
Dropbox Could Have One of 2017’s Most Interesting IPOs - t23
https://www.technologyreview.com/s/603204/dropbox-could-have-one-of-2017s-most-interesting-ipos/?utm_campaign=internal&utm_medium=readnext&utm_source=item_2
======
raiyu
The fact that Dropbox's revenue is well above Box's if the rumors in the
article are true is a great positive sign. As is being cash flow positive
which would indicate that if they are burning cash it isn't at the rate of 2x
revenue that Box has been a victim of.

However, the vision they are selling will not come to pass. That of them being
a collaborative platform. Google docs, slack, and a myriad of other tools have
already taken that place and there isn't a large enough disruption in Dropbox
to unseat that.

In the meantime Dropbox's core offering of syncing and sharing files
seamlessly as well as providing more security minded options for businesses is
something that no one else has quite gotten right.

Box targeted the high-end enterprise users and Dropbox ceded that market to
them rather early on. But the massive number of individual users coupled with
SMBs that do not need the complexity that Box entails is a large market. The
only question is are those two markets combined larger than the enterprise
market that Box is chasing.

According to the revenue reported it seems that currently on the revenue side
it is.

And given that investors do value profitability and with only a 200 sales
person team their burn should be within controllable limits should make them
overall both on the profitability and revenue side more attractive than Box.

However if they grew revenue from $400 -> $750 they simply do not have the
growth trajectory that gets Wall St excited because due to their maturity and
larger revenue you get a more consistent view point into their future growth.

Then again if they are compared more to Atlassian that is trading at 10x
revenue then they certainly maybe get justified in their close to $10B private
valuation.

~~~
sdrinf
| In the meantime Dropbox's core offering of syncing and sharing files
seamlessly as well as providing more security minded options for businesses is
something that no one else has quite gotten right.

There is absolutely no mention whatsoever neither in the article, nor in your
analysis above about Owncloud.

Owncloud (or any OSS fork thereof) is an existential threat to Dropbox's core
offering: while the consumer side is not yet price-competative, it can already
be one-click deployed by many VPS providers. And the business case for hosting
mission-critical data onsite, or at least own leased equipment & encryption is
strong, and enjoys economies of scale.

~~~
soroushjp
I went on a little adventure the other week of setting up my own NAS server,
and checked out Owncloud and competitors. Even ignoring issues like feature
parity and third-party app integration, I think the setup costs of something
like this are still _way_ too high for consumers. While VPS providers may make
this process easier (even deploying complete Dropbox clones with no tech
knowledge required), they'd still be doing it at a significant disadvantage to
Dropbox's scale and expertise. It was clear to me very quickly just how much
work has gone into giving Dropbox the level of polish it has. Note that this
doesn't even address other competitive moats such as brand recognition and
distribution partnerships.

Not saying that Dropbox doesn't face business risks -- but I think the open-
source alternatives will not be the biggest risk ulttimately in the mainstream
market.

I do think they will face margin pressures as long as Google/MSFT/Apple/Amazon
believe this to be too important of a market to cede to Dropbox.

------
chollida1
I talked to a friend just before Christmas whose firm made a good portion of
their returns on the insight that VC firms, IPO participants and the market in
general all have gaps in how they evaluate the worth of a company and the fact
that this gap has grown significantly in the past 5 years.

Previously, companies went public much sooner and you could expect a match,
not an exact one, but in the same ball park, between the VC valuation and wall
street valuations. This helped lead to rising share prices after the IPO.

Now with longer gestation periods leading to more fund raises, the VC's get
paid, but its the IPO participants and the employee's who get screwed. Once a
company is public its GAAP that matters and GAAP analysis usually assigns a
revenue multiple to a company that is based on its sector and assumed growth.
This multiple is almost always much smaller than what the company's publicly
stated valuation.

This leads to a bunch of broken IPO's as companies stretch to IPO at a certain
price to meet mezzanine level funding requirements. If you can get borrow,
almost certainly dependent on how much you pay on commissions to brokers, then
atleast up until this year you could have made decent money shorting most tech
IPO's, most other industries don't yet suffer from a phobia of becoming
public.

~~~
1_2__3
I've gone through 6 startup IPOs since 1999 in the valley, and have watched as
it went from a way to reward employees to a whole lot of voodoo bullshit. I'm
a little stunned when I see people still talking about the startups they work
for and possibly making it big - that doesn't happen anymore. You are being
lied to.

