
Dropbox Files Confidentially for U.S. IPO - richiezc
https://www.bloomberg.com/news/articles/2018-01-11/dropbox-is-said-to-file-confidentially-for-initial-offering
======
chollida1
Congratulations to the team and of course YCombinator!!

3 things I'm looking forward to knowing.

1) What is their profitability? I think they might surprise some people here,
like Google did when they were private, hiding just how much money they are
making.

It will be nice to see a cash flow positive tech company going public!!

2) What sort of share structure they are looking for. I think after SNAP its
going to be a tough sell to get away with no voting control,

3) Can they go public at a valuation larger than the rumored $10+ billion they
were valued at without resorting to cheap tricks like only floating 5% ala
Groupon.

As a side note, it looks like JP Morgan and Goldman Sachs decision 4-5 years
ago to start offering more services to private companies is starting to pay
dividends

~~~
cossatot
From TFA:

 _Unlike money-losing Snap, Dropbox will come to the table with annualized
sales of more than $1 billion, Chief Executive Officer Drew Houston said in an
interview last year. It’s also been profitable, excluding interest, taxes,
depreciation and amortization. Those benchmarks are the product of more than
two years of focusing the company, expanding its product suite for businesses
and reining in expenses, Houston said at the time._

~~~
maxxxxx
Doesn't "profitable, excluding interest, taxes .." mean not profitable?

~~~
jlittel
Not necessarily. Excluding interest, taxes, depreciation and amortization
(EBITDA) is a common financial metric. It can demonstrate a business model is
working, before taking in to account capital structure or other semi-external
factors.

~~~
maxxxxx
This is a ten year old billion dollar company. How can they not have figured
out a viable business model?

~~~
goialoq
Amazon was a 20 year old company before it was reliably profitable by
accounting metrics. Is their business model viable? That's how a growth
company works.

~~~
JumpCrisscross
> _Amazon was a 20 year old company before it was reliably profitable_

Amazon’s decision was quite obviously a choice. Snap and Twitter are more
natural comparisons for Dropbox if it’s still unprofitable.

~~~
Brendinooo
I don't think that's true. Snap's and Twitter's consumer-facing product is
free, while Dropbox charges for theirs.

They played the long game here. I'm still not a paying customer after almost
ten years (partially because I got a lot of free space via referrals and
trying out their apps). But if I ever max it out and decide to start paying
someone for space, it'll be them unless there's something out there that does
what they do at a price that's low enough to make the effort to switch
worthwhile.

And, more notably, the freemium model means that they're able to invade the
business world in the same way that the iPhone did with BYOD. And there's a
lot more money there.

I'd be stunned if Dropbox wasn't very successful already, and I'm happy that
someone outside of the Big 5 is doing what Dropbox is doing. It's a fantastic
and indispensable product for me.

------
unexpected
Dropbox Team: Congrats on this great milestone! I think I was one of your
first users back in the day, and your product has transformed my life - it's
been the single greatest productivity tool I've used in the past 10 years!

I know some people will scoff at that, and there is always the "yeah but
google drive/box/oneDrive is better", but you guys did it first and still do
it best! I've been a Pro member for a long while now and I'll be with you guys
until the end - good luck and I'm excited to see what the future holds.

------
jurassic
I recently did a purge of nearly all my software subscriptions and Dropbox was
among the few that survived. Say what you want about storage being a
commodity, I think they have built an outstanding service that continues to
deliver a huge value to their users. I hope the employees see a nice windfall.

~~~
bsharitt
There are plenty of options out there for file storage services with decent
phone client and being able to easily share file with non-techie friends and
family. There are also plenty of file storage services that have clients for
the desktop and command line Linux. But Drop box is the only one I've found
that works across both of those very well with first party clients.

