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Other interesting excerpts: - "Salesforce Ventures LLC has entered into an agreement with us pursuant to which it has agreed to purchase $100,000,000 of our Cl

Other interesting excerpts: - "Salesforce Ventures LLC has entered into an agreement with us pursuant to which it has agreed to purchase $100,000,000 of our Class A common stock in a private placement at a price per share equal to the initial offering price." - "Following this offering, outstanding shares of Class B common stock will represent approximately 98.0% of the voting power of our outstanding capital stock." Class B shares get 10 votes per share, so presumably reserved for the founders. This seems to be a very high fraction.

cdolan 9y ago
It’s not uncommon, from my understanding, for founders/families to have almost all of the voting control in a public company. I think it’s a misplaced assumption that the public has a proportional interest in voting equal to their amount of shares, or % ownership.
- ggg9990 9y ago
  It’s not uncommon today, but was virtually unheard of until Google did it.
  - kloncks 9y ago
    Yes it was. See Newspapers/media barons.
    - kaycebasques 9y ago
      Which ones?
      - atypeoferror 9y ago
        New York Times is a good example: https://en.wikipedia.org/wiki/The_New_York_Times#Ochs-Sulzberger_family https://en.wikipedia.org/wiki/The_New_York_Times#Ochs-Sulzbe...
      - kloncks 9y ago
        NYT is big one that I know, but others include: News Corp, Sinclair, WaPo, NYT Other media companies in general.
      - jstalin 9y ago
        Ford.
    - deleted 9y ago
      [deleted]
    - edanm 9y ago
      Weren't those usually private companies?
- adventured 9y ago
  > It’s not uncommon, from my understanding, for founders/families to have almost all of the voting control in a public company. Less than 1% of public stocks in the US have that arrangement. It's extremely uncommon. Among public companies with market caps above $5 billion, there are extraordinarily few stocks in which founders/families have almost all of the voting power. You can count them on one hand.
  - rwmj 9y ago
    I don't understand why it isn't illegal.
    - gumby 9y ago
      Because if you don't like the idea you don't have to by the security. And, as it happens, so many people own equities passively (through a managed mutual fund, or an index fund, retirement account and the like) and ownership of a company is so diffuse, these provisions have little impact in practice except against another large entity. I'm not defending the practice -- I think it is a bad management practice myself and don't buy stocks with such provisions -- I'm simply responding to your comment.
    - deleted 9y ago
      [deleted]
    - adambkaplan 9y ago
      Wall St. hasn't punished most tech stock prices for this practice (yet). Seems to be an unspoken rule that when it comes to tech companies, the founders know more than the street analysts.
      - deleted 9y ago
        [deleted]
      - hathathat 9y ago
        Yes they have! [1] Dual- class listing now miss out in huge daily price-insensitive purchases from ETFs driving their stock up. [1] https://www.ft.com/content/993e4c11-8729-3168-a280-69e1d400b1bc https://www.ft.com/content/993e4c11-8729-3168-a280-69e1d400b...
cletus 9y ago
Yeah I just did the math on this (systems of simultaneous equations FTW) and this comes out to almost 17% class A and 83% class B. So we have: - 36M class A shares @ $18/share = $745m - $100m of class A shares at the IPO price in a private placement. This is roughly 5.55m shares and how the figure gets to 41m shares and change - I don't know how many unissued class A shares there are but given that there are 41.5m being issued, this implies there are AT LEAST 245m class B shares outstanding, which seems... kinda high. - Additionally, Dropbox has raised >$1.7b in VC [1] over the last decade. What class of shares have these investors gotten? B or A? If it's A then there are a whole lot more B shares outstanding. If it's B then that too is curious. Unless we're misunderstanding what 98% of the voting power means here? EDIT: Oh there's a table ("THE OFFERING"). - 26.8m class A shares being issued it looks like? - 9.2m class A shares being offered by existing stockholders. - It's unclear to me if the Salesforce private placement is from existing stockholders or a new issuance. - 53.7m outstanding class A shares after this offering; - 339.3m (!) outstanding class B shares - 5.4m outstanding options to purchase class A shares - No outstanding class C shares after this offer. One wonders what class C was. Stapled shares to class B that converted to A? So it looks like this would value Dropbox at close to $8b (393m outstanding shares plus the options plus 30-35m shares IPOed). For a gross profit for 2017 of $737m (from $1.1b in revenue; that's one hell of a profit margin) that all looks pretty healthy. In fact, i wonder why the price is as low as it is? Although they are spending that on R&D and the like. EDIT2: Ya know, I realize commenting on downvoting is not a thing here but I have to ask: why on earth is this getting downvoted?? [1]: https://www.crunchbase.com/organization/dropbox#section-locked-marketplace https://www.crunchbase.com/organization/dropbox#section-lock...
- kloncks 9y ago
  No idea, but I just up-voted you. Your post was helpful to me. Thank you and have a good day.
- prklmn 9y ago
  It's a software company - gross profit is almost meaningless. In reality they made nowhere near $737m.
subroutine 9y ago
It is typically class A that gets 10 votes per share. Does the S-1 say otherwise? [edit] yep, you're right... - "Shares of our Class A common stock are entitled to one vote per share." - "Shares of our Class B common stock are entitled to ten votes per share." From MarketWatch... As is the norm for tech companies going public these days, Dropbox has multiple classes of shares with different voting rights. Class A shares have 1 vote, Class B shares have 10 votes, and Class C shares are nonvoting. MarketWatch pointed out last week that Dropbox's structure still gives heavy voting power to the founders and key investors, but it's "slightly" better than the one rolled out by Snap a year ago, in which ordinary investors don't get any voting rights. - Cofounder and Chief Executive Drew Houston owns 38.3% of the class A shares and 24.3% of the Class B shares, for 24.4% of the total voting power. - Venture-capital firm Sequoia Capital actually has more power than Houston, with 25% of the Class B shares and 24.8% of total voting power. - Cofounder Arash Ferdowski has 9.9% total voting power, mainly consisting of Class B shares.
- gumby 9y ago
  > - Venture-capital firm Sequoia Capital actually has more power than Houston, with 25% of the Class B shares and 24.8% of total voting power. It's likely this will immediately dissolve as these shares are distributed to the investing fund's LPs.
- subroutine 9y ago
  Condoleezza Rice https://i.imgur.com/Ix9rYDR.png https://i.imgur.com/Ix9rYDR.png Didn't realize Condi was on the Dropbox board of directors.
  - sireat 9y ago
    Her joining Dropbox was discussed 4 years ago: https://news.ycombinator.com/item?id=7565546 https://news.ycombinator.com/item?id=7565546 That was a very realpolitik like hire.
prewett 9y ago
> Class B shares get 10 votes per share Well that's a bummer, I guess that rules out Dropbox from my consideration of places to invest. (Which, given current prices, is pretty small.) I can't invest in a company that wants investors money but won't give them anything in exchange for it.
- zapita 9y ago
  > I can't invest in a company that wants investors money but won't give them anything in exchange for it. Other than financial returns, you mean?
  - chowells 9y ago
    A lot of people consider greater fool assets to be financially unsound, no matter what their historical performance might be. Stocks typically provide real value in up to 3 different ways. First is paying dividends. Second is voting power. Third is liquidation preference. Many new tech stocks provide none of those. All they provide is a hope that some fool in the future will pay more for them than you did. As long as we're in a bubble, those greater fool stocks will keep going up. Sooner or later, the bubble will end. Some people consider it financially unwise to depend on the continued existence of a bubble for their financial positions.
    - zapita 9y ago
      It's one thing to argue that an investment is a bad one. It's quite another to say that limited voting rights mean you're "getting nothing in exchange for your money". I don't think you've adressed that claim at all... So what's your point?