~~~
beachstartup
if the founder(s) of the company got really rich, but the company is still
owned by VCs, there is almost definitely "voodoo bullshit" going on.

it's customary to take some money to alleviate the everyday financial stresses
of life and to maybe buy a decent house because people have families, but the
original intent behind the IPO was designed to align everyone's incentives.
when they aren't aligned i.e. when there is a super-class of owners that
already cashed out, it's going to end badly for the people who aren't in
control.

everyone who got in early is already rich or completely exited, and more
idiots keep piling onto the funding rounds... hmm... what does that sound
like?

------
yueq
Dropbox is anti-SaaS -- it expects users will have more 'files' and use more
storage, but users are actually moving to SaaS services where the concept of
files just doesn't exist.

Many usages from hackernews readers are too techy and not for consumers --
like cross-platform or using as git repo. iCloud, Google Photos, Facebook and
YouTube took majority of consumer storage needs aka large photos and videos.

I think enterprise market is their best bet but Box /Google/Microsoft are
dominating in this space.

------
curiousDog
Dropbox is one of those products that is just a pleasure to use (like Stripe).
Sync works seamlessly. I've tried all other alternatives and gotten back to
being a paid customer of Dropbox. I think it also boils down to most of your
employees being passionate, smart folks from MIT, CMU and the like. Good luck
to them with the IPO.

~~~
tspike
I was initially ecstatic about Dropbox, but they seem to be at best stagnant
in terms of functionality.

It was my solution for having access to all my photos on all devices, but then
they canceled Carousel with the promise that its functionality would be rolled
into the main app. That hasn't happened. The photos feature on iOS is
pathetically limited, with slow loading times, no way to organize photos (you
can't even access albums you create on desktop), and inadequate sync
functionality. The web client isn't much better. What exactly are all those
engineers doing with their time?

I am increasingly wary of Google, and do not wish to give them all of my
photos. What solutions am I left with? I don't feel like my asks are a tall
order for a company of Dropbox's size. I basically want what the old Picasa
desktop app provided, except synchronized between all my devices.

I can't possibly be the only one with this problem: an ever-growing library of
photos and videos, scattered across various phones, DSLRs and computers with
the need to organize them and share them easily. I am happy to pay.

~~~
niftich
For your usecase, Prime Photos [1] from Amazon, where they meld the
traditional album and folder metaphors with auto-classifying ML -- the latter
which you can luckily turn off if it creeps you out, unlike with Google.

But this is an under-served market and many people would pay to some paltry
amount a month to have their family photos (or professional photographs) kept
safe in the Cloud. Unfortunately most cloud storage providers are chasing the
(presumably much more lucrative) enterprise market with document-editing and
office-y features.

[1] [https://www.amazon.com/photos/home](https://www.amazon.com/photos/home)

~~~
tspike
This looks interesting, I wasn't aware Amazon had entered this space. I'm not
sure I trust Amazon either, but at least they're explicit in their desire to
take my money in exchange for products and services.

Edit: it doesn't appear to provide any ability to organize photos yourself?

~~~
niftich
For the time being you can freely switch two different interfaces for the same
backend: Prime Photos and Amazon Drive [1]. It's clunky. Cloud Drive was their
first pass, Photos is their second and is barely a few months old, and I'm not
whether the old interface will be disabled for Photos users at some point.

The uncertainty about the product direction is a bit off-putting, but it works
decently well for my use-case [2], even if now you can't get that particular
tier without Prime.

[1]
[https://www.amazon.com/clouddrive/home](https://www.amazon.com/clouddrive/home)
[2]
[https://news.ycombinator.com/item?id=12709221#12709936](https://news.ycombinator.com/item?id=12709221#12709936)

------
bsharitt
Being the one cloud service that sync across Linux, Windows, OS X with a
native client, Dropbox is the service I'd like to give money for about 100GB
of space for a couple of bucks a month, but I just don't need 1TB for $10 a
month. So instead I use Google and wait in vain for a native Linux client
that's probably never coming.

~~~
Retric
Pro is $8.25 / month for 1TB on annual billing. I rarely see monthly pricing
for under 5$. So, I don't think it's going to drop much at this point.
[https://www.dropbox.com/business/plans-
comparison?_tk=dbv1](https://www.dropbox.com/business/plans-
comparison?_tk=dbv1)

IMO, 1TB is completly reasonble. You can get ~10 GB of storage several places
for free which covers most things and minmaxing 2-3$ per month is generally a
waste of time.

