doesn't have to grow because it has a different set of demands. Most you read about on here have a relatively similar set of demands based on the VC investments they took.
- darkstar999 10y ago
  They took venture capital, the investors want to see as big of a return on their investment as possible. I think you'd have to look at self-funded companies to find one that is "ok" with stagnant growth.
- superflyguy 10y ago
  If you start a company and you break even then you're free to not grow. As long as you're happy with the money you're making and you can pay stuff, rent, insurance, equipment, services, surprises etc then you don't need to. But if you can do it, someone else can do it, and if they are criminally inclined, sly, lucky, or are prepared to pay people less or provide a lower quality product, or they have money to burn or are backed by people with money to burn then they can take you on and, until they are caught/run out of money/lose business due to their business practices catching up with them, they can take your business. Companies which are set up with other people's money and/or which go public are going to have to answer to the people who "own" them about why they're not making more money this year than last year and the people notionally running the company will be out of a job if they can't explain this.
- clairity 10y ago
  dropbox is a startup and investors invest in startups to generate outsized returns (with commensurate risk). outsized returns require outsized growth (specifically in free cash flows, but many proxy metrics are used to forecast free cash flows, aka future profits). so the growth rate of a company is one of the biggest factors in its valuation, and higher valuation means more wealth generated for investors, including employee-shareholders. in DCF (discounted cash flows, a fundamental valuation method), revenue growth rate is typically an estimated input, and the model is highly sensitive to it. the outputs of the model are the present value of future free cash flows, otherwise known as the valuation of the company. (see the growth rate in the DCF sensitivity chart on this example of DCF analysis on wikipedia: https://en.wikipedia.org/wiki/Discounted_cash_flow#/media/File:DCFM_Calculator.JPG https://en.wikipedia.org/wiki/Discounted_cash_flow#/media/Fi... ) higher growth rate => higher valuation, all other things being equal. investors are looking for the largest delta between initial valuation and final valuation they can get, and growth is one of the most reliable ways to achieve that. companies that don't grow can generate nice returns for the current owners, but they don't generate outsized returns over time because as growth rate goes to zero, valuation becomes a constant, i.e., no delta in initial vs final valuation (all other things being equal).
akulbe 10y ago
Why can't regular folks seem to get in on an IPO? (Admittedly, I don't understand how all the stock stuff works. It just seems like only big investment firms are the ones that are able to do initial investments.)
- acchow 10y ago
  Yes, regular folks can get in on an IPO. That's kind of the point - floating the shares publicly. Sign up for IPO's through your broker.
- w0m 10y ago
  Why can't you?
- deleted 10y ago
  [deleted]
- asafira 10y ago
  I think it's somewhat the point of an IPO. https://en.wikipedia.org/wiki/Initial_public_offering https://en.wikipedia.org/wiki/Initial_public_offering
- eastbayjake 10y ago
  You usually can't get in on the discounted opening price because those favorable prices are in exchange for large investment banks buying enormous blocks of shares (and thus limiting the IPO company's risk that they won't raise enough cash from the IPO), but you can certainly buy the shares from those banks at the market price. If you have $100M+ to invest you'll get lots of preferable pricing deals...
- sbov 10y ago
  IIRC Google's IPO did some sort of auction. But I don't know if it was available to regular folks or not, or how it turned out in the end.
  - srtjstjsj 10y ago
    It was bad for Google and the investment banks, good for investors. It got an astoundingly low price, in part because banks boycotted the IPO to punish Google for the auction -- share price nearly doubled in the first 2 months, tripled in the first year, and kept growing. http://www.msn.com/en-us/money/stockdetails/history/fi-126.1.GOOGL.NAS http://www.msn.com/en-us/money/stockdetails/history/fi-126.1... https://www.wsj.com/articles/SB109036846726869268 https://www.wsj.com/articles/SB109036846726869268 https://archive.fortune.com/magazines/fortune/fortune_archive/2004/08/23/379378/index.htm https://archive.fortune.com/magazines/fortune/fortune_archiv...
rrdharan 10y ago
[Disclaimer: I used to work at Dropbox.] TL;DR: The only actual news here is the new line of credit. The folks involved in securing that line of credit only noted that it was secured since the previous line of credit had expired. There's no real tie to any IPO news here, and the quotes about an IPO come from "potential advisers" and seem to be entirely unrelated to the line of credit news. > While the company hasn't set specific timing, potential advisers believe it will be ready to go public by the end of this year. Dropbox and its lenders declined to comment.
- aresant 10y ago
  Another interesting nugget that I think is material to the conversation: "For the banks involved, taking on the risk of lending to an unprofitable private company can help them win a role underwriting an eventual IPO." It's fascinating to watch how we're building the stack of cards this time. The bankers on SNAP made $85,000,000 in fees on the IPO - which is very high margin activity. The same bankers provided ~$1.2b in credit to SNAP as part of the courting process (1). I'm not going to wave the doom and gloom flag, but credit lending on unprofitable companies to secure speculative IPO rights is probably something that will show up in HBR case studies after the next downturn. (1) http://www.cnbc.com/2017/03/03/snap-ipo-what-wall-street-banks-made.html http://www.cnbc.com/2017/03/03/snap-ipo-what-wall-street-ban...
  - pm90 10y ago
    This is a really good point. Although: even if I may not agree with the revenue potential, the market does and that is basically what allowed those banks to rake in during SNAP's IPO. I mean, nobody knows for sure whether SNAP will every be profitable, but the market thinks that it will. Or maybe the market is too gullible ...