cdolan 9y ago

It’s not uncommon, from my understanding, for founders/families to have almost all of the voting control in a public company. I think it’s a misplaced assumption that the public has a proportional interest in voting equal to their amount of shares, or % ownership.

ggg9990 9y ago
It’s not uncommon today, but was virtually unheard of until Google did it.
- kloncks 9y ago
  Yes it was. See Newspapers/media barons.
  - kaycebasques 9y ago
    Which ones?
    - atypeoferror 9y ago
      New York Times is a good example: https://en.wikipedia.org/wiki/The_New_York_Times#Ochs-Sulzberger_family https://en.wikipedia.org/wiki/The_New_York_Times#Ochs-Sulzbe...
    - kloncks 9y ago
      NYT is big one that I know, but others include: News Corp, Sinclair, WaPo, NYT Other media companies in general.
    - jstalin 9y ago
      Ford.
  - deleted 9y ago
    [deleted]
  - edanm 9y ago
    Weren't those usually private companies?
adventured 9y ago
> It’s not uncommon, from my understanding, for founders/families to have almost all of the voting control in a public company. Less than 1% of public stocks in the US have that arrangement. It's extremely uncommon. Among public companies with market caps above $5 billion, there are extraordinarily few stocks in which founders/families have almost all of the voting power. You can count them on one hand.
- rwmj 9y ago
  I don't understand why it isn't illegal.
  - gumby 9y ago
    Because if you don't like the idea you don't have to by the security. And, as it happens, so many people own equities passively (through a managed mutual fund, or an index fund, retirement account and the like) and ownership of a company is so diffuse, these provisions have little impact in practice except against another large entity. I'm not defending the practice -- I think it is a bad management practice myself and don't buy stocks with such provisions -- I'm simply responding to your comment.
  - deleted 9y ago
    [deleted]
  - adambkaplan 9y ago
    Wall St. hasn't punished most tech stock prices for this practice (yet). Seems to be an unspoken rule that when it comes to tech companies, the founders know more than the street analysts.
    - deleted 9y ago
      [deleted]
    - hathathat 9y ago
      Yes they have! [1] Dual- class listing now miss out in huge daily price-insensitive purchases from ETFs driving their stock up. [1] https://www.ft.com/content/993e4c11-8729-3168-a280-69e1d400b1bc https://www.ft.com/content/993e4c11-8729-3168-a280-69e1d400b...

