
Dropbox raises about $250 million at $10 billion valuation - dctoedt
http://online.wsj.com/news/articles/SB10001424052702303465004579327001976757542
======
AVTizzle
Dropbox Inc. has closed on about $250 million in a funding round that values
the online-storage provider at close to $10 billion, according to two people
familiar with the deal.

A BlackRock Inc. BLK -0.33% investment fund is leading the deal, which also
includes previous backers, said one of these people, who declined to provide
more detail.

Dropbox wasn't immediately available to comment.

At $10 billion, Dropbox is one of the most highly valued companies backed by
venture capitalists. The company's valuation has more than doubled since late
2011, when investors valued the San Francisco-based company at $4 billion. The
company also got a higher price than expected when it approached investors as
recently as November.

Dropbox raised $250 million in its 2011 financing from Goldman Sachs and
venture-capital firms including Sequoia Capital, Index Ventures and Accel
Partners.

The Wall Street Journal previously reported that Dropbox had expected sales of
more than $200 million in 2013. The company made $116 million in sales in
2012, according to people familiar with the company's financials, more than
doubling its $46 million in revenue in 2011. The year before, it nearly
quadrupled sales from $12 million.

\--David Benoit contributed to this article.

~~~
mlyang
Dropbox really needs to accelerate its enterprise sales to justify this
valuation long term. Given the tight integration that Box has with so many
enterprise software solutions and Box's focus on enterprise, it'll be
interesting to see how these two firms fair against each other on the public
markets eventually (inevitable at this point given their valuations). Maybe
just being a household name will do it for Dropbox even if Box can close
more/better enterprise deals.

~~~
awakeasleep
As a customer of Dropbox for Business, I can confidently say they have a long,
difficult road ahead of them here. The way they've defined their concepts
seems hostile to the very things businesses need in a product.

Even being a company that spends 50k a year gets you next to nothing wrt
feature requests or support outside of what would be given to a free user,
aside from speed of reply. If you want any level of control over data and
sharing, you're sent over to "sookasa", a shambles of a business, or you can
look at non-recommended solutions like boxcryptor (an incredible product that
unfortunately carries it's own administrative overhead).

If anyone from Dropbox is reading this, the things that make my life the
hardest are:

1) removing shared folders from a user's account. (Impossible unless your IT
department controls every shared folder in your organization. Difficult & time
consuming if they do)

2) Deleting a corporate account from all devices, removing folders.
(Impossible)

3) Offering any sort of encryption (need to use 3rd party, unreliable)

4) Managing/reverting changes. Terribly ugly, difficult, and time consuming
process. It's bafflingly inefficient, and in an organization of any size
clueless or new hires are going to create these problems on a weekly basis.

5) Management and reporting APIs don't exist.

~~~
wwwong
Keep your eye out for upcoming updates to Dropbox for Business. Looks like
upcoming features will cover most of your points:
[https://www.dropbox.com/business/two-
dropboxes](https://www.dropbox.com/business/two-dropboxes)

~~~
awakeasleep
We'll see. The only thing that actually looks new is "sharing audit log" and
an audit log is a long way off from being able to effectively control sharing.
Changing someone's password to log into their dropbox, delegate ownership of
the folder to a shared account helpdesk controls, and then have helpdesk go
through every shared folder to remove a terminated employee, then sending the
original user a password reset, then requiring a helpdesk touch for every
sharing change in the future isn't a valid business workflow. Furthermore, in
the past Dropbox's audit logs have been paginated lists you click through
online. Not the sort of thing you can automate. Here's hoping for a change.

Also, notice the phrasing: "With separate Dropboxes for personal and work,
administrators can have the control necessary to secure company data, and you
can still have your most important stuff at your fingertips." That sounds
suspiciously like a sentence that says nothing at all, considering it's
already easy to run two dropboxes, and all the problems I listed concern fully
administered business accounts.

Remote wipe will be nice though.

