6 ms·

Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

40 points by amirmc 15y ago

fourspace 15y ago
Sigh, another article that celebrates funding as some type of success. It isn't. What matters is what they do with that money.
- pg 15y ago
  What in the article celebrates funding as success?
  - fourspace 15y ago
    I admit, my post was an overreaction. My concern, and the reason I've stopped reading TC, was that we're in a culture that celebrates VC funding as some sort of business success. It's a milestone, but it's not success (in my eyes, anyway). Real success, which Dropbox certainly has reached, is when you build a sustainable company where your customers pay you for providing value, not investors. Investors eventually want their money back. That said, my comments were definitely not targeted at Dropbox and I applaud that team for building a great product and providing great value.
    - alain94040 15y ago
      Fair enough. But funding is one of the few publicly visible milestones that a startup can achieve. One could argue that it's almost a proxy for success. Either that or we should all get excited with a press release from Dropbox saying they reached 10 million users. But that doesn't excite geeks (do you care if Apple sold 20 million iPhones this month? No, you care about the iPhone 5).
      - fourspace 15y ago
        I absolutely would get excited for Dropbox saying they reached 10 million paying users. =)
- davidu 15y ago
  The article isn't celebrating success. But perhaps it should be. Building a great company where the success you have achieved thus far is recognized in the form of a favorable valuation which increases shareholder value (which includes all the hardworking employees) and adds capital to the enterprise is certainly a positive milestone worth recognizing.
benologist 15y ago
tldr: they're rumored to have selected investor/s for a rumored amount at a rumored valuation.
johnrob 15y ago
I'm somewhat surprised that a file sharing company can get a valuation this large. Don't get me wrong, the product is great, but I'm skeptical that the "file sharing industry" is big enough for valuations like this. Some quick math: A 5 billion valuation implies earnings of at least 250 million/year. Assuming paying customers are worth 240/year and represent 5% of the user base, dropbox would need roughly 21 million users. Maybe 5% is high; if 4% is better then the number jumps to 26 million, etc... There may be billions of people on earth, but how many are sophisticated enough to really need file sharing? Also, there are other players such as box that will claim some of those users. Dropbox is awesome, but I can't understand the numbers on this one.
- rubyrescue 15y ago
  21 million seems pretty easy to achieve to me worldwide; every one of my social circles and peer groups, both technical and non-technical, in the US and South America, seem to use dropbox. my parents love it. my wife is non-technical to a fault and can't live without it; she just paid for the upgrade to 100gb because it represents safetey to her of her photos. even my under 10 year old son knows that saving in dropbox means he won't lose his homework assignment. i think they have a huge, huge opportunity.
  - ThomPete 15y ago
    Just until windows and apple both offer the service. Apple is already on the way with iCloud.
    - jmreardon 15y ago
      Microsoft has had such a service for a few years now, they call it SkyDrive. Unfortunately it wasn't a very good user experience when I last looked at it. It's been a while though (and I just use Dropbox now), so it might have gotten better.
      - sprovoost 15y ago
        Microsoft may have just been too early. Once they recognize the success they can clone the usability in no time. Or patent troll Dropbox off the map. Very risky investment if you ask me. That said, Dropbox is a great product and the free version is good enough for the small number of documents that I have that are not somewhere else in the cloud.
far33d 15y ago
I'm sure hundreds of second and third tier VCs piled on with ridiculous valuations in the hopes that they could add a "hot" company to their website. If this article is correct, Dropbox did the right thing and decided to go with smarter money.
alFoX 15y ago
Have I chance to have open source client? I don't trust blobs on my computer.
- mtogo 15y ago
  https://www.dropbox.com/downloading https://www.dropbox.com/downloading
  - Maxious 15y ago
    The source on that page is for the Nautilus (GNOME File Browser) extension that adds right click menus and special icons to the file browser and "dropbox" a command line client for talking to the dropbox daemon in the same way as the Nautilus extension. The secret sauce is dropboxd which is not open source.
rokhayakebe 15y ago
Sometimes I feel like there is a little jealousy among the startup community which translates into I like this, but the valuation is absurd. Dropbox could be worth that much, I believe. Some say their business is not defensible because anyone else can build a similar product for free. Well until someone has, nobody has.
- sprovoost 15y ago
  The problem with owning shares is that it takes a decade or longer to earn back your investment just through dividends. I'd say it's almost certain lots of competitors will be crowding the space with that time span.
plusbryan 15y ago
Congrats Drew and the rest of the team. Quite an accomplishment!
dont 15y ago
I tend to see the software world as divided between "Tools" and "Platforms" Platforms are systems that enable a large number o similar behaviors -- Google is the search platform, Amazon the shopping platform, Windows is a platform as is MS Office. Platforms tend to be a winner take all business, as there are significant advantages to scale as well as strong network effects. Tools on the other hand do one thing and one thing well. Most products start off as tools - then there are 2 ways to go, either become a platform (eg: facebook) or get bought by a platform (eg: flickr). I don't see how dropbox is going to be worth $5B as a file sharing tool, nor do I see any platform buying them at that price. So my question really is -- what is the dropbox platform gonna look like? What do the investors know that we don't?
sprovoost 15y ago
Just one more problem: as more and more great platforms become available, there seems to be a trend of users storing different kinds of data in their own specialist platforms. Photos on FlickR, music on Spotify, movies on Netflix, simple documents in Google Docs, code on Github, books on Amazon, mail in Gmail, etc. That leaves less and less stuff for Dropbox. In particular, it leaves less gigabytes for Dropbox, because the big stuff is taken care of. So with the price of storage and bandwidth dropping exponentially and the amount of "other" data dropping, it's going to be hard to sustain a freemium model just based on a storage cap.

