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Dropbox buys HelloSign (YC W11) for $230M (techcrunch.com)
346 points by azhenley 19 days ago | hide | past | web | favorite | 156 comments

HelloSign is one of the few utility SaaS products I use somewhat regularly that just nails it perfectly (and for free). Please don't screw this up, Dropbox.

Second that. I came here to say the same. Been enjoying Hellosign as a paying/free customer for years. Absolutely love their product.

I don't mean to ask this ironically; how do these companies come up with these numbers during a sale? Jet.com was sold for $3 Billion, but Craftsman Tools was sold for only $900 Million.

I don't really know anything about HelloSign, but can someone tell me roughly why they might have come up with the $230M number?

Will chime in with another valuation metric for a company like HelloSign: attach rate [1]. In this case this concerns how much of DropBox's (much bigger) customer base can be persuaded to buy HelloSign's products due to single sales process, tight integration, etc.

DropBox has ~300k paid business accounts. HelloSign is ~$500/yr for their basic small-business (not solopreneur) plan (I believe HelloFax is separate and starts at ~$100/yr).

Assume DropBox can sell e-signing to a third of their business customers, that means HelloSign would be (relatively quickly) worth $50mm/yr in revenue to DropBox. This is before accounting for any sell-through of HelloSign to their ~11mm paid individual accounts, or any sales at all at HelloFax. (I'm sure both of these are a part of an actual investment thesis.)

Also note this assumes HelloSign comes into the deal with zero non-DBX customers, which is obviously not true. HelloSign is also doing valuable new work, so I would expect these numbers to be on the low side of expected outcomes.

Is $50mm/yr worth it? DBX currently trades ~7x revenue, so that $50mm in incremental revenue is, all things equal, worth about $350mm in market cap for DBX. So their backstop is they are buying $350mm++ in market cap for $230mm.

1 - https://en.wikipedia.org/wiki/Attach_rate

Would you say this is another way to explain the value of distribution channels/bolt on acquisition?

A company can have an incredible product and weak distribution (and not be very valuable per se), but the company’s value can be multiplied by a lot if the product can be folded into a very strong distribution channel (salesforce, for example).

Great thoughts on CAC, etc. certainly a fair way to value a sale.

Also, a few things

1) How much would it cost for Dropbox to build and acquire/steal those users?

2) Even if 1) is not that high, what is the opportunity cost for dropbox to do so? Yes, they could move a bunch of engineers and PMs to work on it, but then they wouldn't be working on other more important parts of Dropbox.

3) It's not always about how much you get by buying a competitor, it's sometimes about how much you will lose in the long-term if that competitor doesn't go away. Think Instagram and Facebook. $1B sounded crazy back then, but how much would have Facebook lost if instagram kept growing and growing?

> but can someone tell me roughly why they might have come up with the $230M number?

M&A guy here. Generally companies are valued at EBITDA * Multiple. However when it's a strategic acquisition (which this is) then they tend to adjust EBITDA around an investment thesis. For tech companies, this adjustment can be fairly drastic and multiples can get crazy (general market is about 9x right now, but 15x+ for software providers). There are too many theses to enumerate here, but some commons examples cost takeout, customer cross-sell, resource consolidation, etc.

That’s all fine and dandy but EBITDA * X = Y is solvable for literally any Y so long as EBITDA is nonzero. You just have to pick the “right” X, which makes this formula essentially meaningless. You can have a negative EBITDA and still be purchased for millions (indeed this is “common” for startups).

The reality is that the buyer pays an amount they think they can make back in some reasonable timeframe by some means.

> pays an amount they think they can make back

You're correct - there is some ROI associated with the acquisition price, and that ROI is generally driven by earnings potential, and hence the adjusted EBITDA.

Right. The "adjustment" seems to have such a wide range that it makes it almost meaningless, though. Or put another way, I feel like Price/EBITDA produces a number that can be valuable for the sake of sanity checking an offer. It doesn't seem valuable in the other direction. i.e. The multiplier is an output rather than an input to the formula. Picking a multiplier first is basically arbitrary. Comparing the multiplier a price yields has some value but doesn't really drive the price choice.

Esignature is a huge business and the incumbents have a high cost structure or a history of excessive price increases. (Would you want to build your strategy around Adobe?)

This gives Dropbox something to anchor against. Both Google and Microsoft improve every quarter, while Dropbox is mostly the same, with the same premium pricetag. I could move my whole company to Dropbox for a couple of million, OneDrive is $0.