~~~
apetresc
What a lot of us want is more granularity. I'm totally fine with their per-GB
pricing, but if I (as a personal user) want more than 1TB, it is literally
impossible to buy it from Dropbox. I would have to upgrade to a business plan,
which makes no sense as I'm not a business.

Basically, there are only 3 Dropbox tiers: 0, 1TB, or infinity.

~~~
ohazi
I gave up and just started using AWS S3 directly. I use a few GB, pay a few
pennies for storage, a few more pennies for bandwidth if I'm moving stuff
around, and that's it. I've never paid more than $10/month, and it's usually
under $1/month.

~~~
ktta
that defeats the whole purpose of dropbox though. You can have a cheap ftp
server for $10/year if you look hard enough.

But the argument for dropbox is that you have a client for almost every
platform you can use. With S3 you'll have to use a 3rd-party software, which
might not function properly.

------
username223
> In addition to selling utilities to keep digital files safe and accessible,
> Dropbox intends to offer software that businesspeople use for hours each day
> to create content and get work done.

Aaaaagghh!!!

Just... no. Dropbox used to do one thing well (modulo creepy stuff [1]): sync
a directory across multiple computers. This wasn't so hard to do, but
shockingly, Apple and Google didn't just implement this feature and make them
obsolete. They could have been satisfied with owning that market, but now they
want to create yet another office suite? Ugh...

[1] [http://venturebeat.com/2016/09/20/dropbox-now-asks-for-
acces...](http://venturebeat.com/2016/09/20/dropbox-now-asks-for-
accessibility-permission-in-macos-sierra-and-os-x/)

~~~
megablast
Of course, you have to grow. You have to move into new areas. That is what
everyone does, that is how the world works.

~~~
yardie
No, everyone does not do that and the rest of the world does not work that
way. This train of thought is specific to capitalism (not to be confused with
free market). Most large companies do a few things well and everything else
mediocre or poorly. Most small companies do a few things well and everything
else poorly.

The difference is a small company recognizes it can't afford to do those
things poorly and won't pursue it. Large companies will keep dumping money
into bad, poorly planned products. See Apple and cloud, Google and everything
not Pagerank, Microsoft and mobile.

The world has more small companies than large ones.

------
Yrlec
I'd be very surprised if Dropbox manages to IPO at $10B valuation. The growth
simply isn't there. They're big on platforms and markets with no growth but
they're getting killed in growth markets. E.g. my cloud storage startup Degoo
recently surpassed Dropbox on the Android grossing rank in India
([http://imgur.com/HsII1KK](http://imgur.com/HsII1KK)) and we're only 5
people.

~~~
uiri
Their revenue according to the article is $750 million a year. You really
think that their P/E ratio is less than 13? Most tech companies trade at a P/E
between 25 and 30 these days. I wouldn't be surprised if DropBox's valuation
was around $20B.

~~~
umeshunni
As the other response said, you're confusing revenue with earnings.

Very few companies have a revenue multiple of 13x. Looking at this chart
[https://blog.intercom.com/wp-
content/uploads/2014/07/4-forwa...](https://blog.intercom.com/wp-
content/uploads/2014/07/4-forward-revenue-growth-1000.png) it looks like
Dropbox can expect something in the 6x-10x range, valuing them at $4.5-7.5B.

~~~
uiri
Seems that you are correct - earnings refers to profit (bottom line) rather
than reveneu (top line). Thanks!

That being the case, DropBox probably isn't profitable yet which would throw
their P/E through the roof and make that a useless metric.

Box is already public and it has revenue around $300 million and a valuation
of ~$1.9B. DropBox will probably get a better revenue multiplier since their
customer acquisition cost is lower than and their overall network effects and
future outlook is better than Box. I'd place DropBox at a ~$6B valuation.
Hopefully their revenue grows enough between now and IPO to support something
closer to $10 or $12B.

------
new299
I'm slightly shocked that tech-types who in general seem to be against mass
state sponsored surveillance continue to support Dropbox. Dropbox appointed
Condoleezza Rice to their board. Rice supports warrentless surveillance [1].
They've made no moves to encrypt data service side.

I hope their IPO fails spectacularly so that support of warrentless
surveillance does not become the norm in tech companies.

[1] Condoleezza Rice ([http://www.drop-dropbox.com/](http://www.drop-
dropbox.com/))