revmoo 10y ago
Dropbox are utter clowns and I've personally seen them delete data on two separate accounts.
deleted 10y ago
[deleted]
iclabs 10y ago
Can't say I'm a huge fan of Dropbox
- zeroer 10y ago
  There's lots of things I can't say.
shubhamjain 10y ago
One concern about Dropbox I have is its inability to establish itself beyond its File Storage / Syncing software. Salesforce.com, in comparison, has been acquiring companies left and right. Notable acquisitions of Dropbox, like Mailbox, have either shut down, or are nowhere on the impact map. As Dropbox user (albeit a free one), I don't find it useful for anything beyond synced storage (if there is any new addition in their interface, I might have missed it). After I started uploading pics on Google photos, I have little to store on Dropbox. Synced storage might be big enough problem for it to continue to grow bigger, but I wonder if it's a meaningful moat. What if the storage + software gets commoditized to an extent that it becomes essentially free for most people?
- free2rhyme214 10y ago
  That's why they're focused on the Enterprise now. I agree their acquisition strategy has been lackluster.
- blowski 10y ago
  Why do they need to expand beyond that? Am I idealistic to say a company can survive just by doing something really well. Salesforce is hardly a paragon of a well-executed clear and consistent vision. I pay Dropbox because I can rely on their backups any place at any time, not because their storage is cheap.
  - TAForObvReasons 10y ago
    A company with a modest valuation can survive by doing one thing and doing it well. A company with a very large valuation needs either very large sales figures OR large growth potential. Dropbox is squarely in the second category, which is why they need to keep expanding.
    - nicoburns 10y ago
      Surely if the company isn't "living up to it's valuation" that's a problem for the people who erroneously valued it at that level, not for the company?
deleted 10y ago
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weston 10y ago
Lots of negativity in here, but I'll say I really enjoy how incredibly simple Dropbox is and has remained since it launched. It's so easy to explain how it works to my non-techie parents ("It's just another folder on your computer, except it backs up your data automatically"). I hope Dropbox continues to thrive.
- acjohnson55 10y ago
  I agree. It just works, and it works really well. My only complaint is that they don't yet have Smart Sync [1] (aka Project Infinite) for premium home users. I love it though, and I use Cryptomater [2] to sync my docs folder across machines without having it be on Dropbox's servers in the clear. [1] https://venturebeat.com/2017/01/30/dropbox-launches-smart-sync-formerly-project-infinite-for-business-users/ https://venturebeat.com/2017/01/30/dropbox-launches-smart-sy... [2] https://cryptomator.org/ https://cryptomator.org/
- GordonS 10y ago
  It does work. Most of the time, for most people. But, at least on Windows, only being able to sync 1 folder is a serious limitation. Again at least on Windows, CPU and disk utilisation goes through the roofnon start-up, rendering your machine all but useless for half an hour. And the final nail in my Dropbox coffin - it seemed to quite often choose the wrong file when there were conflicts, and at times it mistakenly deleted a lot if files. I just couldn't trust it. Oh, and support via their forums was rubbish. Dozens of people would report the same problems, and they'd be ignored for years.
  - gcr 10y ago
    What have you switched to? Every other sync service I've tried has major bugs, from Google Drive URL-encoding the filenames in an entire directory tree and deleting the original to Bittorrent Sync silently corrupting large files...
  - jpalomaki 10y ago
    You can use symlinks (mklink on Windows) to overcome the "one folder limitation". Not perfect, but helps in some cases.
asimpleguy 10y ago
I don't know about Dropbox but for example Twitter is still losing money since 2012. Twitter is way overvalue in the market and has lost around $2 billion since inception. Obviously it's not the same as 2000, these companies have revenue, but some of the are not making even a profit. If they continue to throw tech companies with revenue and losing money as IPOs prepare for the next tech bubble. It will burst.
- sfeng 10y ago
  If you read the article, Dropbox is bringing in a billion a year and is almost profitable.
  - asimpleguy 10y ago
    Almost profitable is not profitable.
    - seanieb 10y ago
      They just built out their own data centers to transfer off AWS. I'm guessing that long term bet cost a few $$$
    - rrdharan 10y ago
      They're free cash-flow positive. Consider that Amazon is also mostly not profitable but has staggering amounts of positive free cash flow.
      - mbesto 10y ago
        > They're free cash-flow positive. Do you know that for a fact?
        rrdharan 10y ago
        Dropbox's CEO declared it as a fact last year and it has been widely reported: https://www.bloomberg.com/news/articles/2016-06-14/dropbox-ceo-pushes-toward-profitability-in-a-post-unicorn-era https://www.bloomberg.com/news/articles/2016-06-14/dropbox-c... https://www.wsj.com/articles/dropbox-ceo-were-cash-flow-positive-1465938538 https://www.wsj.com/articles/dropbox-ceo-were-cash-flow-posi... https://techcrunch.com/2016/06/14/dropbox-says-it-is-cash-flow-positive-in-no-rush-to-ipo/ https://techcrunch.com/2016/06/14/dropbox-says-it-is-cash-fl... But I have not personally inspected their financial statements and conducted an audit to confirm this with my own two eyes, if that's what you're asking.
laurentdc 10y ago
I'm failing to see their competitive advantage. Is it the file history? Linux client? Genuinely asking, I pay 7 € / mo for OneDrive (1 TB) and I get a desktop license of Office along with that too.
- ac29 10y ago
  They were the first big player, they have a lot of brand recognition, and network effects help also. That being said, it would be interesting to see what marketshare the various players have. I bet Dropbox is 50% or less.
- jpalomaki 10y ago
