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Just as a caveat, I have 0 affiliation with Dropbox (I don't think I even know anyone who works there). > Are they profitable? Profitability isn't the end-all

Just as a caveat, I have 0 affiliation with Dropbox (I don't think I even know anyone who works there). > Are they profitable? Profitability isn't the end-all metric for a company. Amazon famously circles around the profitable/not-profitable line frequently and few people have doubts about Amazon's viability as a company. Dropbox reported ~20% growth in revenue YoY and seems to have dumped most of that into R&D (you can see their R&D costs have grown by nearly as much as their revenue has). Other operating expenses remain mostly the same. > There is no better evidence that Dropbox is just a feature than for the same price that Dropbox charges for 1Tb of storage, you can get the full Microsoft Office Suite for up to six users and a total of 6TB of storage. Ok, but a growing subset of people clearly choose Dropbox. There are huge advantages to being a first mover that are sometimes insurmountable, even for gigantic companies. The zune was in many ways "superior" to the iPod, but we all know how that story ended.

scarface74 7y ago
Amazon is not the greatest example. Amazon retail is still a poor low profit margin business with huge overhead and if that’s all Amazon was - a company that sells physical products - they would still not be worth anything near what they are worth. Most of Amazon’s profit comes from AWS where they do have economies of scale and relatively high marginal profits. What are the chances that Dropbox will ever find a high margin profitable pivot? What is their customer acquisition cost? The lifetime value of a customer? What type of pricing power do they have. Everyone loves to point at Amazon as evidence that all of these money losing companies will be highly profitable one day but it hasn’t happen. Let’s not forget that out of all the big tech companies - Facebook, Amazon, Apple, Google and Microsoft. The only one that wasn’t profitable before they went public is Amazon. Other operating expenses can’t remain the same. Storage cost real money on a marginal basis unlike software (Microsoft) and search (Google) which has close to zero marginal cost.
- mcguire 7y ago
  "What are the chances that Dropbox will ever find a high margin profitable pivot?" I always thought that was selling ("aggregated") access to user's files.
autokad 7y ago
> "Amazon famously circles around the profitable/not-profitable line frequently" I dont agree with this common saying. Amazon was founded in 1994, IPO in 1997, and made a profit by 2003. Amazon's philosophy is to reinvest money, thus they swing between profit/loss. Amazon went from selling books online to everything online + AWS + Echo + Go Store, etc etc. So it took Amazon to make a profit, but they truly were growing, not paying people to buy movie tickets. Conversely, usually when people say 'look at Amazon' when talking about profitless companies, we are talking about companies that spent a decade + private, IPO with huge valuations, slowing growth, and huge losses with no profit in site. Dropbox for example, founded in 2007 and IPO'ed 11 years later with an 8 billion valuation. A 100$ investment in Amazon would have yielded 127k$. To give you that kind of growth, dropbox would have to reach a market cap of 10+ trillion. This is a huge problem because people are treating these unicorns like growth companies, when their best years are behind them and with their valuation, its mathematically impossible for them to have the huge growth that companies such as Amazon, Netflix, Google had. I think rules need to be enforced / changed to prevent companies from staying private so long. This shenanigans is going to cost generations saving for retirement significantly.
- wokwokwok 7y ago
  I’m puzzled by who you think is suffering by having companies stay private like this? > This is a huge problem because... Why is it a problem? Suck it up; if you’re an investor do your due diligence, just like with any other company.
  - scarface74 7y ago
    It’s a problem because if you’re not a “qualified investor” you don’t get to take advantage of most of the gains as long as the company stays private.
  - mhermher 7y ago
    Because the public market is clearly being used as a greater fool pool for bad investments.
- scoobyyabbadoo 7y ago
notyourday 7y ago
> Profitability isn't the end-all metric for a company. Profitability is a proxy for "going concern" in most of the companies including Dropbox.
philwelch 7y ago
> Profitability isn't the end-all metric for a company. Amazon famously circles around the profitable/not-profitable line frequently and few people have doubts about Amazon's viability as a company. This is basically accounting fiction. Amazon is profitable; they just reinvest their profits so aggressively that they’re writing off tomorrow’s expenses against today’s revenues.

scarface74 7y ago

Amazon is not the greatest example. Amazon retail is still a poor low profit margin business with huge overhead and if that’s all Amazon was - a company that sells physical products - they would still not be worth anything near what they are worth. Most of Amazon’s profit comes from AWS where they do have economies of scale and relatively high marginal profits. What are the chances that Dropbox will ever find a high margin profitable pivot? What is their customer acquisition cost? The lifetime value of a customer? What type of pricing power do they have. Everyone loves to point at Amazon as evidence that all of these money losing companies will be highly profitable one day but it hasn’t happen. Let’s not forget that out of all the big tech companies - Facebook, Amazon, Apple, Google and Microsoft. The only one that wasn’t profitable before they went public is Amazon. Other operating expenses can’t remain the same. Storage cost real money on a marginal basis unlike software (Microsoft) and search (Google) which has close to zero marginal cost.

mcguire 7y ago
"What are the chances that Dropbox will ever find a high margin profitable pivot?" I always thought that was selling ("aggregated") access to user's files.

autokad 7y ago

> "Amazon famously circles around the profitable/not-profitable line frequently" I dont agree with this common saying. Amazon was founded in 1994, IPO in 1997, and made a profit by 2003. Amazon's philosophy is to reinvest money, thus they swing between profit/loss. Amazon went from selling books online to everything online + AWS + Echo + Go Store, etc etc. So it took Amazon to make a profit, but they truly were growing, not paying people to buy movie tickets. Conversely, usually when people say 'look at Amazon' when talking about profitless companies, we are talking about companies that spent a decade + private, IPO with huge valuations, slowing growth, and huge losses with no profit in site. Dropbox for example, founded in 2007 and IPO'ed 11 years later with an 8 billion valuation. A 100$ investment in Amazon would have yielded 127k$. To give you that kind of growth, dropbox would have to reach a market cap of 10+ trillion. This is a huge problem because people are treating these unicorns like growth companies, when their best years are behind them and with their valuation, its mathematically impossible for them to have the huge growth that companies such as Amazon, Netflix, Google had. I think rules need to be enforced / changed to prevent companies from staying private so long. This shenanigans is going to cost generations saving for retirement significantly.

wokwokwok 7y ago
I’m puzzled by who you think is suffering by having companies stay private like this? > This is a huge problem because... Why is it a problem? Suck it up; if you’re an investor do your due diligence, just like with any other company.
- scarface74 7y ago
  It’s a problem because if you’re not a “qualified investor” you don’t get to take advantage of most of the gains as long as the company stays private.
- mhermher 7y ago
  Because the public market is clearly being used as a greater fool pool for bad investments.
scoobyyabbadoo 7y ago

notyourday 7y ago

> Profitability isn't the end-all metric for a company. Profitability is a proxy for "going concern" in most of the companies including Dropbox.

philwelch 7y ago

> Profitability isn't the end-all metric for a company. Amazon famously circles around the profitable/not-profitable line frequently and few people have doubts about Amazon's viability as a company. This is basically accounting fiction. Amazon is profitable; they just reinvest their profits so aggressively that they’re writing off tomorrow’s expenses against today’s revenues.