
Dropbox Secures $600M Credit Line Ahead of Expected IPO - rayuela
https://www.bloomberg.com/news/articles/2017-03-30/dropbox-secures-600-million-credit-line-ahead-of-expected-ipo
======
shubhamjain
One concern about Dropbox I have is its inability to establish itself beyond
its File Storage / Syncing software. Salesforce.com, in comparison, has been
acquiring companies left and right. Notable acquisitions of Dropbox, like
Mailbox, have either shut down, or are nowhere on the impact map. As Dropbox
user (albeit a free one), I don't find it useful for anything beyond synced
storage (if there is any new addition in their interface, I might have missed
it). After I started uploading pics on Google photos, I have little to store
on Dropbox.

Synced storage might be big enough problem for it to continue to grow bigger,
but I wonder if it's a meaningful moat. What if the storage + software gets
commoditized to an extent that it becomes essentially free for most people?

~~~
blowski
Why do they need to expand beyond that? Am I idealistic to say a company can
survive just by doing something really well. Salesforce is hardly a paragon of
a well-executed clear and consistent vision.

I pay Dropbox because I can rely on their backups any place at any time, not
because their storage is cheap.

~~~
yeukhon
I think we need a better storage backup system. I've got data on iCloud and on
multiple desktops and laptops. My iCloud doesn't have all the photos because
I'd run out of space and be paying dozens of dollars monthly [1]. I was
helping my friend to select a disk backup solution a while ago, and not that
many really came to my likings. Backblaze[2] is probably the only one I would
say pretty good for a monthly backup fee at $5. Dropbox's 1TB was enough for
her so I went with that solution, but for my use case I won't be able to
benefit from it. Amazon [3] also has a backup offering product, but I don't
see any real attractions / news since its launch. I did some work with Box.com
and APIs weren't so easy to use (this was back in late 2015, early 2016) and
pricing wasn't very competitive for a home user. S3 would be an ideal backup
but I'd need to code up the system to manage revision and life cycle, that
becomes a job which I might as well create my own Dropbox...

Sync storage is very important when you have a media center PC and a bunch of
PCs you own and needs the files around. Not just in the cloud (that's for on-
the-go and DR), but I would want a local copy too (using a NAS server). So if
Dropbox offers local backup + cloud backup at a reasonable monthly / annual
price, I would give that a try.

[1]: [https://support.apple.com/en-us/HT201238](https://support.apple.com/en-
us/HT201238)

[2]: [https://www.backblaze.com/cloud-
backup.html](https://www.backblaze.com/cloud-backup.html)

[3]:
[https://www.amazon.com/clouddrive/home](https://www.amazon.com/clouddrive/home)

~~~
robbiemitchell
It's $20/month for unlimited storage on Dropbox.

~~~
ac29
Does anything stop you from uploading 10s or 100s of TB? I recently crossed
1TB of storage use on S3 (which costs around $20/month) and am in the process
of exploring alternatives.

I've never really understood how companies can offer "unlimited" storage at
low prices.

~~~
crooked-v
"Unlimited" space in any online service almost always means "there is a soft
cap where we start threatening to shut down your service, but we won't tell
you what it is ahead of time".

~~~
yeukhon
Actually quite an interesting point. Consider S3. They provide unlimited
storage, but their software has to be able to keep up with the insane growth
of data, albeit the hardware storage demand as well.

~~~
013a
S3's cost to the consumer scales with the amount stored. That's different from
Amazon, Dropbox, or Google, who offer enterprise-facing non-developer storage
options at a flat rate for "unlimited".

They can do this because these enterprise-facing products offer fewer
performance guarantees relative to their developer-facing products. But,
ultimately, "unlimited" doesn't mean unlimited, in literally all of these
products.

~~~
yeukhon
I would think enterprise offering would have a stricter SLA than developer-
facing product. The only thing between Dropbox and Amazon is that there is no
independent enterprise offering for S3, except Amazon pays a penalty for
violating said SLA.

------
rrdharan
[Disclaimer: I used to work at Dropbox.]

TL;DR: The only actual news here is the new line of credit. The folks involved
in securing that line of credit only noted that it was secured since the
previous line of credit had expired.