  The thing in Dropbox is the syncing. It works very well and it is very fast. This does not matter for everybody but if you for example work on multiple computers with same files this can be quite handy.
- kilroy123 10y ago
  Same here. I'm a paying dropbox customer, but I plan to switch in a month before my annual subscription renews. Amazon drive offers more space for only $60 USD a year. Plus google apps offers more space than dropboxes business plan.
  - danieldk 10y ago
    I tried to switch quite many times. Problems are typically: refusal to sync some files, excessive memory and CPU use (last time I tried OneDrive it used ~700MB RAM when storage was nearly empty), no LAN sync (speeds up things considerably when sharing with family/colleagues), no block-level sync (touch a small part of a 300MB file and it gets completely resynced), no Linux client.
    - kilroy123 10y ago
      No I feel you, I do agree their sync tech is the best. I switched back to Mac so I no longer care about the linux support. I've really gotten into photography. Shooting in raw means I easily add 10-30 GB of data a week. Just want a cheaper option for more than 1 TB.
marcusr 10y ago
Dropbox for Business has really changed my view of Dropbox the company. With AzureAD SSO integration, and the new Smart Sync feature, it's now possible to run a small company completely in the cloud, with terabytes of data in the cloud accessible to everyone without them synching it all to their laptop. Smart Sync is their game changer.
- pm90 10y ago
  This. Many people fail to see just how well Dropbox works for business that want a reliable, user friendly cloud storage solution. Sure its "just" a file sharing solution, but they do it really really well.
- eitally 10y ago
  I think Google Drive's new features (Team Drives & File Stream) are going to win at least some of this market, too. Drive wasn't compelling for any sort of enterprise data management before, but it's slowly evolving some appealing features. If you add something like AODocs, you can get 80% of what even most large companies need out of an EDM platform. https://www.forbes.com/sites/kevinmurnane/2017/03/14/google-beefs-up-google-drive-for-enterprise-customers/#4645f90f729d https://www.forbes.com/sites/kevinmurnane/2017/03/14/google-...
- post_break 10y ago
  Used to use Dropbox for Business. Shared tons of files. A glitch happened on syncing and it deleted over 60,000 files. I had to restore them a folder at a time. We stopped using it the next week.
skdotdan 10y ago
"Dropbox it's not a product, it's a feature". Don't get me wrong, I'm a Dropbox user myself, but I don't see their actual moat. Isn't cloud storage a commodity nowadays? IMHO they should have spent money in investing in other productivity companies in order to diversify and be able to offer a complete productivity suite.
- sidlls 10y ago
  It seems to me you're looking at this from a technically proficient developer's perspective. It's easy (trivial) for a technically proficient person to setup any trivial cloud storage system they like on just about any provider's platform they like. It's not so easy for anybody else (read: the vast majority of other users). Dropbox's value proposition isn't commodity storage on somebody else's servers: it's the UI/UX that backs it, and the particular implementation details.
  - stephenr 10y ago
    Dropbox isn't installed by default on any platform. Apple, Microsoft and Goole all offer 'cloud' storage services (they aren't a product, stop calling it that) and all have a user-facing platform on devices: macOS/iOS, the various Windows, Android/ChromeOS. Dropbox is effectively a feature. That isn't to say they can't remain in the market and possibly even become profitable, but just making a sync client whose biggest recent news is the skeezy install process on macOS isn't going to cut it.
    - sidlls 10y ago
      If the market treats them like a product, they are a product. Also the number of people outside of techie communities that care about either Apple computers or "skeezy" installs on them is tiny. Mac has a tiny, tiny fraction of the computing market and the vast majority of MacBook users are about as tech savvy as the vast majority of windows laptop users: that is they aren't savvy at all.
      - stephenr 10y ago
sersi 10y ago
I've stopped using Dropbox for a few years already. Their software was good when I used it but I decided to boycott them after Condoleezza Rice joined their board. I just couldn't trust them with my data after that. Plus, the fiasco they had with their Mac app comforted me in not trusting them
gruglife 10y ago
I'm hoping someone can help me with this. DropBox is valued at $10b. Their closest competitor, Box, has a market cap of just over $2b. Does Dropbox really offer that much more than Box?
- officelineback 10y ago
  I think Dropbox has many more users.
- superflyguy 10y ago
  I use Box but Box has some flaws compared to Dropbox. Sync is broken and they don't care. On Dropbox you could have the windows client installed and open a Truecrypt file, make some changes (add/rename/delete/change files within the container) and when you close the Truecrypt file it syncs the changes properly. Do the same on Box and it looks like it's working but it's silently losing your changes; no errors, warnings - nothing. I reported this and they don't care. So you can only trust them with whole files. That's fine, once you know, for a free product, I guess. The version control can be seen as a deletion with no undo too; if you accidentally increment the version number of a file (by uploading a new file of the same name, I think this is what I did) then the earlier version is there but you can't get at it with the free service. Not even by deleting the newer one and reverting. So be very careful what you do. Still, it's better than nothing as a free secondary backup.
- majani 10y ago
  Not really. The latest crop of unicorns have done a really poor job of managing capital and they're getting slaughtered at the public markets(see twitter and snap). Dropbox has probably set themselves up for a similar fate
joshua_wold 10y ago
Thought they were cash profitable??
olivermarks 10y ago
