20 ms·
Dropbox Files Confidentially for U.S. IPO
- chollida1 9y agoCongratulations to the team and of course YCombinator!! 3 things I'm looking forward to knowing. 1) What is their profitability? I think they might surprise some people here, like Google did when they were private, hiding just how much money they are making. It will be nice to see a cash flow positive tech company going public!! 2) What sort of share structure they are looking for. I think after SNAP its going to be a tough sell to get away with no voting control, 3) Can they go public at a valuation larger than the rumored $10+ billion they were valued at without resorting to cheap tricks like only floating 5% ala Groupon. As a side note, it looks like JP Morgan and Goldman Sachs decision 4-5 years ago to start offering more services to private companies is starting to pay dividends
- sulam 9y ago7 years ago they were talking privately about being cash flow positive. It will be interesting to see how that’s held up as they scaled.
- jpalomaki 9y agoWould be quite amazing if they are not profitable. After all they seem to be quite conservative on the product development side and have always had courage to charge actual money for their service. One thing I've always wondered is what is their actual cost structure. Based on my own usage I would assume the actual storage part is quite small compared to the data processing and bandwidth. Since the sync works so smoothly, it is convenient to keep all kinds of projects there. Thinking for example node.js projects, which take not so many megabytes, but may contain 10-100k small files (due to dependencies).
- chollida1 9y ago> After all they seem to be quite conservative on the product development side and have always had courage to charge actual money for their service. Have we really come to the point where its "couragous" to charge money for your product?
- jpalomaki 9y agoI think it takes courage, because people will only pay if you provide some real value for them. Give out things for free and you might build a nice user base even if the offering is not so interesting.
- joering2 9y agoNot necessarily; if you hook up people on free and have them invest time money or resources into your free by walled system, the cost of moving elsewhere overweight a small upcharge once you start charging. Example is Twilio. They were first and we implement them very heavily into our systems. Currently our bills are at around $400 per month. Phaxio is much cheaper, but we just got used to Twilio and unwilling to spend time money and resources into jumping to something else just for the sake of little savings.
- cma 9y ago> After all they seem to be quite conservative on the product development side and have always had courage to charge actual money for their service. They've always charged for higher tier services but they've also always had a free tier where they provide service without charging anything.
- Moseman23 9y agoPretty simple: they pay a gazillion dollars to host everyone's pictures and old resume versions, they get half a gazillion from enterprise customers storing work documents. They reduced a lot of costs by building their own data centers and getting off AWS.
- 9y ago
- cossatot 9y agoFrom TFA: Unlike money-losing Snap, Dropbox will come to the table with annualized sales of more than $1 billion, Chief Executive Officer Drew Houston said in an interview last year. It’s also been profitable, excluding interest, taxes, depreciation and amortization. Those benchmarks are the product of more than two years of focusing the company, expanding its product suite for businesses and reining in expenses, Houston said at the time.
- maxxxxx 9y agoDoesn't "profitable, excluding interest, taxes .." mean not profitable?
- blibble 9y agothey wouldn't say it if they didn't have to
- kornish 9y agoEBIDTA certainly has merits and drawbacks – like any other metric – for measuring the health of a company. https://www.investopedia.com/terms/e/ebitda-margin.asp https://www.investopedia.com/terms/e/ebitda-margin.asp
- JumpCrisscross 9y agoEBITDA is a good un-levered metric because it approximates cash flow. For a ten-year old company going public, actual cash flow and net income are more important. If Dropbox are trying to price at a premium to Box and don't even have profits, they're going to look like Snap and Twitter more than anything respectable.
- philjr 9y agoKinda. It approximates cash flows for some types of companies. For others it doesn’t. Hard to generalize here. Ultimately the best measure of cashflow is cashflow. It’s a good normalized measure of a stable mature business, but it can overstate or understate the health of depending on the revenue and billings model. So, basically, YMMV
- frik 9y agoThe first IPO in YCombinator portfolio. Quite interesting they had to invest in 1450 companies first and now after 12 years the first IPO. As of 2017, Y Combinator had invested in ~1,450 companies including Dropbox, Airbnb, Coinbase, Stripe, Reddit, Zenefits, BuildZoom, Instacart, Twitch.tv, Machine Zone, Weebly, Paribus, and Chinese startup Raven Tech. The combined market capitalization of YC companies was over $80B. A handful of the YC companies are well known including Dropbox, AirBnB, Stripe, Reddit, InstaCart, Twitch (bought by Amazon) and two rather infamous ones Zenefits and Coinbase. The next IPO will be AirBnB, but then ahead is another lean period.
