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Dropbox 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 m

by David 15y ago

Dropbox 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 ago
Current 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 ago
  Exactly. 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 ago
  They 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 ago
    Don't forget, they also have an opportunity to downgrade quite a few of their paying customers from 50GB to e.g. 20GB.
    - deleted 15y ago
      [deleted]
- dplakon 15y ago
  I imagine they could spend a little more on marketing.
rokhayakebe 15y ago
1) Founders may want to take some money off the table. 2) I do not see why DB couldn't end up being a 100B company. They built a huge business with one fucking product. One. I do not even remember the last time I noticed new features. I want to see them starting to move more into backing up/syncing social data as well. There could be a day when all your social data will be simply poured into your DB, and they will do the job at syncing it via all your devices, and social networks. Go DB. Edit: Imagine. I take pictures. Put them on my DB. Set privacies (social, private, family, work, etc...). Then Facebook can now directly grab from my DB, Google, Twitter and new startups as well depending on my settings.
- jsnell 15y ago
  Everything is possible. There might for example be a bout of hyper-inflation in the US, making any business more serious than a lemonade stand worth >$100 billion. And that's about it for plausible scenarios. Becoming that valuable in real dollar terms would probably mean being one of the top 25 largest companies in the US.
  - dplakon 15y ago
    true, I think facebook just got a 100B valuation...
- dplakon 15y ago
  damn, that's genius. it would take a lot of cooperation from huge entities though.
- jerf 15y ago
  "They built a huge business with one fucking product. One." That's not a good sign, that's a bad one. That means if anyone attacks that one product credibly, the whole company is rocked hard. Better to be diversified, broadly speaking. (Details matter, of course.) What are the odds Google, Amazon, and a not insignificant number of the other backup vendors in the world are planning some form of direct competition? ... actually, this speaks to what sort of concerns me about a bubble right now. Excessive valuations aren't themselves a cause, they have to be a symptom of something else. ISTM there is an excessive optimism over any one company's ability to completely lock up the market forever and ever, amen. To be honest I don't expect one masterstroke that comes in and just destroys Dropbox in three days, but valuating them as if it's just an assured thing that they're going to completely own the home backup market over the next ten years is absurdly optimistic. It's one possible outcome, but not anywhere near the most likely. Valuating Facebook as if it's going to own social networking forever and ever is absurd; look at the very rapid inroads G+ is making, my point being that even if G+ crashes and burns it has clearly demonstrated that it has a chance, and that means other competition has a chance, too. Valuating X as if it's going to own the market is stupid, and a lot of the valuations seem to be based on that; not a reasonable, rational assessment of the possibility that they may own the market or at least do well, but valuations based on the solid, near-100% of that outcome. Seems unwise to me.
speckledjim 15y ago
When there's a massive bubble frothing money all over the place, it probably pays to take advantage of it.

by David 15y ago

ssharp 15y ago

Current 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 ago
Exactly. 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 ago
They 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 ago
  Don't forget, they also have an opportunity to downgrade quite a few of their paying customers from 50GB to e.g. 20GB.
  - deleted 15y ago
    [deleted]
dplakon 15y ago
I imagine they could spend a little more on marketing.

rokhayakebe 15y ago

1) Founders may want to take some money off the table. 2) I do not see why DB couldn't end up being a 100B company. They built a huge business with one fucking product. One. I do not even remember the last time I noticed new features. I want to see them starting to move more into backing up/syncing social data as well. There could be a day when all your social data will be simply poured into your DB, and they will do the job at syncing it via all your devices, and social networks. Go DB. Edit: Imagine. I take pictures. Put them on my DB. Set privacies (social, private, family, work, etc...). Then Facebook can now directly grab from my DB, Google, Twitter and new startups as well depending on my settings.

jsnell 15y ago
Everything is possible. There might for example be a bout of hyper-inflation in the US, making any business more serious than a lemonade stand worth >$100 billion. And that's about it for plausible scenarios. Becoming that valuable in real dollar terms would probably mean being one of the top 25 largest companies in the US.
- dplakon 15y ago
  true, I think facebook just got a 100B valuation...
dplakon 15y ago
damn, that's genius. it would take a lot of cooperation from huge entities though.
jerf 15y ago
"They built a huge business with one fucking product. One." That's not a good sign, that's a bad one. That means if anyone attacks that one product credibly, the whole company is rocked hard. Better to be diversified, broadly speaking. (Details matter, of course.) What are the odds Google, Amazon, and a not insignificant number of the other backup vendors in the world are planning some form of direct competition? ... actually, this speaks to what sort of concerns me about a bubble right now. Excessive valuations aren't themselves a cause, they have to be a symptom of something else. ISTM there is an excessive optimism over any one company's ability to completely lock up the market forever and ever, amen. To be honest I don't expect one masterstroke that comes in and just destroys Dropbox in three days, but valuating them as if it's just an assured thing that they're going to completely own the home backup market over the next ten years is absurdly optimistic. It's one possible outcome, but not anywhere near the most likely. Valuating Facebook as if it's going to own social networking forever and ever is absurd; look at the very rapid inroads G+ is making, my point being that even if G+ crashes and burns it has clearly demonstrated that it has a chance, and that means other competition has a chance, too. Valuating X as if it's going to own the market is stupid, and a lot of the valuations seem to be based on that; not a reasonable, rational assessment of the possibility that they may own the market or at least do well, but valuations based on the solid, near-100% of that outcome. Seems unwise to me.

speckledjim 15y ago

When there's a massive bubble frothing money all over the place, it probably pays to take advantage of it.