Cloud storage is a commodity business and race to the bottom: hard drive prices already got there as local backup. Failing to see what the ipo upside is here. A bit melodramatic but the cloud is very new and untested against natural events such as a coronal mass ejection, which could wipe put huge amounts of stored data...the sort of thing that arguably should be in IPO risk lists but isn't...yet... https://en.wikipedia.org/wiki/Coronal_mass_ejection https://en.wikipedia.org/wiki/Coronal_mass_ejection
rglover 10y ago
Still surprised Dropbox doesn't apply their UI/UX talent to taking S3 to the cleaners.
- officelineback 10y ago
  Doesn't Dropbox run on S3? Or is that the company that recently moved off AWS into their own datacenters? If so that was a good case study. (I'm an all 5 certified AWS guy and while I love it, I like seeing the counterexamples to keep my Kool-Aid ingestion in check).
  - jeeyoungk 10y ago
    https://www.wired.com/2016/03/epic-story-dropboxs-exodus-amazon-cloud-empire/ https://www.wired.com/2016/03/epic-story-dropboxs-exodus-ama... has an interesting story around their custom storage hardware solution.
  - candiodari 10y ago
    They used to. They migrated off of it because cloud is too expensive. 2 big components to that : 1) traffic to the rest of the internet from the cloud is "wtf" expensive compared to the alternatives. If you can do your own peering (like dropbox does), this goes double. 2) Actual disk storage is too expensive as well. It doesn't compare favorably with what you can get by building a blackblaze pod [1] (just an example). 3) Cloud does not match their usecase. They are write-heavy instead of read-heavy. So as the cloud optimizes for internet serving, it actually moves further away from their optimal price point. There's an episode of software engineering radio that has a lot of details from the horse's mouth: http://www.se-radio.net/2017/03/se-radio-episode-285-james-cowling-on-dropboxs-distributed-storage-system/ http://www.se-radio.net/2017/03/se-radio-episode-285-james-c... [1] https://www.backblaze.com/blog/open-source-data-storage-server/ https://www.backblaze.com/blog/open-source-data-storage-serv...
JohnJamesRambo 10y ago
Investing in Dropbox to me sounds like investing in some other dinosaur like Blockbuster Video or Office Max. Eventually I just don't see people needing Dropbox.
flow99 10y ago
What can I use for free photo gallery storage if I do not want google or dropbox?
- frik 10y ago
  Flickr
sova 10y ago
Way to go Dropbox. Just be prepared for when Operating Systems start shipping this functionality built-in. If you can prepare for that inevitable reality (by, say, providing modules or something for specifically that) then it'll all go great. Great werk so far. Started using dropbox in college and I am an extremely satisfied user. Let me just cue up some Fleetwood Mac
flow99 10y ago
What can I use for free photo gallery storage if I do not want google or dropbox?
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uvince 10y ago
I love that they do one thing really, really well. Further: "Dropbox is the fastest SaaS company to reach $1 billion in revenue run rate" - given that, I don't care if they are profitable or not. They got to $1B faster than Salesforce, as long as they keep this up they'll be just fine.
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nkkollaw 10y ago
Finally an IPO that makes sense to me. I can understand the value of Dropbox. Stuff like Snapchat being worth billions just make me feel like I don't know how anything works anymore.
- sbardle 10y ago
  Dropbox is a utility/product/feature. It can be replaced. Snapchat is a network and therefore is open to network effects, i.e. the sum becomes greater than the parts. I think in ten years time Snapchat will look the more justified valuation, providing they execute. Dropbox are going to struggle unless they can innovate ontop of the current business model.
  - nkkollaw 10y ago
    > I think in ten years time Snapchat will look the more justified valuation, providing they execute. They execute what, exactly? I looked at their investors page. Doesn't make any sense. It's a sexting app!!!
yueq 10y ago
I think it means the opposite. If a public offering is head, why do they even need line of credit?
5_minutes 10y ago
Actually box.com has several nice features by which they totally outperform Dropbox. One is for example the complete mess many Dropbox folders become, because you can drag an drop them around yourself, rename them etc. Look at anyone's Dropbox folder and things get quite messy rather quickly. The problem with box.com is that there's no business support at all (nobody answers any emails). And in that regard Dropbox has been doing a really good job and put some effort into it. The product itself is not superior to box.com, quite in contrary actually, but the support is much better. (it's also quite easy since with box.com it's non-existent).
turingbook 10y ago
Steve Jobs said when his acquisition proposal was refused by Dropbox founders: it was a feature, not a product. This is the sword of Damocles for Dropbox.
mankash666 10y ago
It appears like Dropbox has ~2X the revenue of box with possibly higher costs in marketing and sales, since their investors are pushing for growth. Assuming these higher costs to be nullified by operating their own datacenters, their (fair) valuation is ~$5B. Anyone still wondering why they aren't hurrying to an IPO, what with a plum $10B private valuation and all
ge96 10y ago
If only it didn't use ~1GB of RAM, I used to be a huge fan of Dropbox and I'm still looking for that feature in coding. Something like an auto-github diff upload. I saw some stuff with this I think regarding the particular text editor that I use. My computer's are garbage that's why 1GB to Dropbox is a lot to me. Edit: I'm curious how OneDrive compares. I have Windows on a junk laptop I have but I don't use it to work on (too weak). Maybe it has better idle RAM use.
- sireat 10y ago
  Hmm, I see 3 Dropbox processes two take less than 1MB and one takes 62MB of memory. Not saying Dropbox is super light but it is not too heavy. Does Dropbox memory usage grow with storage? Asking because I am only using 5GB of storage.
whatevorama 10y ago
I love dropbox but I ended up on google drive. I happen to have a business email address with them and I got 30G free then updated. Dropbox is better than Google but I was already on Google. If they offered some sort of package like Google does, they could have more people onboard.