There's no real tie to any IPO news here, and the quotes about an IPO come
from "potential advisers" and seem to be entirely unrelated to the line of
credit news.

> While the company hasn't set specific timing, potential advisers believe it
> will be ready to go public by the end of this year. Dropbox and its lenders
> declined to comment.

~~~
aresant
Another interesting nugget that I think is material to the conversation:

"For the banks involved, taking on the risk of lending to an unprofitable
private company can help them win a role underwriting an eventual IPO."

It's fascinating to watch how we're building the stack of cards this time.

The bankers on SNAP made $85,000,000 in fees on the IPO - which is very high
margin activity.

The same bankers provided ~$1.2b in credit to SNAP as part of the courting
process (1).

I'm not going to wave the doom and gloom flag, but credit lending on
unprofitable companies to secure speculative IPO rights is probably something
that will show up in HBR case studies after the next downturn.

(1) [http://www.cnbc.com/2017/03/03/snap-ipo-what-wall-street-
ban...](http://www.cnbc.com/2017/03/03/snap-ipo-what-wall-street-banks-
made.html)

~~~
pm90
This is a really good point. Although: even if I may not agree with the
revenue potential, the market does and that is basically what allowed those
banks to rake in during SNAP's IPO. I mean, nobody knows for sure whether SNAP
will every be profitable, but the market thinks that it will. Or maybe the
market is too gullible ...

------
weston
Lots of negativity in here, but I'll say I really enjoy how incredibly simple
Dropbox is and has remained since it launched.

It's so easy to explain how it works to my non-techie parents ("It's just
another folder on your computer, except it backs up your data automatically").

I hope Dropbox continues to thrive.

~~~
GordonS
It does work. Most of the time, for most people.

But, at least on Windows, only being able to sync 1 folder is a serious
limitation.

Again at least on Windows, CPU and disk utilisation goes through the roofnon
start-up, rendering your machine all but useless for half an hour.

And the final nail in my Dropbox coffin - it seemed to quite often choose the
wrong file when there were conflicts, and at times it mistakenly deleted a lot
if files. I just couldn't trust it.

Oh, and support via their forums was rubbish. Dozens of people would report
the same problems, and they'd be ignored for years.

~~~
jpalomaki
You can use symlinks (mklink on Windows) to overcome the "one folder
limitation". Not perfect, but helps in some cases.

~~~
kinkrtyavimoodh
Funnily enough, I used to use OneDrive OneDrive (SkyDrive back then) with
symlinks and it had a bug in its earlier version that basically fucked up your
backups if you used symlinks and upgraded OneDrive. It ended up creating
file_1 file_2 etc multiple versions of all my files and was a pain to sort
through.

------
marcusr
Dropbox for Business has really changed my view of Dropbox the company. With
AzureAD SSO integration, and the new Smart Sync feature, it's now possible to
run a small company completely in the cloud, with terabytes of data in the
cloud accessible to everyone without them synching it all to their laptop.

Smart Sync is their game changer.

~~~
eitally
I think Google Drive's new features (Team Drives & File Stream) are going to
win at least some of this market, too. Drive wasn't compelling for any sort of
enterprise data management before, but it's slowly evolving some appealing
features. If you add something like AODocs, you can get 80% of what even most
large companies need out of an EDM platform.

[https://www.forbes.com/sites/kevinmurnane/2017/03/14/google-...](https://www.forbes.com/sites/kevinmurnane/2017/03/14/google-
beefs-up-google-drive-for-enterprise-customers/#4645f90f729d)

------
sersi
I've stopped using Dropbox for a few years already. Their software was good
when I used it but I decided to boycott them after Condoleezza Rice joined
their board. I just couldn't trust them with my data after that.