cletus 9y ago

Yeah I just did the math on this (systems of simultaneous equations FTW) and this comes out to almost 17% class A and 83% class B. So we have: - 36M class A shares @ $18/share = $745m - $100m of class A shares at the IPO price in a private placement. This is roughly 5.55m shares and how the figure gets to 41m shares and change - I don't know how many unissued class A shares there are but given that there are 41.5m being issued, this implies there are AT LEAST 245m class B shares outstanding, which seems... kinda high. - Additionally, Dropbox has raised >$1.7b in VC [1] over the last decade. What class of shares have these investors gotten? B or A? If it's A then there are a whole lot more B shares outstanding. If it's B then that too is curious. Unless we're misunderstanding what 98% of the voting power means here? EDIT: Oh there's a table ("THE OFFERING"). - 26.8m class A shares being issued it looks like? - 9.2m class A shares being offered by existing stockholders. - It's unclear to me if the Salesforce private placement is from existing stockholders or a new issuance. - 53.7m outstanding class A shares after this offering; - 339.3m (!) outstanding class B shares - 5.4m outstanding options to purchase class A shares - No outstanding class C shares after this offer. One wonders what class C was. Stapled shares to class B that converted to A? So it looks like this would value Dropbox at close to $8b (393m outstanding shares plus the options plus 30-35m shares IPOed). For a gross profit for 2017 of $737m (from $1.1b in revenue; that's one hell of a profit margin) that all looks pretty healthy. In fact, i wonder why the price is as low as it is? Although they are spending that on R&D and the like. EDIT2: Ya know, I realize commenting on downvoting is not a thing here but I have to ask: why on earth is this getting downvoted?? [1]: https://www.crunchbase.com/organization/dropbox#section-locked-marketplace https://www.crunchbase.com/organization/dropbox#section-lock...

kloncks 9y ago
No idea, but I just up-voted you. Your post was helpful to me. Thank you and have a good day.
prklmn 9y ago
It's a software company - gross profit is almost meaningless. In reality they made nowhere near $737m.

subroutine 9y ago

It is typically class A that gets 10 votes per share. Does the S-1 say otherwise? [edit] yep, you're right... - "Shares of our Class A common stock are entitled to one vote per share." - "Shares of our Class B common stock are entitled to ten votes per share." From MarketWatch... As is the norm for tech companies going public these days, Dropbox has multiple classes of shares with different voting rights. Class A shares have 1 vote, Class B shares have 10 votes, and Class C shares are nonvoting. MarketWatch pointed out last week that Dropbox's structure still gives heavy voting power to the founders and key investors, but it's "slightly" better than the one rolled out by Snap a year ago, in which ordinary investors don't get any voting rights. - Cofounder and Chief Executive Drew Houston owns 38.3% of the class A shares and 24.3% of the Class B shares, for 24.4% of the total voting power. - Venture-capital firm Sequoia Capital actually has more power than Houston, with 25% of the Class B shares and 24.8% of total voting power. - Cofounder Arash Ferdowski has 9.9% total voting power, mainly consisting of Class B shares.

gumby 9y ago
> - Venture-capital firm Sequoia Capital actually has more power than Houston, with 25% of the Class B shares and 24.8% of total voting power. It's likely this will immediately dissolve as these shares are distributed to the investing fund's LPs.
subroutine 9y ago
Condoleezza Rice https://i.imgur.com/Ix9rYDR.png https://i.imgur.com/Ix9rYDR.png Didn't realize Condi was on the Dropbox board of directors.
- sireat 9y ago
  Her joining Dropbox was discussed 4 years ago: https://news.ycombinator.com/item?id=7565546 https://news.ycombinator.com/item?id=7565546 That was a very realpolitik like hire.

prewett 9y ago

> Class B shares get 10 votes per share Well that's a bummer, I guess that rules out Dropbox from my consideration of places to invest. (Which, given current prices, is pretty small.) I can't invest in a company that wants investors money but won't give them anything in exchange for it.

zapita 9y ago
> I can't invest in a company that wants investors money but won't give them anything in exchange for it. Other than financial returns, you mean?
- chowells 9y ago
  A lot of people consider greater fool assets to be financially unsound, no matter what their historical performance might be. Stocks typically provide real value in up to 3 different ways. First is paying dividends. Second is voting power. Third is liquidation preference. Many new tech stocks provide none of those. All they provide is a hope that some fool in the future will pay more for them than you did. As long as we're in a bubble, those greater fool stocks will keep going up. Sooner or later, the bubble will end. Some people consider it financially unwise to depend on the continued existence of a bubble for their financial positions.
  - zapita 9y ago
    It's one thing to argue that an investment is a bad one. It's quite another to say that limited voting rights mean you're "getting nothing in exchange for your money". I don't think you've adressed that claim at all... So what's your point?