293 points by rayuela 10y ago

adtac 10y ago

I'll never understand why a company has to keep growing. Obviously I don't have a degree in economics, but why can't a company do well and then continue being so without having the need to innovate all the time? Sorry if I'm missing something big.

martin_bech 10y ago
It only does if it cant pay the bills.. right now some of these unicorns have large amounts of debt, or similar obligations, that they cant payback unless they grow.
patrickthebold 10y ago
It doesn't. It's a choice the owners/shareholders can make, which increases (hopefully) the value of the thing they own.
droopyEyelids 10y ago
What you're missing is you're looking for too abstract of an answer. A company has to keep growing because of unique demands on that company. A different company doesn't have to grow because it has a different set of demands. Most you read about on here have a relatively similar set of demands based on the VC investments they took.
darkstar999 10y ago
They took venture capital, the investors want to see as big of a return on their investment as possible. I think you'd have to look at self-funded companies to find one that is "ok" with stagnant growth.
superflyguy 10y ago
If you start a company and you break even then you're free to not grow. As long as you're happy with the money you're making and you can pay stuff, rent, insurance, equipment, services, surprises etc then you don't need to. But if you can do it, someone else can do it, and if they are criminally inclined, sly, lucky, or are prepared to pay people less or provide a lower quality product, or they have money to burn or are backed by people with money to burn then they can take you on and, until they are caught/run out of money/lose business due to their business practices catching up with them, they can take your business. Companies which are set up with other people's money and/or which go public are going to have to answer to the people who "own" them about why they're not making more money this year than last year and the people notionally running the company will be out of a job if they can't explain this.
clairity 10y ago
dropbox is a startup and investors invest in startups to generate outsized returns (with commensurate risk). outsized returns require outsized growth (specifically in free cash flows, but many proxy metrics are used to forecast free cash flows, aka future profits). so the growth rate of a company is one of the biggest factors in its valuation, and higher valuation means more wealth generated for investors, including employee-shareholders. in DCF (discounted cash flows, a fundamental valuation method), revenue growth rate is typically an estimated input, and the model is highly sensitive to it. the outputs of the model are the present value of future free cash flows, otherwise known as the valuation of the company. (see the growth rate in the DCF sensitivity chart on this example of DCF analysis on wikipedia: https://en.wikipedia.org/wiki/Discounted_cash_flow#/media/File:DCFM_Calculator.JPG https://en.wikipedia.org/wiki/Discounted_cash_flow#/media/Fi... ) higher growth rate => higher valuation, all other things being equal. investors are looking for the largest delta between initial valuation and final valuation they can get, and growth is one of the most reliable ways to achieve that. companies that don't grow can generate nice returns for the current owners, but they don't generate outsized returns over time because as growth rate goes to zero, valuation becomes a constant, i.e., no delta in initial vs final valuation (all other things being equal).

akulbe 10y ago

Why can't regular folks seem to get in on an IPO? (Admittedly, I don't understand how all the stock stuff works. It just seems like only big investment firms are the ones that are able to do initial investments.)

acchow 10y ago
Yes, regular folks can get in on an IPO. That's kind of the point - floating the shares publicly. Sign up for IPO's through your broker.
w0m 10y ago
Why can't you?
deleted 10y ago
[deleted]
asafira 10y ago
I think it's somewhat the point of an IPO. https://en.wikipedia.org/wiki/Initial_public_offering https://en.wikipedia.org/wiki/Initial_public_offering
eastbayjake 10y ago
You usually can't get in on the discounted opening price because those favorable prices are in exchange for large investment banks buying enormous blocks of shares (and thus limiting the IPO company's risk that they won't raise enough cash from the IPO), but you can certainly buy the shares from those banks at the market price. If you have $100M+ to invest you'll get lots of preferable pricing deals...
sbov 10y ago
IIRC Google's IPO did some sort of auction. But I don't know if it was available to regular folks or not, or how it turned out in the end.
- srtjstjsj 10y ago
  It was bad for Google and the investment banks, good for investors. It got an astoundingly low price, in part because banks boycotted the IPO to punish Google for the auction -- share price nearly doubled in the first 2 months, tripled in the first year, and kept growing. http://www.msn.com/en-us/money/stockdetails/history/fi-126.1.GOOGL.NAS http://www.msn.com/en-us/money/stockdetails/history/fi-126.1... https://www.wsj.com/articles/SB109036846726869268 https://www.wsj.com/articles/SB109036846726869268 https://archive.fortune.com/magazines/fortune/fortune_archive/2004/08/23/379378/index.htm https://archive.fortune.com/magazines/fortune/fortune_archiv...

rrdharan 10y ago

[Disclaimer: I used to work at Dropbox.] TL;DR: The only actual news here is the new line of credit. The folks involved in securing that line of credit only noted that it was secured since the previous line of credit had expired. There's no real tie to any IPO news here, and the quotes about an IPO come from "potential advisers" and seem to be entirely unrelated to the line of credit news. > While the company hasn't set specific timing, potential advisers believe it will be ready to go public by the end of this year. Dropbox and its lenders declined to comment.

aresant 10y ago
Another interesting nugget that I think is material to the conversation: "For the banks involved, taking on the risk of lending to an unprofitable private company can help them win a role underwriting an eventual IPO." It's fascinating to watch how we're building the stack of cards this time. The bankers on SNAP made $85,000,000 in fees on the IPO - which is very high margin activity. The same bankers provided ~$1.2b in credit to SNAP as part of the courting process (1). I'm not going to wave the doom and gloom flag, but credit lending on unprofitable companies to secure speculative IPO rights is probably something that will show up in HBR case studies after the next downturn. (1) http://www.cnbc.com/2017/03/03/snap-ipo-what-wall-street-banks-made.html http://www.cnbc.com/2017/03/03/snap-ipo-what-wall-street-ban...
- pm90 10y ago
  This is a really good point. Although: even if I may not agree with the revenue potential, the market does and that is basically what allowed those banks to rake in during SNAP's IPO. I mean, nobody knows for sure whether SNAP will every be profitable, but the market thinks that it will. Or maybe the market is too gullible ...