After all that, I'm not a paying Dropbox customer though. Unfortunately their
pricing left me behind when it went to $10 a month for 1TB and nothing between
that and free. So instead of I deal with the wonkiness of Google Drive when I
need to on Linux and it works well enough everywhere else and the $2 a moth
for 100GB is plenty.

~~~
geomark
What do you think of Mega? [1]. I switched from Dropbox to Mega because of
that same pricing issue. I'm not a power user but it certainly works well for
syncing files and photos across by Linux and Android devices.

[1] [https://mega.nz/](https://mega.nz/)

~~~
coolspot
Mega is awesome and also end-to-end encrypted.

~~~
user5994461
Mega is the second iteration of megaupload, funded by piracy and shut down by
the FBI some years ago. The founder is shady and has under many ongoing trials
and extraditions claims.
[https://en.wikipedia.org/wiki/Kim_Dotcom](https://en.wikipedia.org/wiki/Kim_Dotcom)

Seriously. Don't hold your personal files on mega. They can be shut down any
minute and delete all your data. That's what happened last time.

Dropbox is a respectable business. It's not comparable.

~~~
coolspot
AFAIK mega.nz was founded by Kim, but later bought out by investors.

It is fully laws and DMCA compliant. It is not about piracy anymore.

~~~
user5994461
It's as compliant as megaupload was. Don't get it wrong, the vast majority of
the traffic is piracy.

------
jedc
To me, the interesting thing about Dropbox going public is how comparisons to
Box could/will drive Dropbox's valuation. Any investor can easily check out
Box's financials
[https://finance.google.com/finance?q=NYSE%3ABOX&fstype=ii&ei...](https://finance.google.com/finance?q=NYSE%3ABOX&fstype=ii&ei=eLJXWsnzJYzwjAGxpbCgDQ)
and easily compare Dropbox's numbers to that.

So Box suffered the pain of being the first in the easy consumer/business
online storage category to IPO -- but Box's numbers are now driving valuation
of their competitor.

~~~
mbesto
Some napkin math:

Dropbox: $1B in revenue / $10B valuation (10x)

Box: $400M in revenue / $3B valuation (7.5x)

The real question is earnings(which we don't know yet for Box) and whether
Dropbox has a compelling case that it grow faster than Box to justify the
higher multiple.

~~~
nabla9
I estimated theri EV/R's (substract debts add cash to valuation) and I get
Dropbox 9.0 - 9.5 and Box little over 6.

The real issue for me is that file storage is ultimately low profit margin
business when the growth maxes out. The end game comes in next 5 - 10 years
during a downturn and Amazon, Google, Microsoft, Facebook, or some Chinese
company buys one or both of them out and gets the brand and the customers.

~~~
wweidendorf
You have your definition for Enterprise Value flipped - it should be (Equity
Value + Total Debt - Cash & Equivalents + Non Controlling Interest). If you
are subtracting debt and adding cash, you are typically looking to get equity
value from EV.

Your Box multiples look to be correct - looks like they trade at 6.1x on a
trailing twelve month revenue basis, and ~5.0x on a next twelve months revenue
basis.

Given that Dropbox has a $10BN valuation and a $600MM line of credit from the
big banks, I would expect that their trailing revenue multiple is ~10.0x.

------
ea016
First YC company to go public ! Congrats

It's always fun to look at the comments at the time the MVP was posted here on
HN:

[https://news.ycombinator.com/item?id=8863](https://news.ycombinator.com/item?id=8863)

~~~
allenz
I apologize for calling this person out, but I found this funny:

> For a Linux user, you can already build such a system yourself quite
> trivially by getting an FTP account, mounting it locally with curlftpfs, and
> then using SVN or CVS on the mounted filesystem

"quite trivially"

~~~
laxatives
Probably a significant chunk of the world's economy is from taking an already
existing product and making it more accessible.

~~~
wh-uws
You should put this quote on of those startup tshirts or posters and sell it.

~~~
laxatives
You do it. A good chunk of that is copying an alraedy existing product.

------
chrisper
I tried using Dropbox as an alternative to Google Drive. However, just like
the other alternative cloud providers it was quite slow.