- kayhi 9y agoFirst YC company to go public. Congrats everyone!
- dawhizkid 9y agoWow didn't realize it was the first...not sure if that's more depressing than exciting tbh!
- ISL 9y agoBuild a company to build a company, not to IPO.
- dawhizkid 9y agoAs a founder do you not feel some responsibility to eventually provide liquidity to your investors and the employees that helped build your co?
- econner 9y agoBut, structure the comp so that all of your early employees & people in the trenches only get paid if you IPO. Then get mad when those same employees openly wonder if and when you are going to IPO.
- travisjungroth 9y agoAn exit (IPO or acquisition) is the goal of a VC backed startup. If you want to build a company to build a company, do it a different way (debt, savings, bootstrap, investors).
- redwood 9y agoTerrible way of looking at it. Perhaps for investors, sure, but not for employees
- tylersmith 9y ago
- foolfoolz 9y agoDropbox has always been a successful company with great mindshare. While not quite a household name, if you worked there and told your family there's a chance they would know what the company is (how many of you can do that?). Yet still, dropbox was founded in 2007. It's been over 10 years to reach IPO. Just a friendly message to any engineers out of school who see the tempting offer to work at a small fast moving startup, you may get the payout like dropbox is about to, but you might have to wait a decade.
- deleted 9y ago[deleted]
- msmith10101 9y agoMore likely a new grad will get nothing: recruiters, dilution, and taxes will see to that.
- dawhizkid 9y agoDropbox probably moved to RSUs at some point over the past few years, so this is only true of the last batch of options holders depending on the strike price.
- jeremyis 9y agoEarly dropbox employees have had opportunities to cash out. Same has happened for other big private startups.
- econner 9y agoYes, but there's no denying that a bit of bait and switch goes on at these companies whereby they grant you a bunch of stock options, call it part of your total comp, and then restrict 100% what you can do with them unless it's on their terms.
- appachai2 9y agoYeah, most startups aren't geared towards their employees. They have to grow a certain size before the employees are able to get reasonable terms from their employer.
- chrisper 9y agoI tried using Dropbox as an alternative to Google Drive. However, just like the other alternative cloud providers it was quite slow. With Google Drive I can max out my Gbit Fiber (I downloaded with 920 Mb/s last time), while Dropbox was slow 8 Mb/s. Though I am not sure if Dropbox isn't rate limited for the free accounts.
- sbarre 9y agoSpeaking as a paying user, I see speeds way higher than what you see. That doesn't confirm your hypothesis, but it's a counterpoint I suppose.
- chrisper 9y agoWell it would also make sense. I just didn't want to gamble on it. Maybe I will contact the support and ask them.
- wil421 9y agoI don’t see that much benefit paying for Dropbox or Google Drive. At work my company pays for OneDrive. Personally I use OneDrive because it already comes with my Office subscription. For $8.25 a month I get Office on all my devices and 1TB per 365 user. I have gigabit internet and there isn’t much difference in OneDrive or Google Drive.
- chrisper 9y agoAre you using the OneDrive file stream? I forgot what it is called.
- hunter23 9y agoI actually tested dropping up 2 exact copies of a photo folders on Google Drive and Dropbox. Google Drive is way way slower due to lack of block level syncing and other issues. You shouldn't be looking at the bandwidth usage you should be looking at how long it takes the files to sync.
- aviv 9y agoI'm surprised they didn't go the ICO route with DropCoin or something.
- luckydata 9y agoI'm genuinely curious to know why you're surprised or what would they have to gain from it.
- aviv 9y ago/s
- quickthrower2 9y agoIt would be foolish to ICO now. Go public first then pull a Kodak.
- KindOne 9y agoCan you explain the "pull a Kodak"? I'm a bit lost with that.
- quickthrower2 9y agoLaunch a coin, sell some Bitcoin mining gear, etc.
- sagivo 9y agoi probably gonna get downvoted but i don't get their product. anything they offer you can find better/cheaper elsewhere (google docs, photos etc) or not really needed (paper)
- nck4222 9y agoYou should try to be a bit more open-minded. You sound a lot like the posters here: https://news.ycombinator.com/item?id=8863 https://news.ycombinator.com/item?id=8863
- mikestew 9y agoParent sounds nothing like those comments. Whereas you see people saying, “just glue together some ftp, rsync, a little SVN, and you’re golden!”, my take on what parent is saying is, “we have offerings from Google, Microsoft, Apple, Joe’s Online Storage, what makes Dropbox special again?” The picture you try to portray is “no wireless, less space than a nomad, lame” and that’s not the case at all, I think it is a question worth considering.
