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Congratulations 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

Congratulations 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 ago
7 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 ago
  Would 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 ago
      I 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 ago
        Not 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 ago
    Pretty 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.
    - bdcravens 9y ago
      I pay $10/mo for the storage bump. Not sure how many there are like me, but I suspect a non-trivial amount of their revenue comes from non-enterprise customers.
    - jpalomaki 9y ago
      For example BackBlaze sells storage at $0.005/GB [1]. I picked them as an example, because I'm fairly confident their business model is based on making money with this. Based on this I would assume that at Dropbox scale you could do storage at least for the same price, maybe even cheaper. With those prices the free user storage would cost like max 1 cent/month. There's of course some users with more than 2GB, but there's also many who use less and all the de-duplication and shared folders pushing down the per free-user cost. [1] https://www.backblaze.com/b2/cloud-storage-pricing.html https://www.backblaze.com/b2/cloud-storage-pricing.html
      - ktamura 9y ago
        I analyzed Backblaze's business model before. It's quite fascinating. https://twitter.com/kiyototamura/status/934558071019339776 https://twitter.com/kiyototamura/status/934558071019339776 If I had to guess, Dropbox improves their margin by getting people to share files and folders (because that counts toward multiple users' quotas).
cossatot 9y ago
From 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 ago
  Doesn't "profitable, excluding interest, taxes .." mean not profitable?
  - blibble 9y ago
    they wouldn't say it if they didn't have to
  - kornish 9y ago
    EBIDTA 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 ago
      EBITDA 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 ago
        Kinda. 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 ago
The 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.

sulam 9y ago

7 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 ago
Would 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 ago
    I 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 ago
      Not 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 ago
  Pretty 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.
  - bdcravens 9y ago
    I pay $10/mo for the storage bump. Not sure how many there are like me, but I suspect a non-trivial amount of their revenue comes from non-enterprise customers.
  - jpalomaki 9y ago
    For example BackBlaze sells storage at $0.005/GB [1]. I picked them as an example, because I'm fairly confident their business model is based on making money with this. Based on this I would assume that at Dropbox scale you could do storage at least for the same price, maybe even cheaper. With those prices the free user storage would cost like max 1 cent/month. There's of course some users with more than 2GB, but there's also many who use less and all the de-duplication and shared folders pushing down the per free-user cost. [1] https://www.backblaze.com/b2/cloud-storage-pricing.html https://www.backblaze.com/b2/cloud-storage-pricing.html
    - ktamura 9y ago
      I analyzed Backblaze's business model before. It's quite fascinating. https://twitter.com/kiyototamura/status/934558071019339776 https://twitter.com/kiyototamura/status/934558071019339776 If I had to guess, Dropbox improves their margin by getting people to share files and folders (because that counts toward multiple users' quotas).

cossatot 9y ago

From 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 ago
Doesn't "profitable, excluding interest, taxes .." mean not profitable?
- blibble 9y ago
  they wouldn't say it if they didn't have to
- kornish 9y ago
  EBIDTA 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 ago
    EBITDA 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 ago
      Kinda. 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 ago

The 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.