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Dropbox Raising Massive Round at a $5B-Plus Valuation
- ianl 15y agoSounds like a round for the founders and employees to sell some shares (called a series f?), unless Dropbox has some major expansion planned to build its own CDN and data centres instead of using S3. The amount of savings at there scale (200 million new files / day [1]) would be huge as data via S3 is already more expensive then running your own bare metal boxes. I would imagine that Dropbox pays some sort of bulk price, but I can't find any information. I don't think the 5 billion dollar valuation is out of the ball park considering that they solve a problem that a lot of people encounter including my mother. Their solution is simple and elegant and seems to work. Last statistics I heard they had 25 million users [1] and growing, while I dont know how many of those users are active subscribers I can imagine the conversion ratio is much higher then normal freemium products. While there has been a lot of anti-Dropbox news in the tech press lately, we need to remember we live in an information bubble that doesn't reach the normal user. [1] http://techcrunch.com/2011/06/17/billion-dollar-valuatio-club/ http://techcrunch.com/2011/06/17/billion-dollar-valuatio-clu...
- Joakal 15y agoThere's a difference between 200 million new files and 200 million 'uploaded' files. eg a song has a fingerprint. If 100 other users 'upload' the same song, it's counted towards their usage but no actual upload or storage is performed, saving costs. Pretty clever on their part :)
- ianl 15y agoYes it is very clever, I had forgotten they ensure they only store unique files (I wonder what percentage of files "saved" are unique). I actually went and looked through the TechCrunch articles from April 17th that announced the Dropbox 25m user mark and 200 million file saves but it doesn't distinguish between unique and saved files. I imagine its the latter as it would be the more impressive number. http://techcrunch.com/2011/04/17/dropbox-hits-25-millions-users-200-million-files-per-day/ http://techcrunch.com/2011/04/17/dropbox-hits-25-millions-us...
- eru 15y agoAbout the percentage of unique files: I guess if you go by volume, the percentage of unique files is small. And if you go by number, the percentage of unique files is big. I.e. bigger files are more likely to be stuff that you didn't make yourself.
- blantonl 15y agoPretty clever on their part :) It is actually pretty standard. Deduplication is a very common method for not duplicating the same content on shared storage.
- Joakal 15y agoOT: How do you add italics to text? I find it preferable than adding >s.
- peterb 15y agoI also wonder if they are selling shares because Microsoft is nipping at their heels. Live Mesh is a serious contender and starts with 5G instead of 2G. I switched.
- rjbond3rd 15y agoHmm, interesting. I've never heard of it. EDIT: Apparently it only works on Windows, so I'll be sticking with Dropbox. EDIT: Thanks, I had missed the Mac option. But to me, they cheapen their Live Mesh brand by association with Windows Live ID and Hotmail.
- peterb 15y agoWindows and OSX, but not iOS (yet) or Linux (probably never).
- seabee 15y agoWindows Live is the online brand, all their free-download software/online services are "Windows Live X". I'm not sure how it cheapens it any more than if it was "Microsoft X" or "iProduct"...
- rjbond3rd 15y agoOkay, I should rephrase: when I see Hotmail so prominently featured on the Windows Live ID page, I worry because of Hotmail's spammy past. Also, the only times I've encountered Windows Live ID are times when it was being forced on me. E.g., when I got my broadband, I was forced to use a Windows-only CD to install a lot of (to me: irrelevant, useless, copycat) consumer software (photo sharing etc.), then get a Windows Live ID, and then finally activate the broadband. So I pulled a Windows machine from a dumpster, did the install, got the Live ID, activated the broadband and then installed Linux. It felt dirty (and not from the dumpster). After activation, the Live ID was not required, nor the software, nor Windows. So the whole experience was dictated and had no value for me, the customer.
- bdonlan 15y ago> I would imagine that Dropbox pays some sort of bulk price, but I can't find any information. Storage pricing is right there on the S3 pricing page: http://aws.amazon.com/s3/#pricing http://aws.amazon.com/s3/#pricing Assuming they're at the highest tiers, we're looking at about $0.055/gb storage, $0.050/gb transfer out, $0 transfer in. Transfer out could certainly be less, though, if they're in the >524TB/mo range.
- natrius 15y agoI'd bet that Dropbox is that largest S3 user in existence. Custom rates are very likely.
- EliAndrewC 15y agoNetflix also uses Amazon S3 and is probably an even larger customer, but I agree with your assessment that custom rates are very likely (for both of them).
- jonknee 15y agoNetflix uses EC2 for computing power. It uses CDNs (Level 3 and Akamai mostly) to deliver streams so most of the bandwidth would not be from Amazon.
- deleted 15y ago[deleted]
- David 15y agoDropbox has traction and paying users. Why do they need $200 million? Of course it's not just a two-man gig anymore, but... what is it for? If their business model isn't supporting the growth they want and they're not going to change it, is throwing money around going to be all that helpful? Maybe I'm doubting that they'll be able to bring in that many new users because I can't imagine how anyone hasn't heard of dropbox by now -- which is pretty silly. I've just known about it for a long time because of HN. Or maybe there are economies of scale that I don't know about, and by spending $x they'll be able to save/make $y>>$x? (...Are they going to get off of s3, set up their own datacenters?)