Plus, the fiasco they had with their Mac app comforted me in not trusting them

------
gruglife
I'm hoping someone can help me with this. DropBox is valued at $10b. Their
closest competitor, Box, has a market cap of just over $2b. Does Dropbox
really offer that much more than Box?

~~~
superflyguy
I use Box but Box has some flaws compared to Dropbox. Sync is broken and they
don't care. On Dropbox you could have the windows client installed and open a
Truecrypt file, make some changes (add/rename/delete/change files within the
container) and when you close the Truecrypt file it syncs the changes
properly. Do the same on Box and it looks like it's working but it's silently
losing your changes; no errors, warnings - nothing. I reported this and they
don't care. So you can only trust them with whole files. That's fine, once you
know, for a free product, I guess. The version control can be seen as a
deletion with no undo too; if you accidentally increment the version number of
a file (by uploading a new file of the same name, I think this is what I did)
then the earlier version is there but you can't get at it with the free
service. Not even by deleting the newer one and reverting. So be very careful
what you do. Still, it's better than nothing as a free secondary backup.

------
uvince
I love that they do one thing really, really well. Further:

"Dropbox is the fastest SaaS company to reach $1 billion in revenue run rate"
\- given that, I don't care if they are profitable or not. They got to $1B
faster than Salesforce, as long as they keep this up they'll be just fine.

------
laurentdc
I'm failing to see their competitive advantage. Is it the file history? Linux
client?

Genuinely asking, I pay 7 € / mo for OneDrive (1 TB) and I get a desktop
license of Office along with that too.

~~~
kilroy123
Same here. I'm a paying dropbox customer, but I plan to switch in a month
before my annual subscription renews. Amazon drive offers more space for only
$60 USD a year.

Plus google apps offers more space than dropboxes business plan.

~~~
danieldk
I tried to switch quite many times. Problems are typically: refusal to sync
some files, excessive memory and CPU use (last time I tried OneDrive it used
~700MB RAM when storage was nearly empty), no LAN sync (speeds up things
considerably when sharing with family/colleagues), no block-level sync (touch
a small part of a 300MB file and it gets completely resynced), no Linux
client.

~~~
kilroy123
No I feel you, I do agree their sync tech is the best. I switched back to Mac
so I no longer care about the linux support.

I've really gotten into photography. Shooting in raw means I easily add 10-30
GB of data a week. Just want a cheaper option for more than 1 TB.

~~~
krrrh
rclone plus Amazon Cloud Drive might be an option. They do seem to have no
limit when it comes to uploading data, but you can apparently run into soft
caps if you try to download it all at once. Apparently Amazon has a lot of
spare downstream capacity at their datacenters.

------
adtac
I'll never understand why a company has to keep growing. Obviously I don't
have a degree in economics, but why can't a company do well and then continue
being so without having the need to innovate all the time? Sorry if I'm
missing something big.

~~~
superflyguy
If you start a company and you break even then you're free to not grow. As
long as you're happy with the money you're making and you can pay stuff, rent,
insurance, equipment, services, surprises etc then you don't need to.

But if you can do it, someone else can do it, and if they are criminally
inclined, sly, lucky, or are prepared to pay people less or provide a lower
quality product, or they have money to burn or are backed by people with money
to burn then they can take you on and, until they are caught/run out of
money/lose business due to their business practices catching up with them,
they can take your business. Companies which are set up with other people's
money and/or which go public are going to have to answer to the people who
"own" them about why they're not making more money this year than last year
and the people notionally running the company will be out of a job if they
can't explain this.

------
rglover
Still surprised Dropbox doesn't apply their UI/UX talent to taking S3 to the
cleaners.

~~~
officelineback
Doesn't Dropbox run on S3? Or is that the company that recently moved off AWS
into their own datacenters? If so that was a good case study. (I'm an all 5
certified AWS guy and while I love it, I like seeing the counterexamples to
keep my Kool-Aid ingestion in check).

~~~
candiodari
They used to. They migrated off of it because cloud is too expensive. 2 big
components to that :

1) traffic to the rest of the internet from the cloud is "wtf" expensive
compared to the alternatives. If you can do your own peering (like dropbox
does), this goes double.

2) Actual disk storage is too expensive as well. It doesn't compare favorably
with what you can get by building a blackblaze pod [1] (just an example).

3) Cloud does not match their usecase. They are write-heavy instead of read-
heavy. So as the cloud optimizes for internet serving, it actually moves
further away from their optimal price point.