Yeah, but I get a lot more value from DocHub. HelloSign is not that good as a product anyway. Lame purchase, which would only increase my cost of Dropbox, which will force me to move to Google One. So, essentially, Dropbox is stupid squared. DocuSign and Adobe are still leading in the e-signature space.

I'm with you, and just moved to Google One myself (after subscribing for almost a decade). The value for dollar just isn't there for most use cases -- it's not worth paying 2x for a product missing key features like fulltext search and dealing with the constant, never ending upsell.

Dropbox seems to be hyper-focused on a market of graphics and other professionals where the speed to sync is their primary benefit. That seems like an unwise strategy to me, but I can see where those users would benefit from an esignature solution.

HelloSign also has a history of excessive price increases.

We were using this in our app when it suddenly became ridiculously cost prohibitive to do so, so we had to remove it.

As a second data point, we looked at HS, too. We alter our templates so often that their inflexible pricing rendered them completely out of the running. Other e-sign solutions were just as bad in that respect. IAAL, and the dirty secret is that “handwritten” scrawls aren’t required to form valid electronic contracts. It’s purely a measure to assuage the social presumption that a thing is locked in when all the parties scribble on it. So, we rolled our own workflow with clickwrap assent instead.

We did something similar. Needed e-signatures in our SaaS HR app but when considering all players in the market, including HelloSign, it was really cost prohibitive. We ended up rolling our own e-signature functionality which our users are totally happy with.

Correct it’s the intent. Capturing consent, auditable trail, with a dash of tamper seal and a sprinkle of sugar ;) (do not take my comment as literal advice, also my comments do not represent my company and are my own.)

revenue * multiple

let's say $10m in ARR * a 23x multiple

The way you get to the multiple is a combination of how fast the revenue is growing, how long you think that will keep up, and the margin of the revenue.

Craftsman Tools, for example, was probably not growing much or shrinking and likely had low margin revenue but I don't know.

Revenue is almost meaningless. At least use a multiple of profits or of net income.

You know, you can have a crazy revenue, and still lose money, and your company can be bankrupt in a few months.

Those issues end up being reflected in the multiple.

Revenue * multiple is just a common way of talking about it, especially because companies within the same industry tend to have similar multiples. In reverse if you notice two public (since the information is easy to find)companies with seemingly-similar businesses that have very different multiple, you can start looking into why, and the quarterly financial reports with high-level numbers like cash burn, outstanding debt, profits, or net income would be a great place to start :)

> Revenue * multiple is just a common way of talking about it, especially because companies within the same industry tend to have similar multiples.

This is the common way media talks about it, either because they are (1) uniformed or (2) they only hear of top line revenue.

Companies are typically acquired for EBITDA * Multiple. However when their is a "strategic" acquisition (which this one is) then there is all sorts of weird math that potentially goes on.

Examples: (napkin math)

- Company being acquired has $100M in revenue, and $20M in EBITDA. Post close, they realize $20M in synergies, so they might buy the company at 20x * $40M Adjusted EBIDTA ($20M EBITDA + $20M new EBITDA from synergies)

- Company being acquired has $100M in revenue, and $20M in EBITDA. The acquirer is going to remove 100 engineers post close (100120k/yr = $12M) and therefore the new EBITDA is going to be $32M, and the company gets bought at 20x $32M EBITDA

At the end of the day, the ROI is really what matters.

It's also worth noting - most M&A does not realize the hypothesized deal value. So yes people are right to be critical, but without full details, being precise about what the true value of a company is nigh impossible.

All acquisitions are “strategic”. Even holding companies acquire assets that they believe accrue toward their strategic vision.

The EBITDA calculation is at best a sanity check for the acquirer.

> All acquisitions are “strategic”.

I'm just using industry nomenclature. When people sell to a PEG, they don't say "we're selling to a strategic".


I said the multiple is based on the margin of the revenue, aka, how profitable the revenue is.

Revenue is the proper starting point as it is the thing that can or can not be optimized and grown. Profitability of the revenue (now vs. future) is obviously a huge driver but it is not the right starting point.

In the formula you provided how is the number for the multiple arrived at? Is that the multiplier that will be realized at some future date based on the current rate of growth? If so what would that future date be - the next round of funding, an IPO, something else?