- nck4222 9y agoThe parent is also suggesting cobbling together multiple different products (google docs, photos etc) in order to replace dropbox...
- prklmn 9y agoAll those google products are contained within the Drive client now, and could act exactly like a dropbox folder if the user doesn't do any setup.
- sagivo 9y agonothing to do with open-minded. simply checking advantages vs alternatives.
- 9y ago
- ea016 9y agoFirst YC company to go public ! Congrats It's always fun to look at the comments at the time the MVP was posted here on HN: https://news.ycombinator.com/item?id=8863 https://news.ycombinator.com/item?id=8863
- 40acres 9y agoI feel like this has got to be one of the most infamous / inspiration posts in HN history. Just to be able to look at the MVP of a billion dollar company and watch it get scrutinized, doubted and critiqued at that early stage.. it's an amazing look for anyone w/ thoughts of launching a startup.
- ajkjk 9y agoOn the other hand, some of those criticisms were, like, obviously foolish, even at the time. Like: "The only problem is that you have to install something."? Regular users don't care and they didn't care then. Linux users can build this quite trivially? Yeah, but your average person can't, so who cares? "Not income generating"? It's storage. People pay for storage all the time.
- Frank2312 9y agoAgreed on all your points except the last one. Not sure if it was just in my part of the world, but when Dropbox started, people only paid for local storage. And that was mostly technical people outside of small USB drives.
- phil248 9y agoI enjoyed the Linux comment too. It's as if they were only concerned with the other 97% of the market! Those fools.
- blibble 9y agoit's still making a loss though...
- eclipxe 9y ago
- kbumsik 9y agoI don't know much about the stock stuff so I am wondering why they are doing it secretly? Just because they are not ready to announce yet?
- unexpected 9y agoDropbox Team: Congrats on this great milestone! I think I was one of your first users back in the day, and your product has transformed my life - it's been the single greatest productivity tool I've used in the past 10 years! I know some people will scoff at that, and there is always the "yeah but google drive/box/oneDrive is better", but you guys did it first and still do it best! I've been a Pro member for a long while now and I'll be with you guys until the end - good luck and I'm excited to see what the future holds.
- jonny_eh 9y agoDoes this mean they'll remove the constant nag to upgrade my account to get more space? I have 2 GB out of a total of 20GB free on my non-paying account. It's so infuriating that I've uninstalled the client. How did I get 20 GB free? By getting lots of friends onto the service in the early days, and this is how they thank me?
- yadongwen 9y agoSo you are not one of the normal users. Do you think they will write special logic for you?
- ct0 9y agoDropbox must have expected people to play their invite game. Not agreeing with original poster though
- throwaway2048 9y agonagging you about free space when you clearly have it is obviously dysfunctional.
- bflesch 9y agoCongrats to Arash for getting to this point. He has been very helpful when I reported security flaws nearly half a decade ago. I'm still wearing their sweater from time to time.
- toblender 9y agoWould be great to know what day the IPO will be. Why is there no easy place to see this?
- jedberg 9y agoIt isn't set yet. This is basically a leak -- the process isn't done yet. The day gets set much further down the line.
- sharpshoot 9y agoHuge! congrats Drew and Arash on the first YC IPO
- make3 9y agoI know I'm not being original when I say I'm really not optimistic about their future. There service is extremely easy to replicate, as seen by all the giant companies who have done so, and all of these giant companies can give better service for free just as an incentive for people to increase their dependancy on their ecosystem (like microsoft and apple do quite aggressively, and google, to a lesser degree)
- quietbritishjim 9y agoTo back up your point, for the same price as 1TB of storage on Dropbox you can get MS Office 365 (for 5 devices), which comes with 1TB of storage on OneDrive. Not everyone uses Office of course, but if you do you'd be nuts to pay for Dropbox. It's IE bundled free with Windows all over again.
- briandear 9y agoI'd rather pay Dropbox more and not have to have the overhead and constant nag of the Microsoft ecosystem -- not to mention Microsoft's questionable privacy policies -- i.e. https://news.ycombinator.com/item?id=7369163 https://news.ycombinator.com/item?id=7369163 Or the privacy mess that is Windows 10... 1TB on Dropbox is $9.99 per month. That's a bargain. I'm not really one to use an inferior product just to save a few dollars.