~~~
edanm
I think most people recognize that they don't necessarily agree with everyone,
especially when it comes to politics, and that refusing to work with people
because you dislike their politics is, in general, not a smart thing to do.
Not to mention not supporting companies because one of their board members
takes a position you dislike on an issue.

~~~
drewrv
I'm happy to work with people whom I disagree with politically. But if you're
concerned about privacy, giving all your files unencrypted to a company that
is uninterested in your privacy (as demonstrated by their board) is just
bonkers.

------
JohnJamesRambo
As a former Dropbox user, I can't imagine investing in them. For me, their
plans are just way out of line with regard to pricing. So out of line that I'm
going to go to the trouble of moving all of my stuff to Google Drive or
OneDrive. And I hate their ransom policy of giving you free space for a while
due to phone promotions or whatever and then taking it away. You are screwed
and can't access your own stuff until you pay the ransom. I just don't think a
company formed on those sorts of policies and pricing strategies is a good
investment.

~~~
asher_
I agree. Dropbox are massively more expensive than competitors like Google
Drive. I stopped using Dropbox years ago when I realised that shared files and
folders take up quota for ALL people that have access to it. This is absurd,
and is a terrible experience when you're trying to share something with
someone and they then have to upgrade their account.

I used to love Dropbox, but the pricing model is terrible.

~~~
JohnJamesRambo
Wow, I did not even know about the shared part.

------
automatwon
My primary use case for Dropbox, actually, is getting videos onto my iPhone.
You can't simply drag and drop a video file into the phone as a mass storage
device. With ITunes, the sync feature purportedly sync the video to the
device, and consumes space accordingly, but there's no way to access the video
on the device. It's actually way faster for me to upload a video to Dropbox
from my computer, and download the video on the Dropbox app into my photos.
The video quality is excellent, too!

~~~
douche
What a magnificent Goldbergian solution! The needless complexity of simple
tasks is sometimes breathtaking.

~~~
puranjay
This is one reason why I sold my iPad. I just couldn't figure out its cloud
storage system.

Android makes it so much easier - just install a file manager and you're good
to go.

------
mikeytown2
I'm moving away from Dropbox as a consumer. Google Photos [1] for jpg and
video; Prime Photos [2] for raw and jpg. Uploading raw and jpg to google
photos causes a lot of duplicates, plus it gets recompressed.

[1] [https://photos.google.com/](https://photos.google.com/) [2]
[https://www.amazon.com/photos/home](https://www.amazon.com/photos/home)

------
em3rgent0rdr
I predict the quality of free Dropbox service will go down (or not
significantly improve) after they become publicly-traded, similar to what
happened to Facebook, since the stockholders will force them to monetize the
free accounts. They why I avoid using free but proprietary services.

~~~
danieldk
The quality of the Pro service already went down considerably: it has
advertisement for the business version in all places. I guess that they want
to drive up value for the IPO.

I just don't understand why they are annoying Pro users. Not every Pro user
uses Dropbox for company work. Not every Pro user is in a company/organization
that will ever switch to Dropbox.

~~~
em3rgent0rdr
Maybe they annoy the pro users with ads for the business version because they
know the pro users have money and are willing to pay...somewhat targeted
advertising.

------
joshmn
When they (finally) moved off S3 to their own setup it really said to me that
they're going to IPO. Sure, a lot of companies the size of Dropbox (in terms
of rev) do it, but a lot of those companies don't have profit margins that are
directly related to S3.

------
AndrewKemendo
I've always wondered why BOX did their IPO before Dropbox. I know Box is two
years older but it seems like age is only a relative determinant in IPO timing
(FB IPO at 8 years, Google 6 years...).

------
amelius
I wonder why we haven't seen good open-source imitations of Dropbox yet, and
why there isn't a good open protocol for file sharing. The last such protocol
I've heard of is WebDAV, but it seemed to have been neglected by OS
implementers (Apple's implementation was particularly bad). Also WebDAV was
missing many modern features.

~~~
4rtemis
I agree, and by no means is it a replacement, but
[https://syncthing.net](https://syncthing.net) is pretty damn interesting if
you want to control your own data.
[https://www.syncany.org](https://www.syncany.org) [now abandonded] was a cool
twist on the idea using cloud storage in a secure way.

~~~
LeoPanthera
I've been using SyncThing for a few years now and I'm mildly surprised that it
is not more popular.

Though every time they release a new major version it breaks compatibility
with the older major versions and this happens quite often. They need to stop
doing that if they want mainstream adoption.

~~~
danieldk
I think SyncThing also has the wrong model for mainstream adoption: you have
to fiddle with host keys that you need to add to every peer.
Bittorrent/Resilio Sync's model of using shared RW/RO/encrypted keys per share
is much more intuitive.