With Google Drive I can max out my Gbit Fiber (I downloaded with 920 Mb/s last
time), while Dropbox was slow 8 Mb/s. Though I am not sure if Dropbox isn't
rate limited for the free accounts.

~~~
wil421
I don’t see that much benefit paying for Dropbox or Google Drive. At work my
company pays for OneDrive. Personally I use OneDrive because it already comes
with my Office subscription.

For $8.25 a month I get Office on all my devices and 1TB per 365 user.

I have gigabit internet and there isn’t much difference in OneDrive or Google
Drive.

~~~
chrisper
Are you using the OneDrive file stream? I forgot what it is called.

------
bflesch
Congrats to Arash for getting to this point. He has been very helpful when I
reported security flaws nearly half a decade ago. I'm still wearing their
sweater from time to time.

------
kayhi
First YC company to go public. Congrats everyone!

~~~
dawhizkid
Wow didn't realize it was the first...not sure if that's more depressing than
exciting tbh!

~~~
ISL
Build a company to build a company, not to IPO.

~~~
travisjungroth
An exit (IPO or acquisition) is the goal of a VC backed startup. If you want
to build a company to build a company, do it a different way (debt, savings,
bootstrap, investors).

~~~
redwood
Terrible way of looking at it. Perhaps for investors, sure, but not for
employees

~~~
tylersmith
Who cares? They're replaceable cogs that shouldn't expect anything but wages.

------
coherentpony
I don't understand. What does it mean to file 'confidentially' if now the
entire general public knows about it?

~~~
hortonew
It seems it doesn't really refer to their announcement being public or
private, but rather what they have to submit in financial statements. They
have much looser guidelines, so they don't have to disclose/document as much.
They can be more "confidential" about what they submit, and that data is not
released to the public until a much later date. This is how I understand it.

------
always_good
Dropbox stands out as having one of the most bizarre brand redesigns I've ever
seen: [https://dropbox.design/](https://dropbox.design/)

~~~
lbotos
I mean, have you been on the Bloomberg site?

[https://www.bloomberg.com/politics/404](https://www.bloomberg.com/politics/404)

[https://www.bloomberg.com/politics/500](https://www.bloomberg.com/politics/500)

This is what the general 404 page used to be:

[https://imgur.com/gallery/0MoqU4Y](https://imgur.com/gallery/0MoqU4Y)

[https://www.bloomberg.com/features/elon-musk-
goals/](https://www.bloomberg.com/features/elon-musk-goals/)

~~~
puranjay
I like Bloomberg's redesign. It's bizarre but fun.

Moreover, Bloomberg is a media company (well, at least the magazine). They
have much more license to be insane.

Dropbox is a productivity company and the redesign seems...unwanted? What
corporate executive is looking at his Dropbox and thinking that you know, this
needs some Sharp Grotesk

~~~
justinjlynn
Yeah -- I... well, I'll stick with the bubbly bootstrap 5-second template look
please, if this is what's going to be popular next. It's genuinely and
actively hard to look at.

------
nishantvyas
Dropbox has come a long way... Kudos to them!

My YC app: Dropbox - Throw away your USB drive
[https://news.ycombinator.com/item?id=8863](https://news.ycombinator.com/item?id=8863)

Dropbox launches (YC summer 07)
[https://news.ycombinator.com/item?id=134405](https://news.ycombinator.com/item?id=134405)

------
staunch
This is definitely the best Show HN I've had the pleasure of watching evolve!
Dropbox is a cool technology started by a cool person. That's what I like to
see succeed.

Too bad we didn't have the opportunity to buy some "DBCoin" back in 2007. I'd
have bought a lot!

Congrats dhouston & co on building a company that improves the world in a
significant way.

------
akulbe
Question: since an IPO is going to be a matter of public record, why would you
want to file it confidentially? What's the advantage?

Thanks.

------
cvaidya1986
First YC IPO! Congrats Drew, Arash and team!

------
foolfoolz
Dropbox has always been a successful company with great mindshare. While not
quite a household name, if you worked there and told your family there's a
chance they would know what the company is (how many of you can do that?). Yet
still, dropbox was founded in 2007. It's been over 10 years to reach IPO. Just
a friendly message to any engineers out of school who see the tempting offer
to work at a small fast moving startup, you may get the payout like dropbox is
about to, but you might have to wait a decade.