- make3 9y agoyou're likely a dev, so a very special case of super performant user with strong ideas about computers, not very representative of the average consumer, who knows and likes the Office suite. Same goes for icloud and the iOS/Mac ecosystem, and Google drive, etc.
- ericd 9y agoAre the Linux/OS X/iOS/Android clients for OneDrive good? Because one of the major selling points for Dropbox for me is that their native clients are uniformly excellent, and I rarely have to think about it - it just works everywhere.
- jedc 9y agoTo me, the interesting thing about Dropbox going public is how comparisons to Box could/will drive Dropbox's valuation. Any investor can easily check out Box's financials https://finance.google.com/finance?q=NYSE%3ABOX&fstype=ii&ei=eLJXWsnzJYzwjAGxpbCgDQ https://finance.google.com/finance?q=NYSE%3ABOX&fstype=ii&ei... and easily compare Dropbox's numbers to that. So Box suffered the pain of being the first in the easy consumer/business online storage category to IPO -- but Box's numbers are now driving valuation of their competitor.
- mbesto 9y agoSome napkin math: Dropbox: $1B in revenue / $10B valuation (10x) Box: $400M in revenue / $3B valuation (7.5x) The real question is earnings(which we don't know yet for Box) and whether Dropbox has a compelling case that it grow faster than Box to justify the higher multiple.
- nabla9 9y agoI estimated theri EV/R's (substract debts add cash to valuation) and I get Dropbox 9.0 - 9.5 and Box little over 6. The real issue for me is that file storage is ultimately low profit margin business when the growth maxes out. The end game comes in next 5 - 10 years during a downturn and Amazon, Google, Microsoft, Facebook, or some Chinese company buys one or both of them out and gets the brand and the customers.
- wweidendorf 9y agoYou have your definition for Enterprise Value flipped - it should be (Equity Value + Total Debt - Cash & Equivalents + Non Controlling Interest). If you are subtracting debt and adding cash, you are typically looking to get equity value from EV. Your Box multiples look to be correct - looks like they trade at 6.1x on a trailing twelve month revenue basis, and ~5.0x on a next twelve months revenue basis. Given that Dropbox has a $10BN valuation and a $600MM line of credit from the big banks, I would expect that their trailing revenue multiple is ~10.0x.
- Cookingboy 9y ago
- post_break 9y agoSorry dropbox, I was one of your first few paying customers, but then you started taking features away one by one and I had to just cancel.
- djsumdog 9y agoOut of curiosity, which features did you lose?
- post_break 9y agoPublic folder was a huge one that was axed. Then there was a photo gallery thing that was removed.
- mankash666 9y agoPlease check box's financials [1]. They have annual revenues of $500M and can surely show a profit with non standard accounting practices (all the BS employed as disclaimers by Dropbox to spin a loss as a profit). Box's valuation is around $3.2B. Personally, anything over a $6.5B valuation for Dropbox is grossly over valuing it, by using Box as a benchmark from the open market [1]: https://www.google.com/search?q=NYSE:BOX#wptab=COMPANY https://www.google.com/search?q=NYSE:BOX#wptab=COMPANY
- mankash666 9y agoWhat's the down-voting for? Seems like a perfectly legitimate comparison to a public company offering the EXACT same product to the exact same market segment.
- rpearl 9y agoYou can look at the relatively standard metric of EBITA (which Dropbox says is positive) right here https://www.marketwatch.com/investing/stock/box/financials https://www.marketwatch.com/investing/stock/box/financials and note that it was -$100M in 2017. You can also see their revenue in 2017 were $400M, not $500M so you're kind of pulling numbers out of nowhere...
- brian-armstrong 9y agoWell, congrats to them for doing it. All they had to do to get there was bring a Bush admin war criminal on board. Hurray for state surveillance!
- kindfellow92 9y agoSo adding an ex-government official to the board automatically means Dropbox is surveilling you? How does that logic work?
- brian-armstrong 9y agoWhen the official has advocated heavily for it, yes that's probably safe to assume http://www.drop-dropbox.com/surveillance.html http://www.drop-dropbox.com/surveillance.html
- kindfellow92 9y agoWhat kind of relationship do you think the person in question has with the current federal intelligence community?
- brian-armstrong 9y agoStellar, considering she spearheaded the warrantless wiretap program.
