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This seems like a very convoluted way of coming to the valuation. Revenue != profit. I can easily create business that generates $1bn/month in revenue by sellin

by casca 13y ago

This seems like a very convoluted way of coming to the valuation. Revenue != profit. I can easily create business that generates $1bn/month in revenue by selling dollars for 90 cents. Dropbox may be worth $8bn, but surely it makes more sense to assess the valuation based on the growth in profitability?

eliben 13y ago
Indeed. Especially given that Dropbox uses Amazon for the actual storage and the massive scale, I wonder what % of that revenue ends up in Amazon's pockets.
- jedc 13y ago
  Do they still? I would have thought that by this stage they'd have started building their own (at least mini-) data centers.
  - msoad 13y ago
    Their traffic is not even close to Netflix and yet, Netflix runs on AWS.
    - awj 13y ago
      Netflix also has a very different use case. Building a data center that can meet the storage needs of Dropbox seems much simpler than building one that can meet the compute/bandwidth needs of Netflix.
      - skj 13y ago
        hah
    - PanMan 13y ago
      For computing. For delivery they use various CDN's. delivery is the expensive part, for them
  - kmfrk 13y ago
    They were planning to change at one point, I believe, but Amazon lowered their prices - and later introduced Glacier - which may have dissuaded them.
ed 13y ago
Doesn't seem like a stretch to imagine Dropbox has very attractive margins.
- matthunch 13y ago
  Not sure, There are a lot of indirect costs as well which dropbox needs to pay off. IMO, If they are profitable, PM would be >30% before taxes.
pyrrhotech 13y ago
The theory is that since they have high gross margin they are only losing money while they ramp up to scale. In some time in the near future, they should employ economies of scale to have decent operating margins. Selling dollars for 90 cents would be a negative gross margin business. Any business with negative gross margin should be valued as worthless
Raphael 13y ago
You can easily acquire 100 million dollars to burn every month?

by casca 13y ago

eliben 13y ago

Indeed. Especially given that Dropbox uses Amazon for the actual storage and the massive scale, I wonder what % of that revenue ends up in Amazon's pockets.

jedc 13y ago
Do they still? I would have thought that by this stage they'd have started building their own (at least mini-) data centers.
- msoad 13y ago
  Their traffic is not even close to Netflix and yet, Netflix runs on AWS.
  - awj 13y ago
    Netflix also has a very different use case. Building a data center that can meet the storage needs of Dropbox seems much simpler than building one that can meet the compute/bandwidth needs of Netflix.
    - skj 13y ago
      hah
  - PanMan 13y ago
    For computing. For delivery they use various CDN's. delivery is the expensive part, for them
- kmfrk 13y ago
  They were planning to change at one point, I believe, but Amazon lowered their prices - and later introduced Glacier - which may have dissuaded them.

ed 13y ago

Doesn't seem like a stretch to imagine Dropbox has very attractive margins.

matthunch 13y ago
Not sure, There are a lot of indirect costs as well which dropbox needs to pay off. IMO, If they are profitable, PM would be >30% before taxes.

pyrrhotech 13y ago

The theory is that since they have high gross margin they are only losing money while they ramp up to scale. In some time in the near future, they should employ economies of scale to have decent operating margins. Selling dollars for 90 cents would be a negative gross margin business. Any business with negative gross margin should be valued as worthless

Raphael 13y ago

You can easily acquire 100 million dollars to burn every month?