- ssharp 15y agoCurrent traction and paying customers may not be enough to satisfy their growth/evolution goals. The cash could be used for a lot of thing. One guess is that they may be trying to ramp up the attack the enterprise storage/backup market and need a war chest to have any major impact. Also, plenty of people who could really use a service like Dropbox have not heard of it. Even with their current product offerings, there is an ocean of customers who haven't been reached yet.
- dgreensp 15y agoExactly. Given that Dropbox is still on a growth curve and it's time to raise more money, you can bet that Drew is being very shrewd in maximizing his valuation and keeping from needing to raise another round any time soon.
- keenans 15y agoThey still need to work on their pricing. They have an opportunity to convert quite a few of their non-paying customers if they'd simply offer a plan between 2GB and 50GB. https://www.dropbox.com/votebox/90/better-more-affordable-storage-prices https://www.dropbox.com/votebox/90/better-more-affordable-st...
- seabee 15y agoDon't forget, they also have an opportunity to downgrade quite a few of their paying customers from 50GB to e.g. 20GB.
- mayop100 15y agoWow. Good for them! Go Dropbox.
- daniel1980fl2 15y agoyes but what about users like me. used it for years, then find out they can decrypt all my files. then i learnt they owe my files accordingly to their new tos. that made me spent one weekend to actually move my data out of their box. even if, arguendo, they would change the rules overnight and made some sort of promise of not doing evil anymore, it is still going to be a sick organism (to me) that i wouldnt touch it with my file(s) ever again.
- carterac 15y agoVery rough mental math: At a $5B valuation, PG's share of Dropbox should pay for ~10,000 YC investments
- acak 15y agoMore than 4 years ago, a post on HN by Houston asking for a review of DropBox: http://news.ycombinator.com/item?id=8863 http://news.ycombinator.com/item?id=8863 [Edit: Corrected link. Thank you.]
- drivebyacct2 15y agoThat's a link to this post.
- Huppie 15y agoAnd if I remember correctly that linked to just a video of how dropbox works, without Drew actually having a working product (but you couldn't see that on the video).
- rorrr 15y agoWith the revenue of 100M, that valuation is insane. S3 costs must be eating most of the revenues. http://www.businessinsider.com/dropbox-revenue-2011-3 http://www.businessinsider.com/dropbox-revenue-2011-3
- savrajsingh 15y agoCongrats Drew and Arash, awesome stuff!
- dplakon 15y agoAwesome! I use their service all the time, I'm glad to see them doing well!
- mlinsey 15y ago41 days ago, PG's estimation for the sum of the value of all YC companies was 4.7 billion. http://ycombinator.com/nums.html http://ycombinator.com/nums.html Congrats to Drew, Arash, and the whole Dropbox team. (Ordinarily I would say that giving congratulations before a deal is confirmed as closed is a jinx, but at this point there is no such thing as jinxing Dropbox. Their ultimate success, whether this report is true or not, is inevitable.)
- dhbanes 15y agoJust for clarification, it looks like he stated "the combined value of the top 21 companies is $4.7 billion."
- mlinsey 15y agoYes, but as explained in the post, that's a decent estimation for the value of the whole portfolio (of the 210 companies through S10). This is because startup valuations follow a power law, which among other things means that almost all of the value in a portfolio will be in the top 10%. This round of funding is a good example of that principle - if TC is correct, then even among the top 21 companies, a majority of the value will be in the top single company.
- blantonl 15y agoHow does PG value YC companies? Is this process public knowledge or something internal to PG?
- mlinsey 15y agoFrom the link: "For 18 of the top 21 I used the postmoney valuation of the most recent funding round. The other 3 had grown significantly since their last round, and to estimate the values of those I used the opinions of independent experts and the valuations of the funding offers they are currently receiving."
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- pbreit 15y agoKudos to them on a fine product and excellent execution but, wow, this seems pretty frothy. And I don't have a huge problem with some of the other big valuations (Square, AirBnB, etc). But DropBox is going to have to find some other interesting business for investors to see any of that money. Just storing files doesn't seem like it would fit that bill.
- danecjensen 15y agoWhat's worth more YCombinator or Dropbox
- schiptsov 15y agoNo, no, it is not a bubble and 5 billion dollars is just a several hours of printing.. ^_^
- mynameishere 15y agoAlmost the same price as United States Steel (6.2B).
- Mattcodes1 15y agoAll this talk/speculation about how the valuations are done and Amazon S3 costs etc.. Just log in to Dropbox with email ceo@dropbox.com or partner@yc.com on dropbox.com with ANY password and look in their docs folder, S3costs2011.xls and valuation.xls. duh.....
- wladimir 15y agoLet's hope they will invest at least some of their newly-gotten money into improving their security.
- joshu 15y agoand to think i balked at investing in dropbox at 20m pre!
- danbmil99 15y agoCongrats also to Trevor, Jessica, PG.
- keke_ta 15y agoCongrats to Dropbox and YC. Awesome!!
- mtogo 15y agoIn the past year, Dropbox has lied to it's customers about encryption and how much power Dropbox has over the data (!!!), shown that they deduplicate before encrypting (and that they can view files in your Dropbox and make them unsharable), and finally allowed all Dropbox accounts to be logged into without a password, for four hours. And yet they are at a $5B+ valuation? I'm amazed at how dropbox seems to be able to make any mistake and keep going. Very few other companies are capable of this. I'm not sure whether i should congradulate them or be disappointed.