- scrollaway 9y agoI downvoted your first post because, much as I dislike Condoleezza Rice, what on earth does that have to do with an IPO? Even putting aside that it was factually wrong (no, her joining isn't "all they had to do", they have 10 years of work to show for it). I downvoted your second comment because it's complaining about downvotes, and is making the completely incorrect (and really quite narcissistic) assumption that you getting downvoted means surveillance/privacy has lost priority. Here's your context.
- always_good 9y agoDropbox stands out as having one of the most bizarre brand redesigns I've ever seen: https://dropbox.design/ https://dropbox.design/
- tomcam 9y agoThat, ah, really stands alone
- adamnemecek 9y agoI’m glad I’m not the only one. I feel like it’s some sort of reference to popart but like, you are a company that’s doing documents, let’s not get too Warholy.
- EthanHeilman 9y agoDesign fashion has the property that if you do something that pushed the envelope it always seems wrong until it becomes normal and other brands adopt it.
- pmarreck 9y agoThis person gets it. I might also add the heuristic that "if a youngish person is creating it, it probably WILL be the next thing"
- adamnemecek 9y agoThis argument can be used to justify just about any design.
- ignoramous 9y agoHow else do you think Drew Houston was convinced that this design was the right step for them? I'd also like to point out that not all redesigns go as planned, but iteratively eventually 'get' there. See: Android's honeycomb and later Ice Cream Sandwich redesigns before they settled on Material Design. One of the few apps to have gotten design different and right, at the first time of asking, have been, IMHO, WhatsApp, Stripe, and AirBnb.
- jurassic 9y agoI recently did a purge of nearly all my software subscriptions and Dropbox was among the few that survived. Say what you want about storage being a commodity, I think they have built an outstanding service that continues to deliver a huge value to their users. I hope the employees see a nice windfall.
- JohnStudio 9y agoJokingly, I saw this and thought to myself - ok, who's the backroom Chinese hacker planting the HN post. :) Then I realized your karma .. I don't disagree with you, but I'm always weary of glowing compliments to software platforms.
- bsharitt 9y agoThere are plenty of options out there for file storage services with decent phone client and being able to easily share file with non-techie friends and family. There are also plenty of file storage services that have clients for the desktop and command line Linux. But Drop box is the only one I've found that works across both of those very well with first party clients. After all that, I'm not a paying Dropbox customer though. Unfortunately their pricing left me behind when it went to $10 a month for 1TB and nothing between that and free. So instead of I deal with the wonkiness of Google Drive when I need to on Linux and it works well enough everywhere else and the $2 a moth for 100GB is plenty.
- cvaidya1986 9y agoFirst YC IPO! Congrats Drew, Arash and team!
- staunch 9y agoThis is definitely the best Show HN I've had the pleasure of watching evolve! Dropbox is a cool technology started by a cool person. That's what I like to see succeed. Too bad we didn't have the opportunity to buy some "DBCoin" back in 2007. I'd have bought a lot! Congrats dhouston & co on building a company that improves the world in a significant way.
- nishantvyas 9y agoDropbox has come a long way... Kudos to them! My YC app: Dropbox - Throw away your USB drive https://news.ycombinator.com/item?id=8863 https://news.ycombinator.com/item?id=8863 Dropbox launches (YC summer 07) https://news.ycombinator.com/item?id=134405 https://news.ycombinator.com/item?id=134405
- coherentpony 9y agoI don't understand. What does it mean to file 'confidentially' if now the entire general public knows about it?
- hortonew 9y agoIt seems it doesn't really refer to their announcement being public or private, but rather what they have to submit in financial statements. They have much looser guidelines, so they don't have to disclose/document as much. They can be more "confidential" about what they submit, and that data is not released to the public until a much later date. This is how I understand it.
- deleted 9y ago[deleted]
- akulbe 9y agoQuestion: since an IPO is going to be a matter of public record, why would you want to file it confidentially? What's the advantage? Thanks.
- arachnids 9y agoLess work for the company because the process is simpler, and allows them to "test the waters" and back out if response is cooler than they imagined it would be. https://www.inc.com/christine-lagorio/public-offerings-how-confidential-ipos-are-changing-the-market.html https://www.inc.com/christine-lagorio/public-offerings-how-c... is a good read.
- maxpert 9y agoI still want to understand what makes Dropbox different from Box. Box almost never had a good time since it's IPO.
- emh68 9y agoName too close to dropbox, and Dropbox became a well-known name first.
- T2_t2 9y agoWhat will YC's final cut be?