------
incision
My anecdotal sample size of one makes me wonder how Dropbox means to sustain
itself.

I'd been on a $20/month plan with Dropbox for a few years now. I recently
cancelled down to the free tier because...

* I didn't want to pay more to store/sync even more data.

* All my apps that add great convenience by leveraging Dropbox for sync will work fine and consume just a fraction of the free tier space.

This is actually the "killer" feature right now. If I had to pay to keep this
functionality, I'd probably pony right up, but it would be tough to start
demanding payment for that.

* Dropbox is actually pretty slow.

Sure, I'm just one person, but their percentage of paying customers has always
been small. Just a few years ago, there weren't many if any viable
alternatives - now there's a whole slew of them and Dropbox hasn't changed
much if any in that span.

Also, since it seems to come up so often. I've seen nothing in the way of
moves by or significant interest in Dropbox in the enterprise. Meanwhile,
Microsoft is pushing SkyDrive, Google has Drive and Box is stating that
they're fully enterprise focused.

~~~
rogerbinns
Our startup uses and pays for Dropbox for Business. All the alternatives
(including Google) believe that Linux isn't worth bothering with. Dropbox has
a decent client, both graphical as well as command line for Linux. We keep a
lot of stuff in Dropbox, as well as having various tools produce reports and
similar into it.

The single biggest headache with Dropbox is that it doesn't support multiple
accounts. This is a problem when people have both personal and work stuff on
the same machine (we do lots of BYOD). There are unreliable hacks for desktop
operating systems, but no solution on mobile.

Other than that they want people to individually "subscribe" to shared folders
rather than letting the admin set the defaults. This is unpleasant and does
not scale well consuming too much people time.

Last on the list would be allowing/using signing in using Google accounts.

They have asked how things are going every six months or so, although I get
the vibe the question is more of "what can I upsell you on today" rather than
anything that results in any action (so far nothing has happened with any of
my feedback from 12 months ago).

~~~
Peaker
Not all the alternatives: [http://copy.com/](http://copy.com/) has a decent
Linux client.

~~~
rogerbinns
Their last blog post was 5 months ago, the website footer is copyright last
year, you are the only person to mention them in all these comments, and their
website seems to say the only thing they offer over the competition is being
cheaper. That is going to be a big hole for them to climb out of!

~~~
Peaker
I had no idea :-) they seem to work well enough...

------
lubos
I've been using Dropbox for years and was using it for everything until last
year. I didn't even bother installing it after getting new computer.

The problem with Dropbox is that it's too general, too abstract. There are now
specialized services that are made for hosting source code, hosting photos,
hosting music, hosting scanned documents... and each service is doing it
better in its niche than general-purpose tool like Dropbox.

So who needs Dropbox on its own?

I think Dropbox will need to re-invent itself and fast. One way would be to
buy other startups that are targeting specific niches and would use Dropbox as
persistent storage. This way Dropbox could be offering various apps for free
and make money if users run out of their Dropbox space.

Think about it, rather than paying monthly for source code hosting, photo
hosting, document hosting, email hosting or whatever service separately as we
do it now. All these services could be free as Dropbox apps and once you hit 2
GB limit, you pay for storage you consume as a single monthly fee.

Is this what Dropbox has in mind? Are they raising capital to go on
acquisition spree of struggling startups (think Everpix.com) that have great
products but not enough traction?

I would love to see that...

~~~
robszumski
Isn't this what their developer API platform is for? You store users data on
dropbox, but create your own UX with your app.

[https://www.dropbox.com/developers](https://www.dropbox.com/developers)

~~~
lubos
Yeah but 3rd party apps will probably need to charge end-user for usage on top
of what Dropbox is already charging for storage.

If Dropbox would do these services themselves, they could make them free
because they make money from storage.

Not only that, Dropbox would effectively lock-in their users into Dropbox
platform. Right now it is extremely easy to switch from Dropbox to competitor.
Once you start depending on so-called Dropbox apps, you can't leave just as
easily.