It depends on the margin of the revenue and the growth rate primarily

So is there a generally accepted formula for calculating that given those two inputs?

Would revenue or assets be used?

So once the accounting statements are reviewed, then most of the acquisition talk is just a discussion over a multiplier?

It all factors in but realistically with SaaS there is little in terms of fixed assets.

Most likely a lot of the additional factors for the valuation multiple calculation are going to be around efficient customer acquisition, sales cycle payback periods, and different income percentages (operating, net). X factor would be if other competitors of the acquirer are also bidding on the acquiree.

Depends on the business. Something like Zipcar or similarly asset-heavy would incorporate assets in an MnA valuation, but SaaS would not unless they're flush with valuable patents.

I've always wondered this myself. I ended up taking a course on financial valuations. My novice takeaways were there were two approaches:

1. An intrinsic, detailed "bottoms up" approach by projecting future cash flows and discounting their value back to the present day. There might be 2 stages, the first years of explicit growth assumptions and the second along some kind of long term growth rate.

2. A market based, "top down" approach where you find comparable transactions and make adjustments for different levels of investment, leverage, to try to get an apples to apples comparison.

In either case, you also factor in gains you'd get from a strategic acquisition like eliminating redundant departments. Compare this to an acquisition by a PE firm, that doesn't do anything other than buy and sell equity in companies.

What I realized was it wasn't a science. Sure it deals mainly with numbers. And from an outside party you think it's this really rigorous, matter of fact assessment. But there's lots of areas where there are just guesses, albeit with a lot of money.

It should be something derived net present values or discounted cash flow. Same general idea: what is the summation of future cash flows distributable to owners after a suitable discount rate (plus liquidation value, maybe).

It's hard to extrapolate rapid growth correctly, but it can lead to very high present values (ie ~20x sales, depending growth curve of expenses & current margins).

The same formula, given a 10% discount rate zero growth implies a ~9x multiple on earnings, a pretty low valuation.

Craftsman Tools was a brand, if I recall correctly (made by Danaher?). So while asset light and potentially higher margin, there probably wasn't as much liquidation value there. If growth rate wasn't high or decreasing the predicted valuation on earnings might have been low.

Then you just run into human factors like fomo/bidding wars (maybe, like Nicira, Heptio?), things that impact valuation like perceived higher or low risk free rates that might impact the discount rates that are used, et cetera.

I hate faxing and signing real documents. Hellofax fixes that and I've been using it since 2011 or something.

Many of my clients (F500) use HelloSign and DocuSign. They are not DropBox customers. I think what follows is rather obvious.

EXCELLENT! I've been saying Dropbox needed to add this type of functionality to their existing offering for a while now so this is very exciting.

It's a natural fit with everything else that they are doing with Dropbox Paper.

Now they just need to add a direct integration for something like eFax and it will be on the short list of indispensable SMB tooling.

EDIT: Didn't realize HelloSign had the fax capability already...so all around great news. This is probably the most well aligned acquisition I can recall seeing.

This acquisition will fail if Whitney, Neal and the HelloSign team isn't given the freedom and authority to direct integration, marketing and product direction going forward.

HelloSign has demonstrated competencies Dropbox has not. Great that Dropbox nailed sync, desktop integration and sharing years ago; but since then they've done little to show any vision or execution in marketing, sales or product direction.

As a Dropbox shareholder and user I am hoping the Dropbox team will give their HelloSign colleagues the freedom and authority needed to save Dropbox from almost certain failure. The sync, store and search ship sailed long ago.

There are two more acquisitions I'd like to see Dropbox make this year of private companies to round out the product line.

Have you used Paper? Also an acquired team, and a great product that has seen a bevy of improvements since being under Dropbox.

Paper is a security nightmare. Every document is automatically accessible publicly if you know the url. You need to set each document individually to private. At least for the Personal/Pro plans.

The URLs contain a long random string in them, no? This makes them unguessable. Public-by-default seems to enable easy sharing of documents. I would hope that corporate plans would impose stricter privacy controls, but for personal use, being able to share a document just by sharing its URL seems very convenient. Though I suppose defaulting the permissions such that anyone with the URL can edit the document seems maybe too permissive.

This is security by obscurity, it's still technically possible to access the documents. Like if you accidentally revealed the URL somehow. You shouldn't have to worry about things like that.

Surprisingly, it turns out that using security based on a URL with a random string is /not/ security by obscurity.