revmoo 10y ago

Dropbox are utter clowns and I've personally seen them delete data on two separate accounts.

deleted 10y ago

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iclabs 10y ago

Can't say I'm a huge fan of Dropbox

zeroer 10y ago
There's lots of things I can't say.

shubhamjain 10y ago

One concern about Dropbox I have is its inability to establish itself beyond its File Storage / Syncing software. Salesforce.com, in comparison, has been acquiring companies left and right. Notable acquisitions of Dropbox, like Mailbox, have either shut down, or are nowhere on the impact map. As Dropbox user (albeit a free one), I don't find it useful for anything beyond synced storage (if there is any new addition in their interface, I might have missed it). After I started uploading pics on Google photos, I have little to store on Dropbox. Synced storage might be big enough problem for it to continue to grow bigger, but I wonder if it's a meaningful moat. What if the storage + software gets commoditized to an extent that it becomes essentially free for most people?

free2rhyme214 10y ago
That's why they're focused on the Enterprise now. I agree their acquisition strategy has been lackluster.
blowski 10y ago
Why do they need to expand beyond that? Am I idealistic to say a company can survive just by doing something really well. Salesforce is hardly a paragon of a well-executed clear and consistent vision. I pay Dropbox because I can rely on their backups any place at any time, not because their storage is cheap.
- TAForObvReasons 10y ago
  A company with a modest valuation can survive by doing one thing and doing it well. A company with a very large valuation needs either very large sales figures OR large growth potential. Dropbox is squarely in the second category, which is why they need to keep expanding.
  - nicoburns 10y ago
    Surely if the company isn't "living up to it's valuation" that's a problem for the people who erroneously valued it at that level, not for the company?

deleted 10y ago

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weston 10y ago

Lots of negativity in here, but I'll say I really enjoy how incredibly simple Dropbox is and has remained since it launched. It's so easy to explain how it works to my non-techie parents ("It's just another folder on your computer, except it backs up your data automatically"). I hope Dropbox continues to thrive.

acjohnson55 10y ago
I agree. It just works, and it works really well. My only complaint is that they don't yet have Smart Sync [1] (aka Project Infinite) for premium home users. I love it though, and I use Cryptomater [2] to sync my docs folder across machines without having it be on Dropbox's servers in the clear. [1] https://venturebeat.com/2017/01/30/dropbox-launches-smart-sync-formerly-project-infinite-for-business-users/ https://venturebeat.com/2017/01/30/dropbox-launches-smart-sy... [2] https://cryptomator.org/ https://cryptomator.org/
GordonS 10y ago
It does work. Most of the time, for most people. But, at least on Windows, only being able to sync 1 folder is a serious limitation. Again at least on Windows, CPU and disk utilisation goes through the roofnon start-up, rendering your machine all but useless for half an hour. And the final nail in my Dropbox coffin - it seemed to quite often choose the wrong file when there were conflicts, and at times it mistakenly deleted a lot if files. I just couldn't trust it. Oh, and support via their forums was rubbish. Dozens of people would report the same problems, and they'd be ignored for years.
- gcr 10y ago
  What have you switched to? Every other sync service I've tried has major bugs, from Google Drive URL-encoding the filenames in an entire directory tree and deleting the original to Bittorrent Sync silently corrupting large files...
- jpalomaki 10y ago
  You can use symlinks (mklink on Windows) to overcome the "one folder limitation". Not perfect, but helps in some cases.

asimpleguy 10y ago

I don't know about Dropbox but for example Twitter is still losing money since 2012. Twitter is way overvalue in the market and has lost around $2 billion since inception. Obviously it's not the same as 2000, these companies have revenue, but some of the are not making even a profit. If they continue to throw tech companies with revenue and losing money as IPOs prepare for the next tech bubble. It will burst.

sfeng 10y ago
If you read the article, Dropbox is bringing in a billion a year and is almost profitable.
- asimpleguy 10y ago
  Almost profitable is not profitable.
  - seanieb 10y ago
    They just built out their own data centers to transfer off AWS. I'm guessing that long term bet cost a few $$$
  - rrdharan 10y ago
    They're free cash-flow positive. Consider that Amazon is also mostly not profitable but has staggering amounts of positive free cash flow.
    - mbesto 10y ago
      > They're free cash-flow positive. Do you know that for a fact?
      - rrdharan 10y ago
        Dropbox's CEO declared it as a fact last year and it has been widely reported: https://www.bloomberg.com/news/articles/2016-06-14/dropbox-ceo-pushes-toward-profitability-in-a-post-unicorn-era https://www.bloomberg.com/news/articles/2016-06-14/dropbox-c... https://www.wsj.com/articles/dropbox-ceo-were-cash-flow-positive-1465938538 https://www.wsj.com/articles/dropbox-ceo-were-cash-flow-posi... https://techcrunch.com/2016/06/14/dropbox-says-it-is-cash-flow-positive-in-no-rush-to-ipo/ https://techcrunch.com/2016/06/14/dropbox-says-it-is-cash-fl... But I have not personally inspected their financial statements and conducted an audit to confirm this with my own two eyes, if that's what you're asking.

laurentdc 10y ago

I'm failing to see their competitive advantage. Is it the file history? Linux client? Genuinely asking, I pay 7 € / mo for OneDrive (1 TB) and I get a desktop license of Office along with that too.