------
namenotrequired
Link without paywall:
[https://www.google.nl/url?sa=t&rct=j&q=&esrc=s&source=web&cd...](https://www.google.nl/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CCoQqQIwAA&url=http%3A%2F%2Fonline.wsj.com%2Fnews%2Farticles%2FSB10001424052702303465004579327001976757542&ei=fK7ZUoCbOOWd0QXS8oCgAw&usg=AFQjCNH5aRtNl2COWiZBUb33PGEcXg0fUA)

~~~
pattisapu
Am I doing something wrong? When I click this link I still get paywalled. :(

~~~
changdizzle
If you manually google the title and then click through you should be able to
bypass the paywall.

~~~
pattisapu
thanks!

------
jwwest
Could someone explain what the point of Dropbox as a company is now? They
literally own their space, everyone loves them, and I'm sure they're making
money hand-over-fist.

However, they raised another round? Why?

~~~
nlh
Just as a quick point of reference, they don't actually own the space. I do
love them - I think they are an awesome company and expect they'll do well,
but I just switched my entire company from Dropbox to Box. In short, Dropbox
falls very short when it comes to "enterprisey" stuff like fine-grained
permissions, etc.

They certainly _could_ own the space, but at the moment Box has a vastly
superior enterprise offering.

~~~
derengel
Do they have something similar to dropbox packrat?

------
highCs
I'm not able to read this without signing up. I suggest a [restricted access]
in the title of such articles like [video].

~~~
dangoldin
A way to bypass is to search Google for that title and click on the WSJ link
from the results. It seems the WSJ looks at the referrer and allows search
engine sources.

~~~
AhtiK
Or go to [http://www.google.com](http://www.google.com) and type into address
bar:

javascript:window.location="[http://online.wsj.com/news/articles/SB1000142405270230346500...](http://online.wsj.com/news/articles/SB10001424052702303465004579327001976757542")

:-)

One step further is to define a new keyword search type in your browser to
perform this redirect for any provided url in the future.

~~~
stuartd
Or just don't bother.

------
dchuk
Since they're hosted on AWS, their bandwidth and storage costs have to be
monstrous per month. Anyone have a rough estimate of how much they're paying
currently and how much they could possibly stand to save by using this
investment money to possibly build their own data center/acquire one?

~~~
hbags
"The company uses more than uses more than 10,000 physical servers to manage
user content, along with Amazon Web Services."

source:
[http://www.datacenterknowledge.com/archives/2013/10/23/how-d...](http://www.datacenterknowledge.com/archives/2013/10/23/how-
dropbox-stores-stuff-for-200-million-users/)

I was trying to find a comment on HN where one of the dropbox employees
references their datacenter, but my hnsearch-fu wasn't up to par.

~~~
dchuk
Per the linked article:

"User metadata is stored in the company’s data centers, while the actual files
reside on Amazon’s S3 storage service."

So I'm assuming they have determined that S3 is cheaper than their own metal
for actual file storage?

~~~
byoung2
_So I 'm assuming they have determined that S3 is cheaper than their own metal
for actual file storage?_

With S3, they don't have to physically own enough hard drives to support every
user maxing out their allotment. If I started DropBox tomorrow, and a million
people signed up for free accounts with 2GB, S3 would cost me $0 at first. As
more and more users start to fill up their accounts, it will make more
economic sense to migrate in-house (a la Backblaze storage pods).

~~~
jzwinck
Surely it's the same with bare metal. Companies who store client data do what
is called capacity planning, where they estimate how much space (or compute
power, or whatever) they will need for the next N months, and buy it on a
rolling basis. Nobody would actually purchase 2 GB of physical disks every
time a 2 GB capacity signup occurs.

