
Dropbox Raising Massive Round at a $5B-Plus Valuation - ssclafani
http://techcrunch.com/2011/07/12/dropbox-raising-massive-round-at-a-5b-plus-valuation/
======
ianl
Sounds like a round for the founders and employees to sell some shares (called
a series f?), unless Dropbox has some major expansion planned to build its own
CDN and data centres instead of using S3. The amount of savings at there scale
(200 million new files / day [1]) would be huge as data via S3 is already more
expensive then running your own bare metal boxes. I would imagine that Dropbox
pays some sort of bulk price, but I can't find any information.

I don't think the 5 billion dollar valuation is out of the ball park
considering that they solve a problem that a lot of people encounter including
my mother. Their solution is simple and elegant and seems to work. Last
statistics I heard they had 25 million users [1] and growing, while I dont
know how many of those users are active subscribers I can imagine the
conversion ratio is much higher then normal freemium products.

While there has been a lot of anti-Dropbox news in the tech press lately, we
need to remember we live in an information bubble that doesn't reach the
normal user.

[1] [http://techcrunch.com/2011/06/17/billion-dollar-valuatio-
clu...](http://techcrunch.com/2011/06/17/billion-dollar-valuatio-club/)

~~~
Joakal
There's a difference between 200 million new files and 200 million 'uploaded'
files.

eg a song has a fingerprint. If 100 other users 'upload' the same song, it's
counted towards their usage but no actual upload or storage is performed,
saving costs.

Pretty clever on their part :)

~~~
blantonl
_Pretty clever on their part :)_

It is actually pretty standard. Deduplication is a very common method for not
duplicating the same content on shared storage.

~~~
Joakal
OT: How do you add italics to text? I find it preferable than adding >s.

~~~
patrickk
You may find these helpful, the formatting options for HN:

<http://news.ycombinator.com/formatdoc>

------
mlinsey
41 days ago, PG's estimation for the sum of the value of _all_ YC companies
was 4.7 billion. <http://ycombinator.com/nums.html>

Congrats to Drew, Arash, and the whole Dropbox team.

(Ordinarily I would say that giving congratulations before a deal is confirmed
as closed is a jinx, but at this point there is no such thing as jinxing
Dropbox. Their ultimate success, whether this report is true or not, is
inevitable.)

~~~
blantonl
How does PG value YC companies? Is this process public knowledge or something
internal to PG?

~~~
mlinsey
From the link: "For 18 of the top 21 I used the postmoney valuation of the
most recent funding round. The other 3 had grown significantly since their
last round, and to estimate the values of those I used the opinions of
independent experts and the valuations of the funding offers they are
currently receiving."

------
David
Dropbox has traction and paying users. Why do they need $200 million? Of
course it's not just a two-man gig anymore, but... what is it for?

If their business model isn't supporting the growth they want and they're not
going to change it, is throwing money around going to be all that helpful?

Maybe I'm doubting that they'll be able to bring in that many new users
because I can't imagine how anyone hasn't heard of dropbox by now -- which is
pretty silly. I've just known about it for a long time because of HN.

Or maybe there are economies of scale that I don't know about, and by spending
$x they'll be able to save/make $y>>$x?

(...Are they going to get off of s3, set up their own datacenters?)

~~~
ssharp
Current traction and paying customers may not be enough to satisfy their
growth/evolution goals. The cash could be used for a lot of thing. One guess
is that they may be trying to ramp up the attack the enterprise storage/backup
market and need a war chest to have any major impact.

Also, plenty of people who could really use a service like Dropbox have not
heard of it. Even with their current product offerings, there is an ocean of
customers who haven't been reached yet.

~~~
keenans
They still need to work on their pricing. They have an opportunity to convert
quite a few of their non-paying customers if they'd simply offer a plan
between 2GB and 50GB.

[https://www.dropbox.com/votebox/90/better-more-affordable-
st...](https://www.dropbox.com/votebox/90/better-more-affordable-storage-
prices)

~~~
seabee
Don't forget, they also have an opportunity to downgrade quite a few of their
paying customers from 50GB to e.g. 20GB.

------
acak
More than 4 years ago, a post on HN by Houston asking for a review of DropBox:

<http://news.ycombinator.com/item?id=8863>

[Edit: Corrected link. Thank you.]

~~~
Huppie
And if I remember correctly that linked to just a video of how dropbox works,
without Drew actually having a working product (but you couldn't see that on
the video).

------
pbreit
Kudos to them on a fine product and excellent execution but, wow, this seems
pretty frothy. And I don't have a huge problem with some of the other big
valuations (Square, AirBnB, etc). But DropBox is going to have to find some
other interesting business for investors to see any of that money. Just
storing files doesn't seem like it would fit that bill.

------
joshu
and to think i balked at investing in dropbox at 20m pre!

~~~
jayzee
Can you tell us why you balked? Market size?

~~~
joshu
20 seemed too high, is all. lesson learned: if the price is shooting up, there
might be a reason.

------
schiptsov
No, no, it is not a bubble and 5 billion dollars is just a several hours of
printing.. ^_^

------
carterac
Very rough mental math: At a $5B valuation, PG's share of Dropbox should pay
for ~10,000 YC investments

~~~
ianl
Did you factor in for dilution, they previously raised a 7.2m round.

~~~
staunch
We also don't know what percentage YC took. They might have taken a bit more
or less than 6%. Regardless, this valuation puts their equity in the $100
million - $350 million range.

------
mynameishere
Almost the same price as United States Steel (6.2B).

------
savrajsingh
Congrats Drew and Arash, awesome stuff!

------
Mattcodes1
All this talk/speculation about how the valuations are done and Amazon S3
costs etc.. Just log in to Dropbox with email ceo@dropbox.com or
partner@yc.com on dropbox.com with ANY password and look in their docs folder,
S3costs2011.xls and valuation.xls. duh.....

~~~
wladimir
Let's hope they will invest at least some of their newly-gotten money into
improving their security.

------
dplakon
Awesome! I use their service all the time, I'm glad to see them doing well!

------
mtogo
In the past year, Dropbox has lied to it's customers about encryption and how
much power Dropbox has over the data (!!!), shown that they deduplicate before
encrypting (and that they can view files in your Dropbox and make them
unsharable), and finally allowed all Dropbox accounts to be logged into
without a password, for _four hours_.

And yet they are at a $5B+ valuation?

I'm amazed at how dropbox seems to be able to make any mistake and keep going.
_Very_ few other companies are capable of this. I'm not sure whether i should
congradulate them or be disappointed.

------
mayop100
Wow. Good for them! Go Dropbox.

------
danecjensen
What's worth more YCombinator or Dropbox

------
keke_ta
Congrats to Dropbox and YC. Awesome!!

------
danbmil99
Congrats also to Trevor, Jessica, PG.

------
rorrr
With the revenue of 100M, that valuation is insane.

S3 costs must be eating most of the revenues.

<http://www.businessinsider.com/dropbox-revenue-2011-3>