ac29 10y ago
They were the first big player, they have a lot of brand recognition, and network effects help also. That being said, it would be interesting to see what marketshare the various players have. I bet Dropbox is 50% or less.
jpalomaki 10y ago
The thing in Dropbox is the syncing. It works very well and it is very fast. This does not matter for everybody but if you for example work on multiple computers with same files this can be quite handy.
kilroy123 10y ago
Same here. I'm a paying dropbox customer, but I plan to switch in a month before my annual subscription renews. Amazon drive offers more space for only $60 USD a year. Plus google apps offers more space than dropboxes business plan.
- danieldk 10y ago
  I tried to switch quite many times. Problems are typically: refusal to sync some files, excessive memory and CPU use (last time I tried OneDrive it used ~700MB RAM when storage was nearly empty), no LAN sync (speeds up things considerably when sharing with family/colleagues), no block-level sync (touch a small part of a 300MB file and it gets completely resynced), no Linux client.
  - kilroy123 10y ago
    No I feel you, I do agree their sync tech is the best. I switched back to Mac so I no longer care about the linux support. I've really gotten into photography. Shooting in raw means I easily add 10-30 GB of data a week. Just want a cheaper option for more than 1 TB.

marcusr 10y ago

Dropbox for Business has really changed my view of Dropbox the company. With AzureAD SSO integration, and the new Smart Sync feature, it's now possible to run a small company completely in the cloud, with terabytes of data in the cloud accessible to everyone without them synching it all to their laptop. Smart Sync is their game changer.

pm90 10y ago
This. Many people fail to see just how well Dropbox works for business that want a reliable, user friendly cloud storage solution. Sure its "just" a file sharing solution, but they do it really really well.
eitally 10y ago
I think Google Drive's new features (Team Drives & File Stream) are going to win at least some of this market, too. Drive wasn't compelling for any sort of enterprise data management before, but it's slowly evolving some appealing features. If you add something like AODocs, you can get 80% of what even most large companies need out of an EDM platform. https://www.forbes.com/sites/kevinmurnane/2017/03/14/google-beefs-up-google-drive-for-enterprise-customers/#4645f90f729d https://www.forbes.com/sites/kevinmurnane/2017/03/14/google-...
post_break 10y ago
Used to use Dropbox for Business. Shared tons of files. A glitch happened on syncing and it deleted over 60,000 files. I had to restore them a folder at a time. We stopped using it the next week.

skdotdan 10y ago

"Dropbox it's not a product, it's a feature". Don't get me wrong, I'm a Dropbox user myself, but I don't see their actual moat. Isn't cloud storage a commodity nowadays? IMHO they should have spent money in investing in other productivity companies in order to diversify and be able to offer a complete productivity suite.

sidlls 10y ago
It seems to me you're looking at this from a technically proficient developer's perspective. It's easy (trivial) for a technically proficient person to setup any trivial cloud storage system they like on just about any provider's platform they like. It's not so easy for anybody else (read: the vast majority of other users). Dropbox's value proposition isn't commodity storage on somebody else's servers: it's the UI/UX that backs it, and the particular implementation details.
- stephenr 10y ago
  Dropbox isn't installed by default on any platform. Apple, Microsoft and Goole all offer 'cloud' storage services (they aren't a product, stop calling it that) and all have a user-facing platform on devices: macOS/iOS, the various Windows, Android/ChromeOS. Dropbox is effectively a feature. That isn't to say they can't remain in the market and possibly even become profitable, but just making a sync client whose biggest recent news is the skeezy install process on macOS isn't going to cut it.
  - sidlls 10y ago
    If the market treats them like a product, they are a product. Also the number of people outside of techie communities that care about either Apple computers or "skeezy" installs on them is tiny. Mac has a tiny, tiny fraction of the computing market and the vast majority of MacBook users are about as tech savvy as the vast majority of windows laptop users: that is they aren't savvy at all.
    - stephenr 10y ago

sersi 10y ago

I've stopped using Dropbox for a few years already. Their software was good when I used it but I decided to boycott them after Condoleezza Rice joined their board. I just couldn't trust them with my data after that. Plus, the fiasco they had with their Mac app comforted me in not trusting them

gruglife 10y ago

I'm hoping someone can help me with this. DropBox is valued at $10b. Their closest competitor, Box, has a market cap of just over $2b. Does Dropbox really offer that much more than Box?

officelineback 10y ago
I think Dropbox has many more users.
superflyguy 10y ago
I use Box but Box has some flaws compared to Dropbox. Sync is broken and they don't care. On Dropbox you could have the windows client installed and open a Truecrypt file, make some changes (add/rename/delete/change files within the container) and when you close the Truecrypt file it syncs the changes properly. Do the same on Box and it looks like it's working but it's silently losing your changes; no errors, warnings - nothing. I reported this and they don't care. So you can only trust them with whole files. That's fine, once you know, for a free product, I guess. The version control can be seen as a deletion with no undo too; if you accidentally increment the version number of a file (by uploading a new file of the same name, I think this is what I did) then the earlier version is there but you can't get at it with the free service. Not even by deleting the newer one and reverting. So be very careful what you do. Still, it's better than nothing as a free secondary backup.
majani 10y ago
Not really. The latest crop of unicorns have done a really poor job of managing capital and they're getting slaughtered at the public markets(see twitter and snap). Dropbox has probably set themselves up for a similar fate

joshua_wold 10y ago

Thought they were cash profitable??