Whether it makes more sense to bring it in-house depends on some other
factors, such as whether Dropbox is willing to cut some corners relative to
what S3 provides (i.e. maybe there are S3 features they don't need), and how
dedicated to budget trimming their employees really are (some people just
don't have the stomach for cutting costs way down, e.g. if they see it as
compromising in some way).

~~~
byoung2
That's definitely true, that you wouldn't buy all your capacity upfront, but
you would need to have a minimum amount of capacity on hand upfront, and to do
that in multiple datacenters and build the software to manage it would cost
money. That explains why they started on S3 but it doesn't explain why they
are still there now. looking at the economics of it, I wonder if Amazon hasn't
cut Dropbox a huge discount to keep them around. But even still, with $250
million in the bank, I bet the discussion to move in house is happening right
now. After a certain point (X users, Y revenue, Z $ VC money), I would look at
hosting in-house. [http://blog.backblaze.com/2013/02/20/180tb-of-good-
vibration...](http://blog.backblaze.com/2013/02/20/180tb-of-good-vibrations-
storage-pod-3-0/) looks like an interesting solution to storage.

~~~
jasonzemos
> I wonder if Amazon hasn't cut Dropbox a huge discount to keep them around.

I can't imagine why they would. Dropbox dedupes all their data before hitting
S3, but Amazon can still leverage their bulk hardware discounts that Dropbox
likely isn't big enough to score. Amazon would have the upper hand in such a
deal, and I don't see why it would be friendly.

> [http://blog.backblaze.com/2013/02/20/180tb-of-good-
> vibration...](http://blog.backblaze.com/2013/02/20/180tb-of-good-
> vibration..). looks like an interesting solution to storage.

AFAIK those boxes are and have usually been tuned for lukewarm or maybe even
lukecold storage to cut costs. Dozens of 5400 rpm drives loaded on bare
minimal support planes have a genuine rating of _Shit_ for reliable seek
times. It's great for backup, when you only expect a small fraction of users
to actually make a query and be thankful enough they're pulling down a
recovery. For the kind of direction Dropbox wants to take, this is absolutely
out of the question.

~~~
byoung2
Dropbox hosts the metadata on much faster hardware. When you find your file,
seek time on the file system is not as important as transfer speed, and over
the Internet, the network is your bottleneck, not your spinning media.

------
akennberg
Does YC buy into later rounds of a company or just let the dilution happen?

~~~
pg
The latter.

------
lancewiggs
I might be missing a trick, but if I were Box or Dropbox I'd be reaching out
for merger discussions with the other. A combined entity would dominate
corporate and retail markets.

------
mattmaroon
Congrats Drew and Arash!

------
mmaunder
The closest comparable I can think of is Salesforce which has a $34B valuation
right now as a public company. Totally different sector, but a software
company that focuses on doing one thing really well and generates over $3Bn
yearly revenue.

[https://www.google.com/finance?q=NYSE:CRM&sa=X&ei=Gq_ZUvPkF5...](https://www.google.com/finance?q=NYSE:CRM&sa=X&ei=Gq_ZUvPkF5PRkQfX84GoAw&sqi=2&ved=0CCsQ2AEwAA)

~~~
rgbrenner
_Salesforce ... a software company that focuses on doing one thing really
well_

One thing? They own Heroku, Desk.com, Work.com, and several other companies.

~~~
monkeyspaw
And their focus over the next few years is to be the cloud computing company
for businesses. Had a salesforce VP tell me recently that SF wants to dominate
non-CRM software (e.g., electronic medical records in the cloud) while Oracle
and SAP are still working on figuring out this whole "cloud" thing.

Large businesses are still just entering the cloud with a lot of their
software. Salesforce is the company they think of when thinking cloud. There's
a lot of power in that.

------
thomseddon
When I was in the process of creating a similar service specially for students
I did a lot of research into their freemium model....The findings were pretty
clear: the most reliable source puts their conversion at around 4% and and
with approximations on growth and a heavily reduced s3 cost there is a point
where it stops working - they need to boost their revenue sources.