There's an episode of software engineering radio that has a lot of details
from the horse's mouth:

[http://www.se-radio.net/2017/03/se-radio-
episode-285-james-c...](http://www.se-radio.net/2017/03/se-radio-
episode-285-james-cowling-on-dropboxs-distributed-storage-system/)

[1] [https://www.backblaze.com/blog/open-source-data-storage-
serv...](https://www.backblaze.com/blog/open-source-data-storage-server/)

------
skdotdan
"Dropbox it's not a product, it's a feature". Don't get me wrong, I'm a
Dropbox user myself, but I don't see their actual moat. Isn't cloud storage a
commodity nowadays?

IMHO they should have spent money in investing in other productivity companies
in order to diversify and be able to offer a complete productivity suite.

~~~
sidlls
It seems to me you're looking at this from a technically proficient
developer's perspective.

It's easy (trivial) for a technically proficient person to setup any trivial
cloud storage system they like on just about any provider's platform they
like.

It's not so easy for anybody else (read: the vast majority of other users).
Dropbox's value proposition isn't commodity storage on somebody else's
servers: it's the UI/UX that backs it, and the particular implementation
details.

~~~
stephenr
Dropbox isn't installed by default on any platform.

Apple, Microsoft and Goole all offer 'cloud' storage services (they aren't a
product, stop calling it that) and all have a user-facing platform on devices:
macOS/iOS, the various Windows, Android/ChromeOS.

Dropbox _is_ effectively a feature. That isn't to say they _can 't_ remain in
the market and possibly even become profitable, but just making a sync client
whose biggest recent news is the skeezy install process on macOS isn't going
to cut it.

~~~
sidlls
If the market treats them like a product, they are a product. Also the number
of people outside of techie communities that care about either Apple computers
or "skeezy" installs on them is tiny. Mac has a tiny, tiny fraction of the
computing market and the vast majority of MacBook users are about as tech
savvy as the vast majority of windows laptop users: that is they aren't savvy
at all.

~~~
stephenr
> If the market treats them like a product

A product is something you buy once. A service is something that is provided
to you over time to use, usually in exchange for money. My issue was people
calling cloud based storage a 'product'. It isn't, it's a service.

You seem to be somehow ignoring the little glass-faced elephant in the room:
iPhones/iPads. The number of people who use these devices is not _tiny_.

The people who don't care about Apple but are still potential Dropbox
customers are still using an OS: either Windows, Android or ChromeOS. The
manufacturers of those OS' also compete with Dropbox. So what's your point
about Apple exactly?

Non-technical users are exactly my point. Why would grandma use Dropbox, when
its almost certain the device has built-in cloud-syncing storage from the OS
manufacturer?

------
5_minutes
Actually box.com has several nice features by which they totally outperform
Dropbox. One is for example the complete mess many Dropbox folders become,
because you can drag an drop them around yourself, rename them etc. Look at
anyone's Dropbox folder and things get quite messy rather quickly.

The problem with box.com is that there's no business support at all (nobody
answers any emails). And in that regard Dropbox has been doing a really good
job and put some effort into it. The product itself is not superior to
box.com, quite in contrary actually, but the support is much better. (it's
also quite easy since with box.com it's non-existent).

------
olivermarks
Cloud storage is a commodity business and race to the bottom: hard drive
prices already got there as local backup. Failing to see what the ipo upside
is here.

A bit melodramatic but the cloud is very new and untested against natural
events such as a coronal mass ejection, which could wipe put huge amounts of
stored data...the sort of thing that arguably should be in IPO risk lists but
isn't...yet...
[https://en.wikipedia.org/wiki/Coronal_mass_ejection](https://en.wikipedia.org/wiki/Coronal_mass_ejection)

------
ge96
If only it didn't use ~1GB of RAM, I used to be a huge fan of Dropbox and I'm
still looking for that feature in coding. Something like an auto-github diff
upload. I saw some stuff with this I think regarding the particular text
editor that I use.

My computer's are garbage that's why 1GB to Dropbox is a lot to me.

Edit: I'm curious how OneDrive compares. I have Windows on a junk laptop I
have but I don't use it to work on (too weak). Maybe it has better idle RAM
use.

~~~
sireat
Hmm, I see 3 Dropbox processes two take less than 1MB and one takes 62MB of
memory. Not saying Dropbox is super light but it is not too heavy.

Does Dropbox memory usage grow with storage? Asking because I am only using
5GB of storage.

------
nkkollaw
Finally an IPO that makes sense to me.

I can understand the value of Dropbox. Stuff like Snapchat being worth
billions just make me feel like I don't know how anything works anymore.