olivermarks 10y ago

Cloud storage is a commodity business and race to the bottom: hard drive prices already got there as local backup. Failing to see what the ipo upside is here. A bit melodramatic but the cloud is very new and untested against natural events such as a coronal mass ejection, which could wipe put huge amounts of stored data...the sort of thing that arguably should be in IPO risk lists but isn't...yet... https://en.wikipedia.org/wiki/Coronal_mass_ejection https://en.wikipedia.org/wiki/Coronal_mass_ejection

rglover 10y ago

Still surprised Dropbox doesn't apply their UI/UX talent to taking S3 to the cleaners.

officelineback 10y ago
Doesn't Dropbox run on S3? Or is that the company that recently moved off AWS into their own datacenters? If so that was a good case study. (I'm an all 5 certified AWS guy and while I love it, I like seeing the counterexamples to keep my Kool-Aid ingestion in check).
- jeeyoungk 10y ago
  https://www.wired.com/2016/03/epic-story-dropboxs-exodus-amazon-cloud-empire/ https://www.wired.com/2016/03/epic-story-dropboxs-exodus-ama... has an interesting story around their custom storage hardware solution.
- candiodari 10y ago
  They used to. They migrated off of it because cloud is too expensive. 2 big components to that : 1) traffic to the rest of the internet from the cloud is "wtf" expensive compared to the alternatives. If you can do your own peering (like dropbox does), this goes double. 2) Actual disk storage is too expensive as well. It doesn't compare favorably with what you can get by building a blackblaze pod [1] (just an example). 3) Cloud does not match their usecase. They are write-heavy instead of read-heavy. So as the cloud optimizes for internet serving, it actually moves further away from their optimal price point. There's an episode of software engineering radio that has a lot of details from the horse's mouth: http://www.se-radio.net/2017/03/se-radio-episode-285-james-cowling-on-dropboxs-distributed-storage-system/ http://www.se-radio.net/2017/03/se-radio-episode-285-james-c... [1] https://www.backblaze.com/blog/open-source-data-storage-server/ https://www.backblaze.com/blog/open-source-data-storage-serv...

JohnJamesRambo 10y ago

Investing in Dropbox to me sounds like investing in some other dinosaur like Blockbuster Video or Office Max. Eventually I just don't see people needing Dropbox.

flow99 10y ago

What can I use for free photo gallery storage if I do not want google or dropbox?

frik 10y ago
Flickr

sova 10y ago

Way to go Dropbox. Just be prepared for when Operating Systems start shipping this functionality built-in. If you can prepare for that inevitable reality (by, say, providing modules or something for specifically that) then it'll all go great. Great werk so far. Started using dropbox in college and I am an extremely satisfied user. Let me just cue up some Fleetwood Mac

flow99 10y ago

What can I use for free photo gallery storage if I do not want google or dropbox?

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uvince 10y ago

I love that they do one thing really, really well. Further: "Dropbox is the fastest SaaS company to reach $1 billion in revenue run rate" - given that, I don't care if they are profitable or not. They got to $1B faster than Salesforce, as long as they keep this up they'll be just fine.

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nkkollaw 10y ago

Finally an IPO that makes sense to me. I can understand the value of Dropbox. Stuff like Snapchat being worth billions just make me feel like I don't know how anything works anymore.

sbardle 10y ago
Dropbox is a utility/product/feature. It can be replaced. Snapchat is a network and therefore is open to network effects, i.e. the sum becomes greater than the parts. I think in ten years time Snapchat will look the more justified valuation, providing they execute. Dropbox are going to struggle unless they can innovate ontop of the current business model.
- nkkollaw 10y ago
  > I think in ten years time Snapchat will look the more justified valuation, providing they execute. They execute what, exactly? I looked at their investors page. Doesn't make any sense. It's a sexting app!!!

yueq 10y ago

I think it means the opposite. If a public offering is head, why do they even need line of credit?

5_minutes 10y ago

Actually box.com has several nice features by which they totally outperform Dropbox. One is for example the complete mess many Dropbox folders become, because you can drag an drop them around yourself, rename them etc. Look at anyone's Dropbox folder and things get quite messy rather quickly. The problem with box.com is that there's no business support at all (nobody answers any emails). And in that regard Dropbox has been doing a really good job and put some effort into it. The product itself is not superior to box.com, quite in contrary actually, but the support is much better. (it's also quite easy since with box.com it's non-existent).

turingbook 10y ago

Steve Jobs said when his acquisition proposal was refused by Dropbox founders: it was a feature, not a product. This is the sword of Damocles for Dropbox.

mankash666 10y ago

It appears like Dropbox has ~2X the revenue of box with possibly higher costs in marketing and sales, since their investors are pushing for growth. Assuming these higher costs to be nullified by operating their own datacenters, their (fair) valuation is ~$5B. Anyone still wondering why they aren't hurrying to an IPO, what with a plum $10B private valuation and all

ge96 10y ago

If only it didn't use ~1GB of RAM, I used to be a huge fan of Dropbox and I'm still looking for that feature in coding. Something like an auto-github diff upload. I saw some stuff with this I think regarding the particular text editor that I use. My computer's are garbage that's why 1GB to Dropbox is a lot to me. Edit: I'm curious how OneDrive compares. I have Windows on a junk laptop I have but I don't use it to work on (too weak). Maybe it has better idle RAM use.

sireat 10y ago
Hmm, I see 3 Dropbox processes two take less than 1MB and one takes 62MB of memory. Not saying Dropbox is super light but it is not too heavy. Does Dropbox memory usage grow with storage? Asking because I am only using 5GB of storage.

whatevorama 10y ago

I love dropbox but I ended up on google drive. I happen to have a business email address with them and I got 30G free then updated. Dropbox is better than Google but I was already on Google. If they offered some sort of package like Google does, they could have more people onboard.