The security pattern of a URL with a random string is security-equivalent to a pubic username and a random string password, and also equivalent to the security pattern of a bearer token: so long as the URL is shared only with authorized users, it's the same security hardness.

The pattern can tune the security by using more randomness, such as more characters. There are implementation areas to consider, such choosing a random number generator with high quality randomness like /dev/urandom. There are some access control areas to consider, such as all the people having the same bearer token, which means there's no way to do finer-grained permissions per-user or per-role or per-attribute. There are some user interface areas to consider, such as if a user/agent doesn't treat the URL as secret, because it shows content rather than masking characters such as "*".

For comparison, "security by obscurity" means there's a weakness in how the security is built, such that if you saw the source code, or the physical insides of a lock, then you would understand more about how to crack the security.

In URL pattern, an example of security by obscurity would be if the URL string was not actually random but instead was simply incrementing, or was based on a reversible function of the time or username, etc. If you read the source code, you would discover that there's guessable sequence or guessable trick, and thus become much more likely to break the security.

Edit: I strongly favor higher security, and fine-grained access control, and multi-factor authentication, and UI/UX masking, etc. This post is just to look at security by obscurity.

Browsers do not treat URLs as secure. If you just go to the page and happen to be live-streaming on Twitch or whatever, anyone can access the document because the information is printed visibly on the screen. This makes it starkly different from a password.

And if you type your password onto a keyboard and happen to be live-streaming your physical self on Twitch or whatever from an angle where people can see your hands, they know your password too.

I did not know this distinction, thank you, it makes sense!

Whatever the semantics of security by obsucrity, it's still not ideal that an unintentional screengrab or screen share could reveal the fully editable path of a doc

(i much prefer the google docs method of being able to limit to specific orgs or people)

It’s obscurity in the same way a password or a bearer token is obscurity. Which is not what anybody would reasonably call security by obscurity, as your definition includes any use of a secret.

And easily accessible to Dropbox employees?

Well, I guess they do have access to all of your files anyway?

If they do it right some Dropbox employees might have access to it, but it should definitely not be easy.

Think putting shards of encrypted data together and then decrepyting it by hand to get to the actual file. That's definitely (highly senior) dev level access and a lot of manual work.

Literally all I want from Dropbox is to sync files between my various devices. I am not interested in doing anything else with it.

I think improving on the syncing-workflow and enhancing it to offer more then just syncing would be something useful. Something like automated actions, or filters.

I store sourcecode in my dropbox, and I really would prefer a way to not sync certain junk-files from compiling-process. Or let it automatically commit to a git-repo if there are changes in certain folders. Something like IFTTT for files seems a sane solution that dropbox seem to miss for a long time now.

I do something like this with their CLI to ignore node_modules folders for js dev on mac/linux:

    exclude_folders=$(find . -type d -name "node_modules")
    dropbox exclude add $exclude_folders
    dropbox exclude list # Sanity check

Incron[1] is pretty great for "do X when file Y changes"-style rules.

[1]: http://inotify.aiken.cz/?section=incron&page=about&lang=en

Thats what I wanted it for. Then a single license magically turned into 5 enterprise licenses, became impossible to cancel, and drove me away from the company forever. I mean...$750/yr to sync files?

Please dont mess up HelloSign like you did with the parent company!

It needs a lot more work, the search is horrible, and there are a number of features needed to take it to the next level. So far their feature velocity has been tepid. I like a lot of the ideas, and appreciate a viable google docs alternative, but I fear a Dropbox-level of feature development will doom Paper long term.

I'm forced to use Paper as a wiki now. Search, discoverability and extensibility is so bad that I miss Confluence....

Ouch. Have you used something in that space that is better?

Paper is excellent.

Paper is an embarrassment for a company with Dropbox's resources and past accomplishments. It’s a half-hearted effort that vaguely reminds me of Drop.io (which was terrific), with a small fraction of the utility. If you're going to make a centralized and open repository for specific content then benchmark against what works(ed).

Why are you a dropbox shareholder if you think that the company faces "almost certain failure"?

I ask myself that question every-single-day. I'm hoping they wake from their slumber and start competing against Box, MSFT, Google, etc., with real innovation. This may be a start... even if they had to buy it.

Sounds like you are starting to become an emotional investor in them, which is the worst type of investor.

