On a long-term broad (across industries) basis, stock market investors tend to expect a 10% annual ROI. This is different for VC investors, but only slightly by

On a long-term broad (across industries) basis, stock market investors tend to expect a 10% annual ROI. This is different for VC investors, but only slightly by the time they get to a $10B valuation. The fact that the $10B valuation is 50x revenue implies an extremely high expectation of future growth. They'll look at future earnings potential (profit, not revenue) and try to figure out the probability for Dropbox eventually earning 500m/year, 1b/year, 5b/year etc and discount it according to how long they think it will take them to get there. Another way to look at it, which is one step removed from valuing on future earnings, is to guess what other people will value it for at IPO. If they think Dropbox has a 50% chance of IPOing at $50B in 2 years, they've made a pretty good bet at the current $10B valuation.