40 points by amirmc 15y ago

Sigh, another article that celebrates funding as some type of success. It isn't. What matters is what they do with that money.

pg 15y ago
What in the article celebrates funding as success?
- fourspace 15y ago
  I admit, my post was an overreaction. My concern, and the reason I've stopped reading TC, was that we're in a culture that celebrates VC funding as some sort of business success. It's a milestone, but it's not success (in my eyes, anyway). Real success, which Dropbox certainly has reached, is when you build a sustainable company where your customers pay you for providing value, not investors. Investors eventually want their money back. That said, my comments were definitely not targeted at Dropbox and I applaud that team for building a great product and providing great value.
  - alain94040 15y ago
    Fair enough. But funding is one of the few publicly visible milestones that a startup can achieve. One could argue that it's almost a proxy for success. Either that or we should all get excited with a press release from Dropbox saying they reached 10 million users. But that doesn't excite geeks (do you care if Apple sold 20 million iPhones this month? No, you care about the iPhone 5).
    - fourspace 15y ago
      I absolutely would get excited for Dropbox saying they reached 10 million paying users. =)
davidu 15y ago
The article isn't celebrating success. But perhaps it should be. Building a great company where the success you have achieved thus far is recognized in the form of a favorable valuation which increases shareholder value (which includes all the hardworking employees) and adds capital to the enterprise is certainly a positive milestone worth recognizing.

benologist 15y ago

tldr: they're rumored to have selected investor/s for a rumored amount at a rumored valuation.

johnrob 15y ago

I'm somewhat surprised that a file sharing company can get a valuation this large. Don't get me wrong, the product is great, but I'm skeptical that the "file sharing industry" is big enough for valuations like this. Some quick math: A 5 billion valuation implies earnings of at least 250 million/year. Assuming paying customers are worth 240/year and represent 5% of the user base, dropbox would need roughly 21 million users. Maybe 5% is high; if 4% is better then the number jumps to 26 million, etc... There may be billions of people on earth, but how many are sophisticated enough to really need file sharing? Also, there are other players such as box that will claim some of those users. Dropbox is awesome, but I can't understand the numbers on this one.

rubyrescue 15y ago
21 million seems pretty easy to achieve to me worldwide; every one of my social circles and peer groups, both technical and non-technical, in the US and South America, seem to use dropbox. my parents love it. my wife is non-technical to a fault and can't live without it; she just paid for the upgrade to 100gb because it represents safetey to her of her photos. even my under 10 year old son knows that saving in dropbox means he won't lose his homework assignment. i think they have a huge, huge opportunity.
- ThomPete 15y ago
  Just until windows and apple both offer the service. Apple is already on the way with iCloud.
  - jmreardon 15y ago
    Microsoft has had such a service for a few years now, they call it SkyDrive. Unfortunately it wasn't a very good user experience when I last looked at it. It's been a while though (and I just use Dropbox now), so it might have gotten better.
    - sprovoost 15y ago
      Microsoft may have just been too early. Once they recognize the success they can clone the usability in no time. Or patent troll Dropbox off the map. Very risky investment if you ask me. That said, Dropbox is a great product and the free version is good enough for the small number of documents that I have that are not somewhere else in the cloud.

far33d 15y ago

I'm sure hundreds of second and third tier VCs piled on with ridiculous valuations in the hopes that they could add a "hot" company to their website. If this article is correct, Dropbox did the right thing and decided to go with smarter money.

alFoX 15y ago

Have I chance to have open source client? I don't trust blobs on my computer.

mtogo 15y ago
https://www.dropbox.com/downloading https://www.dropbox.com/downloading
- Maxious 15y ago
  The source on that page is for the Nautilus (GNOME File Browser) extension that adds right click menus and special icons to the file browser and "dropbox" a command line client for talking to the dropbox daemon in the same way as the Nautilus extension. The secret sauce is dropboxd which is not open source.

rokhayakebe 15y ago

Sometimes I feel like there is a little jealousy among the startup community which translates into I like this, but the valuation is absurd. Dropbox could be worth that much, I believe. Some say their business is not defensible because anyone else can build a similar product for free. Well until someone has, nobody has.

sprovoost 15y ago
The problem with owning shares is that it takes a decade or longer to earn back your investment just through dividends. I'd say it's almost certain lots of competitors will be crowding the space with that time span.

plusbryan 15y ago

Congrats Drew and the rest of the team. Quite an accomplishment!

dont 15y ago

I tend to see the software world as divided between "Tools" and "Platforms" Platforms are systems that enable a large number o similar behaviors -- Google is the search platform, Amazon the shopping platform, Windows is a platform as is MS Office. Platforms tend to be a winner take all business, as there are significant advantages to scale as well as strong network effects. Tools on the other hand do one thing and one thing well. Most products start off as tools - then there are 2 ways to go, either become a platform (eg: facebook) or get bought by a platform (eg: flickr). I don't see how dropbox is going to be worth $5B as a file sharing tool, nor do I see any platform buying them at that price. So my question really is -- what is the dropbox platform gonna look like? What do the investors know that we don't?

sprovoost 15y ago

Just one more problem: as more and more great platforms become available, there seems to be a trend of users storing different kinds of data in their own specialist platforms. Photos on FlickR, music on Spotify, movies on Netflix, simple documents in Google Docs, code on Github, books on Amazon, mail in Gmail, etc. That leaves less and less stuff for Dropbox. In particular, it leaves less gigabytes for Dropbox, because the big stuff is taken care of. So with the price of storage and bandwidth dropping exponentially and the amount of "other" data dropping, it's going to be hard to sustain a freemium model just based on a storage cap.