From the article: "Whitney Bouck, COO at HelloSign, who previously held stints at Box and EMC Documentum, said the company will remain an independent entity. That means it will continue to operate with its current management structure as part of the Dropbox family."

1 point by CPLX 0 minutes ago | edit | delete [-]

> The sync, store and search ship sailed long ago.

Perhaps. But that ship appears quite capable of generating well over a billion dollars a year in revenue, so...

Would it make sense to give them decision making power over the rest of Dropbox's marketing and product direction, not just HelloSign's pending integration?

Correct. I think the HelloSign acquisition is an attempt to position for medium and enterprise sales. However, I suspect Dropbox doesn't have competencies to execute on that in marketing or sales. Again, there are 2 or 3 more acquisitions they need to make... now... to make all this tick.

and those companies are ...?

which two?

This is awesome news, congrats folks!! Have relied on hellosign over the years, including doing all of my home buying paperwork with it.

I've used HelloSign as well, but every other app that I used that Dropbox bought has been discontinued so while I'm happy for the team, I don't have high long term hopes for the project.

This. After Dropbox acquired and then unceremoniously killed one of my all-time-favorite apps (Umano), I greet most of their acquisitions with dread.

Ugh, yeah they bought and then slowly killed off Mailbox. :(

Pour one out for Hackpad.

There's something I never understood about e-signature services: how are they legally binding? Why do we need them at all? The end users don't have control over any of the keys, so it all hinges on the e-signature service telling the truth. It's significantly less secure than say, S/MIME with a proper CA-signed certificate. Is the bar for legal "signatures" really that low?

The law isn’t like programming.

The reason you sign something is to show clear intent that you intended to agree to something.

Nobody’s under the impression a paper signature cannot be forged either. It’s no different.

It’s social not mathematical.

This 1000% percent.

The way the law looks at signatures is about the signaling of intent. The way engineers/tech look at signatures is more about trust and identity. There is some overlap of course, but if the agreement to be signed is of any real importance, nobody is going to take the chance that the identity is false or that there were no witnesses or a mis-understanding of what is in the agreement, so signing is done with wet ink.

Then that leads to my second question

>Why do we need them at all?

Why not just email the contract, and the person replies back with "I agree to this"? Simpler and cheaper than paying $150/year.

Because the ceremony of a signature has been socially recognised for thousands of years. That's what our society expects.

>Because the ceremony of a signature

Come to think of it, I remember "signing" pdfs in adobe reader by clicking a form field that produced a signature similar to[1]:

   John Smith
   Digitally signed by
   CN=John Smith
This would satisfy the "ceremony" requirement. According to adobe[2] it looks like you can do this with self signed certificates, so it's completely free as well. But this option is significantly less popular than hellosign/docusign. I guess the value-add for them is having a web interface, but I'm not convinced it's worth the $150/year (significantly more for "business" or "enterprise" plans) for a web interface that essentially signs pdfs with self-signed certificates.

[1] https://helpx.adobe.com/content/dam/help/en/acrobat/11/using...

[2] https://helpx.adobe.com/acrobat/11/using/signing-pdfs.html#S...

The main benefit is around workflows. First and foremost, if you are in a position where you need external people to sign documents (say you're a photographer and need signed releases), it's a lot easier to send someone a link to the standard document and get them to sign a release then to email them and then call the person and walk them through digitally signing a document. Especially if you're doing this 50+ times a year. And you typically get the documents signed much quicker. It's pretty much the difference between having to mail in a check for every payment vs using a web portal. It's more convenient and there's a faster turnaround time. Oh and you've removed the risk that something isn't signed correctly (was there a section that wasn't initialed?) or that something was redlined. It's certainly not for everyone or every business, but there are certain use cases where the money is well worth it.

It's also a huge win if you need multiple people to sign a document.

Without a tool like HelloSign you need to email the document to each person one by one to get everyone to sign on the same "paper". It's a mess and takes up a lot of time and coordination.

With HelloSign (and other similar tools), you can just send out an email with a link to everyone at once. They can sign the document asynchronously in whichever order they want, and when everyone has done that, you get a notification.

So many people still put such huge value on the "handwritten signature" part. Even though it isn't actually that strong (the digital signature from even a self-signed certificate is definitely stronger), the ceremony of having something that you need to scrawl with your fingers or a stylus/pen still matters psychologically to so many people.