There seems to be one open source project that aims to implement Resilio
Sync's model:

[https://librevault.com](https://librevault.com)

------
jaequery
Dropbox was definitely a good product and for the most part it still is. But
with Google and Amazon going towards the free unlimited storage plans, I have
my doubts on Dropbox from here on out. IPO just looks like a way out to me.

------
hellofunk
I've been using Dropbox as a real handy remote git host using the fantastic
git-remote-dropbox utility. It's really great to create a remote repo right
from the command line and immediately push to it without the hassle of going
to a site like GH or BB and setting up the repo first and all that jazz. Make
DB worth the money I spend (and unlimited private repos, of course, and with
easy sharing by many developers with Dropbox's shared folders).

[https://github.com/anishathalye/git-remote-
dropbox](https://github.com/anishathalye/git-remote-dropbox)

------
B1FF_PSUVM
Does anyone here still use Dropbox?

(I signed up in 2009, and probably last touched it in 2011 ...)

P.S. their studiously ignoring user-side encryption was a factor - if I'm
getting my files exposed, might as well go with the big default services.

~~~
toomuchtodo
I pay $100/year for Pro. Cheaper and easier to have 1TB of remote storage than
SD cards, USB sticks, etc, and no excessive bandwidth charges such that AWS
has.

EDIT: I don't care if my files are encrypted.

EDIT 2: Dropbox sync is rock solid. Every experience with the Google Drive
sync client has been trash. I can (and do) pay for convenience.

~~~
mikeevans
Any reason that you use it over Google Drive?

~~~
lancewiggs
1: Trust: Google is primarily in the business of search, and Google Drive is
one of many other products that Google has. The company has a history of
deleting or ignoring products that are not performing, or even that are
performing but not core. Meanwhile Google's core business or searching
anything and everything makes their motivations for GDrive suspect. I moved my
email from Google long ago for similar reasons.

2: Salience: Dropbox is in the business of providing the Dropbox service - and
everything else is non-core. So if I pay for my service at Dropbox I would
expect to be more important to them than to Google, who make far more income
from advertisers. Meanwhile Google is famous for being hard to do business
with for customers of all levels.

3: Simplicty: Dropbox just works, and very elegantly. It's the product of
choice for a very large number of people and SMEs and getting it working
outside of a corporate network is easy. Meanwhile Google products (and
Hangouts is the worst here) are often inaccessibly appalling to operate for
people who are not deliberately immersed in the Google ecosystem.

It's not perfect. I would like to see a far higher standard of security from
Dropbox, and wish they had not wasted so much effort on non-core functions
like photos. This trend appears to be getting worse - with the article stating
"Dropbox intends to offer software that businesspeople use for hours each day
to create content and get work done."

------
gumby
I find Dropbox by far the most straightforward and convenient of the cloud
storage providers (DB, Box, iCloud, OneDrive, Google in order of exponentially
increasing frustration level). But at the end of the day it's just a feature.
I assume they haven't yet gone public because they have been tap dancing
hoping to find a way to break out of the feature ghetto.

If there were an easy way to attach to S3, iot devices, etc (credentials
management is a pain) they could probably go out on the strength of that.

------
yawniek
dropbox lost me when i started to get hyper targeted spam to email addresses i
only used for dropbox and haven't used for years. they seem to use a
remarkably persistent cookie syncing technology.

~~~
kbuck
DropBox was hacked in 2012 (and all email addresses were leaked)[0], so you
might have just been getting spam from regular spammers that got a copy of
this list.

[0]: [https://www.troyhunt.com/the-dropbox-hack-is-
real/](https://www.troyhunt.com/the-dropbox-hack-is-real/)

------
wycx
I use dropbox with Zotero almost every day. You can get them to play together
relatively easily, using Dropbox for syncing pdfs, and your Zotero account for
syncing the references. This was my initial motivation for using Zotero, as
other reference managers, such as Mendeley, which made not using Mendeley's
storage very difficult.

It is very convenient to be able to add references at work, then come home to
find it all up to date on my home PC.

Dropbox integration with the camera on my phone is something I also use a lot.
Take a photo of something in the lab, it is waiting for me on my PC by the
time I am back at my desk.

The only thing that I really find lacking is a linux armhf cli client...

------
baccheion
Dropbox's growth potential (revenue-wise) is finite. Their IPO will be similar
to Twitter's (though maybe not as bad).

------
chj
Of all the major players, Dropbox has the sanest cloud storage API. That says
a lot.

------
ipunchghosts
I use owncloud -- done.