~~~
TallGuyShort
Waiting a decade is not necessarily a bad thing unless you're just looking for
a quick payout. As a customer (and honestly as an employee most of the time),
I like to see a company that built a business for 10 years and wasn't rushing
to a huge infusion of cash that comes with a big burden attached.

~~~
matte_black
There’s no reason not to look for quick payouts if you’re fresh out of college
and looking to dive into the world of Silicon Valley style startups.

Money today is worth more than money tomorrow, and often the lump sum of money
you get at the end of a startup’s liquidity event as an employee is not much
greater than someone who earned money through a more traditional route, if you
even get it. I know people who chased the startup life for years with nothing
to show for it.

A decade later when they finally give up and resign to a more traditional
career path, their cohorts who started down that path a decade ago are now
impressively far ahead of them in life. I’m talking big houses with long
hallways and a baby or two keeping them up at night while they ascend the
ranks of a “real” company during the day.

So when playing the startup game, the only thing on your mind should be “fast
money, fast money, fast money!”. If you like to see businesses that have been
around for way longer than 10 years and building strong revenue that most
startups can only dream of, don’t look for startups.

~~~
ericd
People should keep that in mind when getting into it, but the other part is
that some people (myself included) enjoy working for small companies far more
than they enjoy working for large companies, so it's not an apples to apples
comparison. I generally also prefer not to work with people who have a
strictly mercenary mindset.

------
sharpshoot
Huge! congrats Drew and Arash on the first YC IPO

------
mankash666
Please check box's financials [1]. They have annual revenues of $500M and can
surely show a profit with non standard accounting practices (all the BS
employed as disclaimers by Dropbox to spin a loss as a profit). Box's
valuation is around $3.2B.

Personally, anything over a $6.5B valuation for Dropbox is grossly over
valuing it, by using Box as a benchmark from the open market

[1]:
[https://www.google.com/search?q=NYSE:BOX#wptab=COMPANY](https://www.google.com/search?q=NYSE:BOX#wptab=COMPANY)

~~~
rpearl
You can look at the relatively standard metric of EBITA (which Dropbox says is
positive) right here
[https://www.marketwatch.com/investing/stock/box/financials](https://www.marketwatch.com/investing/stock/box/financials)
and note that it was -$100M in 2017. You can also see their revenue in 2017
were $400M, not $500M so you're kind of pulling numbers out of nowhere...

------
arachnids
Less work for the company because the process is simpler, and allows them to
"test the waters" and back out if response is cooler than they imagined it
would be.

[https://www.inc.com/christine-lagorio/public-offerings-
how-c...](https://www.inc.com/christine-lagorio/public-offerings-how-
confidential-ipos-are-changing-the-market.html) is a good read.

------
kbumsik
I don't know much about the stock stuff so I am wondering why they are doing
it secretly? Just because they are not ready to announce yet?

------
post_break
Sorry dropbox, I was one of your first few paying customers, but then you
started taking features away one by one and I had to just cancel.

~~~
djsumdog
Out of curiosity, which features did you lose?

~~~
post_break
Public folder was a huge one that was axed. Then there was a photo gallery
thing that was removed.

------
toblender
Would be great to know what day the IPO will be.

Why is there no easy place to see this?

~~~
jedberg
It isn't set yet. This is basically a leak -- the process isn't done yet.

The day gets set much further down the line.

------
sagivo
i probably gonna get downvoted but i don't get their product. anything they
offer you can find better/cheaper elsewhere (google docs, photos etc) or not
really needed (paper)

~~~
kbumsik
Dropbox is the only major cloud drive service that offers _official_ Linux
app. That beats everything else for me.