(At a past job I was asked to work on a digital signature product and very much the core and just about only requirement was digital ink square that worked on an iPad. Everything else didn't matter so long as they had some bitmap of some scrawl that someone attempted with a finger or an iPad stylus.)

You can even satisfy the ceremony of signature in a pdf document by inserting your hand drawn signature in Preview.

Goodluck with that holding up in court.

I think docusign has the best sustinct summary of the bare requirements needed for a electronicly signed document to be recognized as legally binding.


Adobe's failure to make this easy and free is the problem. How HelloSign gets away with not also embedding digital signatures is the amazing part. Physical signatures are terrible security, at least when we switch to digital make it better, not worse.

Adobe still gets a piece of the pie with their stupid certificate extortion scheme.

Want a green check box in reader, provider cumbersome instructions for your end users to trust public cert . Or pay adobe their annual fee for a special signing cert..

It’s only free for a certain number of signatures per form. Then you need to buy some server side tool from Adobe, and $150/yr seems cheap.

MacOS’s preview app also allows you to e-sign.

Easier to argue that you were agreeing to something else, got confused, things were changed, etc. The ceremony of "hey, you are now doing something legally binding" is important socially and legally, and the process with HelloSign doesn't start and stop with the signatures, there's all the handshaking and communication around the event.

You basically can.


> The second class of signatures, which Parmar uses all the time in her practice, is signing one's name to a document electronically by typing your name in one of the following formats:

> For submissions to the Federal court system: /s/Angela West

> For submissions to the Patent & Trademark Office: /Angela West/

> Both the // and the /s/ methods are considered to be legitimate signatures under the Federal E-Sign act, and acceptable enough for the legal industry.

Here's proof of that where Federal courts are concerned: https://www.cand.uscourts.gov/ecf/signatures

Right - and the point is that in a casual email you may reply 'yes that's fine' and is that signing a contract or not? But if we have some ceremony, like a physical signature, or using this // notation, then it's clear what your intent was.

Even a verbal contract has some weight. A "yes that's fine" reply to an unambiguous email is likely to stand up in court. "I, <full legal name> agree to this" is even better.

A formal contract with a real ink signature makes things easier, but it's often not required.

Also, using docusign, etc. are stupid simple for people's who's signatures are needing in multiple places in a document, and initials or certain pages, etc...

My townhouse complex switched from having us hand-sign paper leases to using DocuSign last year, and it's been wonderful.

Being able to just click-sign through a lease that requires almost every other page to be signed is a godsend. My hand genuinely got tired before, and quite frankly, I've lived here over 11 years, and there's not going to be anything in the lease I don't already know, so I don't really give a shit about going slowly through the damn thing.

In my case, it's better for consistency too. My signature is just a random scribble, so at least with DocuSign it'll now look identical on every page whereas it's different every time if I write by hand. The only thing I really care about is my initials, because I insist on writing my initials as a three-way ligature, and DocuSign is great about that, too. DocuSign will let you either pick one of many fonts or let you mouse-draw it, and you can make that decision separately for your signature and your initials. So I just pick one of their stock fonts for my signature and then mouse-draw my initials.

You can do this.

The best way to see signatures, in my IANAL opinion, is as layers of protection. The goal is that the person who signs the agreement has total understanding of what they are signing, and there is a paper trail of intent to abide by the agreement.

To that degree, if the agreement is important and you have a lot on the line if the counterparty decides to re-neg on the agreement, you should probably not do the above. But going in the opposite direction and insisting on notaries and wet ink might go too far in respect to how much effort is required.

Most likely backwards compatibility. You can print an email chain and bring it in front of a judge, but it's probably not going to work very well.

You can absolutely do that. It works between two parties especially when small very well, but doesn’t scale well.

It’s also problematic when you deal with an asshole, as it’s difficult to determine who has the correct version of the message.

I’ve signed offer emails and “agreement to represent” recruiter emails by just replying “I agree” a few times.

Sure, but then why do people use these expensive services like HelloSign, when they could just get away with a "I agree" checkbox, or even a canvas element asking for your signature?


Its no less secure than faxing signed documents.

A fax machine is never going to accidentally put my signature on a document I didn't sign. A bug in an online service could very easily claim I clicked the "sign this" link when I didn't. I don't trust them.

Because e-signatures are a replacement for faxed/scanned signatures, not original, notarized signatures.

There already exist something like this in Scandinavia. I signed my mortgage papers electronically with a digital signature (of a pdf).