~~~
sbardle
Dropbox is a utility/product/feature. It can be replaced.

Snapchat is a network and therefore is open to network effects, i.e. the sum
becomes greater than the parts.

I think in ten years time Snapchat will look the more justified valuation,
providing they execute.

Dropbox are going to struggle unless they can innovate ontop of the current
business model.

~~~
nkkollaw
> I think in ten years time Snapchat will look the more justified valuation,
> providing they execute.

They execute what, exactly? I looked at their investors page. Doesn't make any
sense. It's a sexting app!!!

------
asimpleguy
I don't know about Dropbox but for example Twitter is still losing money since
2012. Twitter is way overvalue in the market and has lost around $2 billion
since inception. Obviously it's not the same as 2000, these companies have
revenue, but some of the are not making even a profit. If they continue to
throw tech companies with revenue and losing money as IPOs prepare for the
next tech bubble. It will burst.

~~~
sfeng
If you read the article, Dropbox is bringing in a billion a year and is almost
profitable.

~~~
meritt
It's bewildering to me how a company can have $1B in revenue and not able to
make file-syncing profitable.

~~~
pm90
Why? Amazon made _billions_ in revenue for years and only recently became
profitable.

~~~
bigtimeidiot
> _" Why? Amazon made billions in revenue for years and only recently became
> profitable._"

Do you think the complexity of Amazon and Dropbox are even in the same
universe?

Disclaimer: I like both companies.

------
whatevorama
I love dropbox but I ended up on google drive. I happen to have a business
email address with them and I got 30G free then updated. Dropbox is better
than Google but I was already on Google. If they offered some sort of package
like Google does, they could have more people onboard.

------
sova
Way to go Dropbox. Just be prepared for when Operating Systems start shipping
this functionality built-in. If you can prepare for that inevitable reality
(by, say, providing modules or something for specifically that) then it'll all
go great. Great werk so far. Started using dropbox in college and I am an
extremely satisfied user. Let me just cue up some Fleetwood Mac

------
mankash666
It appears like Dropbox has ~2X the revenue of box with possibly higher costs
in marketing and sales, since their investors are pushing for growth. Assuming
these higher costs to be nullified by operating their own datacenters, their
(fair) valuation is ~$5B. Anyone still wondering why they aren't hurrying to
an IPO, what with a plum $10B private valuation and all

------
turingbook
Steve Jobs said when his acquisition proposal was refused by Dropbox founders:
it was a feature, not a product.

This is the sword of Damocles for Dropbox.

------
yueq
I think it means the opposite. If a public offering is head, why do they even
need line of credit?

------
joshua_wold
Thought they were cash profitable??

------
akulbe
Why can't regular folks seem to get in on an IPO? (Admittedly, I don't
understand how all the stock stuff works. It just seems like only big
investment firms are the ones that are able to do initial investments.)

~~~
sbov
IIRC Google's IPO did some sort of auction. But I don't know if it was
available to regular folks or not, or how it turned out in the end.

~~~
srtjstjsj
It was bad for Google and the investment banks, good for investors. It got an
astoundingly low price, in part because banks boycotted the IPO to punish
Google for the auction -- share price nearly doubled in the first 2 months,
tripled in the first year, and kept growing.

[http://www.msn.com/en-
us/money/stockdetails/history/fi-126.1...](http://www.msn.com/en-
us/money/stockdetails/history/fi-126.1.GOOGL.NAS)

[https://www.wsj.com/articles/SB109036846726869268](https://www.wsj.com/articles/SB109036846726869268)

[https://archive.fortune.com/magazines/fortune/fortune_archiv...](https://archive.fortune.com/magazines/fortune/fortune_archive/2004/08/23/379378/index.htm)

------
flow99
What can I use for free photo gallery storage if I do not want google or
dropbox?

~~~
frik
Flickr

------
JohnJamesRambo
Investing in Dropbox to me sounds like investing in some other dinosaur like
Blockbuster Video or Office Max. Eventually I just don't see people needing
Dropbox.

------
iclabs
Can't say I'm a huge fan of Dropbox

~~~
zeroer
There's lots of things I can't say.