~~~
greiskul
They even offer it as just a daemon for linux if you want to install it in a
server.

And for me, even on windows, the Dropbox client just seems so much more stable
than Drive. It's very common for me to see Drive with a little "dead" icon,
saying that it couldn't connect, and stopped trying, and I have no idea why.

------
maxpert
I still want to understand what makes Dropbox different from Box. Box almost
never had a good time since it's IPO.

~~~
emh68
Name too close to dropbox, and Dropbox became a well-known name first.

------
make3
I know I'm not being original when I say I'm really not optimistic about their
future. There service is extremely easy to replicate, as seen by all the giant
companies who have done so, and all of these giant companies can give better
service for free just as an incentive for people to increase their dependancy
on their ecosystem (like microsoft and apple do quite aggressively, and
google, to a lesser degree)

~~~
quietbritishjim
To back up your point, for the same price as 1TB of storage on Dropbox you can
get MS Office 365 (for 5 devices), which comes with 1TB of storage on
OneDrive. Not everyone uses Office of course, but if you do you'd be nuts to
pay for Dropbox. It's IE bundled free with Windows all over again.

~~~
briandear
I'd rather pay Dropbox more and not have to have the overhead and constant nag
of the Microsoft ecosystem -- not to mention Microsoft's questionable privacy
policies -- i.e.
[https://news.ycombinator.com/item?id=7369163](https://news.ycombinator.com/item?id=7369163)

Or the privacy mess that is Windows 10...

1TB on Dropbox is $9.99 per month. That's a bargain. I'm not really one to use
an inferior product just to save a few dollars.

~~~
make3
you're likely a dev, so a very special case of super performant user with
strong ideas about computers, not very representative of the average consumer,
who knows and likes the Office suite. Same goes for icloud and the iOS/Mac
ecosystem, and Google drive, etc.

------
T2_t2
What will YC's final cut be?

------
brian-armstrong
Well, congrats to them for doing it. All they had to do to get there was bring
a Bush admin war criminal on board. Hurray for state surveillance!

~~~
kindfellow92
So adding an ex-government official to the board automatically means Dropbox
is surveilling you? How does that logic work?

~~~
brian-armstrong
When the official has advocated heavily for it, yes that's probably safe to
assume

[http://www.drop-dropbox.com/surveillance.html](http://www.drop-
dropbox.com/surveillance.html)

~~~
kindfellow92
What kind of relationship do you think the person in question has with the
current federal intelligence community?

~~~
brian-armstrong
Stellar, considering she spearheaded the warrantless wiretap program.

~~~
scrollaway
I downvoted your first post because, much as I dislike Condoleezza Rice, what
on earth does that have to do with an IPO? Even putting aside that it was
factually wrong (no, her joining isn't "all they had to do", they have 10
years of work to show for it).

I downvoted your second comment because it's complaining about downvotes, and
is making the completely incorrect (and really quite narcissistic) assumption
that you getting downvoted means surveillance/privacy has lost priority.

Here's your context.

------
jonny_eh
Does this mean they'll remove the constant nag to upgrade my account to get
more space? I have 2 GB out of a total of 20GB free on my non-paying account.
It's so infuriating that I've uninstalled the client. How did I get 20 GB
free? By getting lots of friends onto the service in the early days, and this
is how they thank me?

~~~
yadongwen
So you are not one of the normal users. Do you think they will write special
logic for you?

~~~
ct0
Dropbox must have expected people to play their invite game. Not agreeing with
original poster though

------
aviv
I'm surprised they didn't go the ICO route with DropCoin or something.

~~~
luckydata
I'm genuinely curious to know why you're surprised or what would they have to
gain from it.

~~~
quickthrower2
It would be foolish to ICO now. Go public first then pull a Kodak.

~~~
KindOne
Can you explain the "pull a Kodak"? I'm a bit lost with that.

~~~
quickthrower2
Launch a coin, sell some Bitcoin mining gear, etc.