There is a government appointed 3rd party company that manages the signing keys (BankID). They implement APIs that others, such as banks, telecom and utility companies can integrate with to make use of digital signatures that are legally binding. The signed documents are stored by the service and the initiating party (the bank).

Electronic Signatures in Global and National Commerce (ESIGN) Act in 2000 https://acrobat.adobe.com/content/dam/doc-cloud/en/pdfs/adob...

How is it any different than signing something physically ? I have always understood signatures to be an honor contract. Once you have signed something, what is the proof that YOU actually signed it other than doing a notary ?

And that is why some cases go to court. That is what a lawyer told me while writing our own internal e-signature tool then asked for a few things to help provide evidence for those cases.

Given DocuSign's market cap of $8B, does this price seem low?

DocuSign makes like $700 million a year.

HelloSign makes less than $4 million a year (according to Crunchbase at least).

If Dropbox was buying revenue then by Docusign's multiple they handsomely overpaid for HelloSign. But they're not buying revenue, so who knows if they over or underpaid.

That can't possibly accurate, right? If their revenue is 4M, the acquisition is 57x their rev. That's crazy. Except if they have long time contracts signed maybe?

CB is usually outdated - unless they're reporting their revenue number or it leaks, it's just a guess.

That would be a rather insane 50x revenue multiple. Doesn't sound right

Dropbox's announcement: https://blog.dropbox.com/topics/company/dropbox-is-acquiring...

"Dropbox is acquiring HelloSign to improve document workflows for hundreds of millions of users."

is this a 70X acquisition multiple? I read somewhere they had ~3mil in turnover?

It doesn't matter. Dropbox didn't acquire HelloSign for revenue. The acquisition was for the tech.

It's called nepotism and designed exits for investors with public funds.

They raised 16m. So it's 14x

Turnover typically refers to revenue, not equity raised.

Neat. I've used HelloSign for several things over the years, with their fax support saving me a ton of time on numerous occasions. They've always been very easy to deal with.

As someone who has never worked in an enterprise SaaS will never fully understand the hype or secret sauce around building and selling eSignature software.

Sending, reviewing, and signing documents is something every business needs to do and is difficult to get right according to all the laws in every region served and all the workflow requirements that companies and users want.

These needs may be "unsexy" compared to another social media app but they drive major value in the corporate world while building strong sustainable businesses.

When these services first came out there were lots of technical hurdles to overcome re: web based PDF signing, but it's pretty straightforward to do nowadays.

I had our co-op built an open-source esignature API, that produces audit logs and has a similar user flow to electronic signature provides like Docusign, Hellosign, Adobe sign, etc.... It took him a little over 2 months to get everything working. Only real difficulty he ran into was scaling and stamping signatures on the PDF, as there wasn't a singly Python PDF library that had all the necessary features.

In the end he got it figured out though - for anyone interested / looking to implement eSignatures in their app, see https://github.com/this-is-ari/libresign - it's MIT licensed.

There are a few big benefits to eSignature software

• Your contracts are all in one place • It's easy to make new ones / send them out • You can see if the other person has opened it etc. • It's easier for them to sign

As an individual it's hard to see the benefit of a lot of this software in your own life, just like it's hard to see the benefit of a lot of corporate IT tools to manage two computers at home. But if you have 100 contracts as a company (which is not very many), having an centralised storage function, an easy way to create new ones (say for bringing on a new customer or employee), and analytics that mean you're not asking "what happened to the ACME contract last week."

A lot of enterprise SaaS tools make it easy to organize things that are simple at a small scale, but become very difficult when you increase things by 10-1000x.

I designed software for the AEC industry in the past. You wouldn't believe how engrained are signatures in their mental model for doing things. So much, that we once ended up builiding a functionality that required a scribble that would get attached to a finalized inspection.

Not like that was different from simply pressing a button and acknowledging some message. No cryptography, no standards about legally binding e-signaturees, nothing. They just wanted the scribble of the inspector attached to the form.

Signatures are basically a way of signaling approval, ackowledging something or declaring intent. I designed that feature and always thought about it more as a intentional friction to make someone think briefly before closing or approving an inspection.

My small business accountant worked this way. You can upload docs to their portal and e-sign the required contract or pay extra to have a face to face where you hand it all off and sign in person.