I have all the projections on my pc, feel free to contact me if you would like
to see them.

------
sytelus
Wow... That's like 10 instagrams ;). But honestly, when Microsoft, Apple and
Google have jumped in to this same space with pretty much same offering, does
this makes sense to anyone? I thought they would be out of business because of
this. At least 3 out of 5 big startup buyers aren't welcoming them. My only
hunch is they have revenues now in $100M range and planning IPO in couple of
years as exit.

~~~
adventured
Apple's product has no mass consumer appeal and will never be a threat to
Dropbox. Their approach strictly limits their appeal to the Apple ecosystem.

Microsoft doesn't know how to make a good product in this space. As history
has shown, you can always beat Microsoft with a substantially better product
(Intuit, Google, iPhone, iPad, Wikipedia, Apache, PS2, iPod, Linux etc).

Google thinks the key is to force users into a bundled scenario. The flaw in
their thinking is that most of the individual products in their portfolio are
average at best, including their storage solution. There's no true lock-in.
Which is why it hasn't killed Dropbox after years of competition (and why G+
has failed).

The only threats to Dropbox are 1) they screw-up their own product; 2) there's
a titanic shift in the market itself, enabling a new wave of companies and
technologies to dominate 3) a new company creates a better mousetrap, as
that's not coming from Google / Microsoft / Apple.

Revenue is closer to $250m for 2013.

[http://www.forbes.com/sites/markrogowsky/2013/11/19/dropbox-...](http://www.forbes.com/sites/markrogowsky/2013/11/19/dropbox-
makes-hundreds-of-millions-so-why-is-it-only-asking-for-an-8b-price/)

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

------
codegeek
I did a google search with the link to access non-paywalled

[https://www.google.com/#q=http%3A%2F%2Fonline.wsj.com%2Fnews...](https://www.google.com/#q=http%3A%2F%2Fonline.wsj.com%2Fnews%2Farticles%2FSB10001424052702303465004579327001976757542)

Click on the search result and it is non-paywalled

~~~
Aaronn
Still paywalled for me

------
pekk
Remember that Dropbox has access to everything you store with them, and uses
it

~~~
flyt
What do you mean "and uses it"?

~~~
cma
Isn't there a datamining and profiling clause?

------
ccbrandenburg
Could someone please explain why they would raise another round at this stage?
Investors are assuming an IPO and want to get in before that I guess.

------
marcamillion
I can't wait for them to go public and we can take a look at their financials
properly.

I suspect they will surprise many people - as I had predicted back in 2011 -
[http://marcgayle.com/2011/01/24/how-dropbox-is-printing-
mone...](http://marcgayle.com/2011/01/24/how-dropbox-is-printing-money/)

Much hasn't changed....I don't think.

~~~
lowglow
Hey, you might want to check your site for bugs. You have an unresolved merge
conflict pushed to production. You wouldn't want your potential clients seeing
this:

[http://i.imgur.com/0oGV3ao.png](http://i.imgur.com/0oGV3ao.png)

~~~
marcamillion
Thanks for the tip. I am using Github to host my site, and it turns out that
hosting both a static site and a dynamic blog on the same domain is not as
simple as it seems.

Been going back and forth with Github support on this issue and keep getting
different responses from different people - most of which don't help me fix
the issue properly.

Alas...it's a work in progress and I wish I could just do a git push to
resolve that issue, but that's not to be.

Thanks though.

------
ereckers
It's funny to see everyone on here stating that they are leaving Dropbox as
I'm just about to get on. I've been using Windows machines for years and
finally bought a Mac. I need to start using my computers as simple terminals
to some degree.

The only thing I've been wondering is if running a few things at once is a bad
idea; Google Drive, Box, Dropbox.

~~~
joshmlewis
1.) Is your switching to Mac the only reason for using Dropbox?

2.) Since Dropbox has it's own directory, I imagine the others are similar. It
wouldn't really be feasible because the file wouldn't be the same file across
all apps.

------
joelrunyon
Anyone got a link to a non-paywalled version?

Also - I love dropbox as much as anyone, but do they have the numbers to
justify a 10B valuation?

