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Dropbox Said No To “Nine-Digit” Acquisition Offer From Steve Jobs (techcrunch.com)
220 points by pitdesi on Oct 18, 2011 | hide | past | web | favorite | 92 comments

I love dropbox (use it daily, but only the free version). To be honest I think this decision will probably be looked on as a mistake.

Personally, I'm moving to iCloud soon. The reason for this is that it will enable syncing of the notoriously closed Apps and music that come with Apple.

The non-apple crowd will not see this benefit, but once Google or Facebook decide they want to be in the cloud storage game too, Dropbox is going to find themselves squeezed between players that can pour money into this space. Dropbox is already not competitive on price, that much is certain. It's only a matter of time before their primary attribute (seamless usability) is duplicated enough to erode their base.

They should really look to sell, not try to build an empire. The numbers and/or culture with Apple might not have been right, but this should really be their primary goal.

If it isn't, I hate to say that the very best they could hope for is to be a niche player in a space that will be a commodity in 2-5 years.

I think people are taking a very narrow minded view of Dropbox. You're absolutely right that iCloud, potential entries of Google or other big players could hurt Dropbox and be competitive.

However you have to imagine Dropbox is looking beyond "just file syncing" on client computers. Do you think when Jobs re-joined Apple, he was thinking "lets make Apple a better computer company". Dropbox gave an info session/tech-talk at MIT recently (which they do often), and talked about how they want to be the "Filesystem of the internet". With the money they've raised recently, and the ferocious hiring they're doing, you have to imagine they have plans to move into other spaces that might not necessarily be exactly client/cloud file syncing. I'd gander they have other aspirations and ways to make Dropbox as a platform be pervasive throughout the internet. Dropbox can focus on this one thing. Google can offer space for super cheap, but I can't see them attacking this large problem from as many angles as Dropbox can, since it's the "one" thing they do. This is all speculation, but I don't suspect Dropbox is going to sit complacently in the space they're in with potential pressure coming from so many competitors.

Also, iCloud's goal seems to be more to lock users into Apple products rather than be a great file syncing service. Photos off my iPhone get synced to iPhoto, rather than a folder I designate on my computer (ironically, a Dropbox folder). But to be fair, I haven't dived too deep into what I can do with iCloud yet.

I don't disagree with you re: iCloud, as that Apple's MO in all their actions.

However I can only gauge risk based on what I can see. It's possible that dropbox can revolutionize some new space that changes the equation, but this isn't evident right now, nor is it easily foreseen to be imminent. Given that, it doesn't look like a viable strategy for them, at least from my removed vantage point.

Did you factor this into your strategy viability assessment?:

If DropBox sold to Apple, they'd be out of The Game. Instead of carving out their own niche, with the thrill and risk that goes with it, they'd be supporting a game that Apple has already defined, and is winning. They wouldn't be able to gallop forward towards a future of their choosing, with competitors making them Better from all sides, they'd be IT support for the iApps division.

Do you factor the love of entrepreneurship into your equation?

But here's the thing: if i had sold out for almost a billion, you could either see that as a retirement, or you could see it as a platform that you can use for even bigger entrepreneurial projects? Ie with that kind of money behind you, you can take on, say, healthcare or something much bigger.

There can be more to it than 'if i take the money, i'm forced to spend the rest of my days on a yacht, enjoying life but wasting away'. At least that'd be how i'd justify selling out to myself :)

Most "bigger entrepreneurial projects" are built on a platform that includes BOTH money AND a sustainable core business. Think Microsoft's BASIC compiler, Odeo, the Tesla Roadster, etc.

I think many founders who sell out realize that the latter is often the harder of the two to procure.

You are correct, though, if your goal is buy a yacht you should sell when that becomes possible.

I'm not sure why adding $1B to your net worth somehow reduces your ability to be an entrepreneur. Most founders have a line up of 5 viabile products in their head at any given time anyway.

they want to be the "Filesystem of the internet" - this is scary, I really hope they won't succeed.

> they want to be the "Filesystem of the internet" - this is scary, I really hope they won't succeed.

Why? Are you interpreting this differently from me?

I see them as wanting to provide universal storage for web & mobile applications, in a way that allows you to access your documents & photos across multiple devices and platforms.

Not just documents and photos. In general, working with files on the web is difficult since JavaScript doesn't (yet) let you access the file system. If Dropbox provides really good support for this, they can solve the entire file headache and open up for a whole new type of web applications, while at the same time providing seamless access to the resultant files. This is a pretty big deal.

Dropbox have nothing to worry about from apple thus far. Yeah icloud may be good for people that have their entire lives in apple products. But those people are relatively few. The vast majority of people use different platforms and do not want to be tied down to a single vendor.

As long as Apple continue their tradition of (i) completely ignoring linux and (ii) making some of the worst windows software ever made, Dropbox have nothing to worry about.

Facebook is a non factor. Given Facebooks innovative stands on privacy I doubt anyone sane would let facebook keep their files.