You have no idea what kind of computer or technical expertise is on the other end of situations like this. The value add by e-signature SaaS providers is minimizing the amount of time the accountant employees have to deal with helping people sign docs.

because printing a document, signing it with a pen, taking a photo of it, and emailing it back is a thing rich investors keep having to do.

You can sign docs with free Apple software on Mac/iPhone

I wonder what was their revenue?

Wow. I’ve been a user since the beginning and I seem to recall a point where they almost closed their doors. Talk about it paying off to keep going.

Hmm... the headline has me wondering what was the first time one YC startup bought another YC startup.

Is this the first time? Or has it happened before?

Dropbox previously acquired Hackpad (YC W12), Snapjoy (WC S11), and TapEngage (WC S11).

Thank you!

Reddit was a merger. I assume stock was exchanged.

Does this include HelloFax?

From 2014, still germane: https://www.drop-dropbox.com/

> Dropbox snares HelloSign (YC W11) for $230

The title appears to have a negative slant. Is the modern jargon for acquisitions of this nature?

I don’t think it is meant to be negative. I think “snares” could be positive or negative.

I interpreted it as Dropbox was fortunate to acquire HelloSign.

Also, this may just be some creative writing. Dropbox’s announcement did not use such language.

> I think “snares” could be positive or negative.

You know a snare is a hidden trap for animals? I can't imagine being snared to be positive - it implies you're going to be skinned or eaten.

It also implies you've caught something of value. And get to have stew.

I've certainly heard snared used positively. As in, one has snared something that is beneficial to them and difficult to catch

People often say “he/she is a good catch.” Sure, the term probably comes from hunting but I have always considered it to be a compliment.

Not the term I would use in a business context though.

I read it as "gets the prize despite competition" as in Cinderella snares Prince Charming despite heavy competion from Snow White and the ugly sisters

I’m not sure but most people around me speak negatively about Dropbox in terms of security. The most common expression is: “Things on Dropbox are to be considered public.” My assumption is that anyone can achieve reasonable security of they care enough about it, therefore I would blame Dropbox management for their priorities there. Given the business of HelloSign, that feels like a possibly dangerous combination.

However, I agree with you: “offers to buy” would be more neutral and feel more appropriate. “Snares” has other nuances (surprise, violence, asymmetry) but neither convey a discussed at length, mutually agreed and beneficial relationship.

Hellosign is great, however please add tags!!!

Congrats John, Sarah and Ron!


well deserved.


Sorry, but snare can be used in this context. I highly suggest consulting a dictionary if you are unsure about the definition of a word. Just because the word used is not definition 1, doesn’t mean it’s incorrect. Snare is absolutely acceptable in this context.

I am perfectly sure of the definition of that word. I worked as a copy editor in a past life.

I would suggest maybe you consult the Oxford or Merriam-Webster dictionary:

https://en.oxforddictionaries.com/definition/snare https://www.merriam-webster.com/dictionary/snare

The verb form of the word snare is neither applicable or correct to describe a non-hostile business deal, even colloquially. Hellosign wasn't "trapped" or outwitted by Dropbox in any sense.

The word snag however does have a common colloquial/slang usage in American English to mean obtain - "I snagged the last one", "snag a ticket the show", "someone must have snagged it." You will never hear an American English speaker say they "snared a ticket to the show" or "they snared the last beer" or "someone must have snared it."


transitive verb

1b : to win or attain by artful or skillful maneuvers

This exactly supports my point. There was no artful or skillful "maneuvering" on Dropbox's part. They made an offer and negotiated a purchase that was amenable to both parties.

Had this been a hostile takeover or had Dropbox forced them to sell "snare" would indeed be applicable. However the Dropbox relationship was one Hellosign unequivocally stated they were "thrilled" about as far back as last November:


In love hello sign but it feels like a few weeks of work to build. Feels like they dodged a bullet.

Finally DropBox will offer a useful product.

You think their core offering isn't useful?

How many companies are either Office 365 or GSuite? You get document storage and syncing as standard these days. You need a compelling reason to use Dropbox over GDrive/OneDrive.

Got this email from them a couple days ago:

We’ve noticed you haven’t used your XXX@XXX.com Dropbox account in over one year and have closed your account for you. Devices connected to this account have now stopped syncing. Any remaining files in your account will be subject to deletion.

Sincerely, - The Dropbox Team

There goes my files. Fuck dropbox. Stick to google drive.

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