~~~
mattmaroon
$200m in revenue and solid growth is pretty strong. It's at least not
unreasonable.

~~~
sosborn
If you are going to look at revenue you need to look at expenses as well.
Revenue by itself means nothing.

------
Touche
I realize these are companies and they have to compete with proprietary
features, but it _really_ bothers me that Dropbox, Google Drive, SkyDrive,
etc. are all using their own proprietary technology for the basic sync. It
really does bother me that a company that was born on Hacker News has yet to
open source its sync tech.

------
jcdietrich
I wonder how Dropbox and the NSA get along?

------
glasz
this is going to be funny some day. when the bubble bursts.

~~~
dclara
Can't agree with you more. Not only for the reason of jealous. Let's do a no-
brain estimate. Dropbox has:

1\. A novel idea - $1M

2\. A neat implementation - $10M

3\. A reasonable size of user base (including one-time sign-in users and
abandoned users) - $100M

4\. Any state-of-the-art technology backed up? No

5\. Any innovation which changes the whole industry or UX? No

6\. Any system level software design? No

Where does the rest of the value come from? If this kind of system is worth
$10B, then how much is AWS worth?

Box is aiming enterprise market which makes more sense, because if they can
handle fine-grained user security, that will be a lot different. Basically,
corporations need a

SkyDrive + SharePoint (hosted in cloud service)

if they don't want to host data in-house. Are there anything like this
existing today?

If Dropbox is worth $10B today, what is that going be worthwhile?

We want to encourage new applications to make users life easier, but to a
limited extent. We should encourage more productive inventions instead of
being too much bragging on a piece of small app with some new functionality
like this.

\- Eggs should not be washed.

~~~
glasz
this is not limited to dropbox. and most of the "value" is pure speculation.

    
    
      We should encourage more productive inventions instead of being 
      too much bragging on a piece of small app 
      with some new functionality like this.
    

bragging is ok. little steps are ok. just be realistic.

------
seeingfurther
No paywall link:

[https://www.google.com/search?hl=en&gl=us&tbm=nws&q=site:wsj...](https://www.google.com/search?hl=en&gl=us&tbm=nws&q=site:wsj.com%20Dropbox%20Raises%20About%20$250%20Million%20at%20$10%20Billion%20Valuation)

------
tzury
Cached version (no paywall)

[http://webcache.googleusercontent.com/search?q=cache:online....](http://webcache.googleusercontent.com/search?q=cache:online.wsj.com/news/articles/SB10001424052702303465004579327001976757542)

------
cordie
I wonder how much they value the "Dropbox" brand name at. If you think sharing
a file online you're probably thinking Dropbox.

------
kriro
In light of the NSA scandal I have switched from Dropbox to a self hosted
ownCloud. Pretty happy with it :)

------
dchuk
When did WSJ start using that paywall?

~~~
batoure
They actually were one of the first newspapers to implement a paywall in 1997.
But in recent years they allow a certain number of referring urls to break
through it so that they can generate traffic from major aggregators.

[http://en.wikipedia.org/wiki/Paywall](http://en.wikipedia.org/wiki/Paywall)

------
hgfischer
I'm more and more starting to believe that some SV companies are only
laundering money.

------
sjg007
Clearly, MSFT, Apple, or Google could buy them.

~~~
spiderPig
Why? They all have equivalent products that have pretty much all the features.
They should probably buy them for the talent and user base though.

~~~
pessimizer
At this point I don't think that the product is as important as the branding
and the userbase.

~~~
batoure
Their patent portfolio might be of high value if they have patented certain
processes for file synching.

------
veritas213
thats a ridiculous valuation. What their EBITDA? Oh yeah..

