

Dropbox Chooses Investor Group, Valuation Set at $5+ Billion - amirmc
http://techcrunch.com/2011/08/13/dropbox-chooses-investor-group-valuation-set-at-5-billion/

======
johnrob
I'm somewhat surprised that a file sharing company can get a valuation this
large. Don't get me wrong, the product is great, but I'm skeptical that the
"file sharing industry" is big enough for valuations like this. Some quick
math:

A 5 billion valuation implies earnings of at least 250 million/year. Assuming
paying customers are worth 240/year and represent 5% of the user base, dropbox
would need roughly 21 million users. Maybe 5% is high; if 4% is better then
the number jumps to 26 million, etc...

There may be billions of people on earth, but how many are sophisticated
enough to really need file sharing? Also, there are other players such as box
that will claim some of those users.

Dropbox is awesome, but I can't understand the numbers on this one.

~~~
Havoc
Agreed. My first reaction was "way too high". The problem imo is that they
don't have a huge edge over the competition. Hell even Ubuntu has a semi
comparable product. Not quite as user-friendly, but do a few easily duplicated
UI difference really justify billions?

~~~
heynk
Justifying billions is of course a stretch, but having a really, really smooth
UI definitely does make a difference. Its easy to underestimate these things
in favor of technological advantages, which dropbox doesn't really have
compared to every other personal file hosting site. But normal people really
don't know/care about that, for them all that matters is an easy UI that just
works. And dropbox does just that, IMO better than any others

------
far33d
I'm sure hundreds of second and third tier VCs piled on with ridiculous
valuations in the hopes that they could add a "hot" company to their website.
If this article is correct, Dropbox did the right thing and decided to go with
smarter money.

------
plusbryan
Congrats Drew and the rest of the team. Quite an accomplishment!

------
benologist
tldr: they're rumored to have selected investor/s for a rumored amount at a
rumored valuation.

------
dont
I tend to see the software world as divided between "Tools" and "Platforms"

Platforms are systems that enable a large number o similar behaviors -- Google
is the search platform, Amazon the shopping platform, Windows is a platform as
is MS Office. Platforms tend to be a winner take all business, as there are
significant advantages to scale as well as strong network effects.

Tools on the other hand do one thing and one thing well. Most products start
off as tools - then there are 2 ways to go, either become a platform (eg:
facebook) or get bought by a platform (eg: flickr).

I don't see how dropbox is going to be worth $5B as a file sharing tool, nor
do I see any platform buying them at that price.

So my question really is -- what is the dropbox platform gonna look like? What
do the investors know that we don't?

------
sprovoost
Just one more problem: as more and more great platforms become available,
there seems to be a trend of users storing different kinds of data in their
own specialist platforms. Photos on FlickR, music on Spotify, movies on
Netflix, simple documents in Google Docs, code on Github, books on Amazon,
mail in Gmail, etc. That leaves less and less stuff for Dropbox.

In particular, it leaves less gigabytes for Dropbox, because the big stuff is
taken care of. So with the price of storage and bandwidth dropping
exponentially and the amount of "other" data dropping, it's going to be hard
to sustain a freemium model just based on a storage cap.

------
alFoX
Have I chance to have open source client? I don't trust blobs on my computer.

~~~
mtogo
<https://www.dropbox.com/downloading>

~~~
Maxious
The source on that page is for the Nautilus (GNOME File Browser) extension
that adds right click menus and special icons to the file browser and
"dropbox" a command line client for talking to the dropbox daemon in the same
way as the Nautilus extension.

The secret sauce is dropboxd which is not open source.

------
rokhayakebe
Sometimes I feel like there is a little jealousy among the startup community
which translates into _I like this, but the valuation is absurd_.

Dropbox could be worth that much, I believe. Some say their business is not
defensible because anyone else can build a similar product for free. Well
until someone has, nobody has.

~~~
sprovoost
The problem with owning shares is that it takes a decade or longer to earn
back your investment just through dividends. I'd say it's almost certain lots
of competitors will be crowding the space with that time span.

------
fourspace
Sigh, another article that celebrates funding as some type of success. It
isn't. What matters is what they do with that money.

~~~
pg
What in the article celebrates funding as success?

~~~
fourspace
I admit, my post was an overreaction. My concern, and the reason I've stopped
reading TC, was that we're in a culture that celebrates VC funding as some
sort of business success. It's a milestone, but it's not success (in my eyes,
anyway). Real success, which Dropbox certainly has reached, is when you build
a sustainable company where your customers pay you for providing value, not
investors. Investors eventually want their money back.

That said, my comments were definitely not targeted at Dropbox and I applaud
that team for building a great product and providing great value.

~~~
alain94040
Fair enough. But funding is one of the few publicly visible milestones that a
startup can achieve. One could argue that it's almost a _proxy_ for success.

Either that or we should all get excited with a press release from Dropbox
saying they reached 10 million users. But that doesn't excite geeks (do you
care if Apple sold 20 million iPhones this month? No, you care about the
iPhone 5).

~~~
fourspace
I absolutely would get excited for Dropbox saying they reached 10 million
_paying_ users. =)