Google would be a much bigger concern, but thus far Google have been extremely slow on this front, they seem to be tied up in some grand strategy/architecture dreaming, so they have been a non-factor thus far. I would say Dropbox's future depends mostly on Google's ability to get their heads out of the clouds forget all their grand world domination strategies and build something that works right now.

So yes there are a lot of potential competitors but each one of them carries a lot of architectural and strategy baggage and the entire point of dropbox is to avoid all of that stuff. So I think their chances of success are not bad at all.

Time will tell of course. Sort of like Groupon turning down Google's 6B$ offer, might have been a good thing, might have been majorly stupid. (And of course '9 digit' includes $100,000,000)

There is a lot to like about Dropbox, but you really really can't just brush off the installed base of Apple. If anyone has their customers by the short and curlies Apple does.

Congrats to Dropbox on their success. It seems to be Steve Jobs has been used as the hook here to get more interest on this article.

While i am happy for dropbox , the real point that i learned in the summary article was that Apple is planning products two to three years into the curve which means if anyone wants to even dream or think of competing they need to come up with products that are two to three years ahead of the curve.

I love Dropbox, but Jobs is right -- they are a feature, not a product.

They will be relevant up to the point where operating systems simply makes their functionality a native element of their file system.

At least Drew is wise to the fact that they could become an also-ran, so it's not like this will happen to them overnight.

Operating systems we run Dropbox on at my house: Ubuntu, OSX, iOS, Windows, Blackberry 5.

Someday they may all have Dropbox-like functionality built in, and someday after that they may interoperate. Dropbox can stay in their current business a long time regardless.

Given Ubuntu already has that functionality built in (Ubuntu One), and offers Win, Android and iOS 3.1+ clients, we're really not so far off from that being the case already.

So what it has over Dropbox is the lack of Mac OS X? I haven't used Ubuntu One since I tried it pretty early on, and it was nowhere near as easy to use and convenient as Dropbox.

Ubuntu One cannot be compared to Dropbox, at least not yet: It does not support OSX and it does not support other Linux operating systems either, not even its daddy Debian.

I run Windows and Debian on my desktops and laptop and I recently decided to try Ubuntu One. I could find no mention of other Linux OSes on the Ubuntu One page, and a quick web search returned nothing encouraging.

I was surprised by this. The impression I got is that Ubuntu One is just for people whose main OS is Ubuntu and who may have to also use Windows from time to time.

It's a pretty big feature, I'd say.

Anybody who was a mac user before 2000 can tell you how painful it was to use a mac when your friends or coworkers had windows. It was horrible. Problems with file sharing between systems created huge network effects for microsoft. It killed the possibility of having a mac for a lot of people.

The fundamental problem of compatibility requires not only technological and architectural commitment but also willingness to cooperate with competitors for the sake of the user.

Certainly a big feature, although as platform/os providers integrate similar functionality, that differentiation point for Dropbox will begin to diminish.

But you're spot on with varying OSes being willing to cooperate to allow multiple clients access to shared data stores. Google, Apple, Microsoft and open source all in agreement on file sharing? Right.....

Surely the latest Dropbox investors considered that, and gauged the probability of harmony among the OS providers for the sake of the user. And since Dropbox just closed $250MM in financing, they obviously believe their chances are pretty good. :-)

harmony across OS providers will never happen and isn't necessary here. The cross OS file sharing has been solved many years ago and most successfully by 3rd party independent tools like samba(intranet) or cvs/rsync(internet) and with HTTP based tools on the horizon (webdav is a good starting point). If my understanding correct, Dropbox is just extremely consumer friendly implementation of something like rsync. The main danger to them isn't OS providers, it is another Dropbox, more user friendly, agile, convenient, cheaper, faster ... while the original Dropbox grows and starts having cost structure and screwing up like a large company.

>They will be relevant up to the point where operating systems simply makes their functionality a native element of their file system.

At which point, they become a service. This is admittedly a wide-eyed optimist ideal, but I would picture most OS' adding basically a "Cloud storage" drive option that allows the user to mount any cloud storage service like a physical hard drive. The "driver" would be the interface protocol between the service and the user, and it would allow the various OS' to use the cloud storage as an additional, fully functional drive.

It probably won't happen until the next round of antitrust hearings against everyone(Apple, MS, Debian, Ubuntu, etc.), though...

Wait for competition from Google, Facebook or Microsoft.

Microsoft bought FolderShare a few years back, which let you share & sync directories across PCs and Macs across the internet - so like Dropbox but without their online backup.

Unfortunately Microsoft turned it in to something that didn't work anywhere near as well. It might have been improved now, but my business partner and I moved across to Dropbox, which has been much better. Since then I've also received files from various people working on joint projects across Dropbox, within the web industry it appears to have become the standard for that.

Getting something else that works well on one OS will be straightforward, especially for someone like Apple. Getting it to work well (and wanting it to) for multiple OSes and getting people on the other OSes to adopt it will be another matter.

That's partly why Dropbox survived their security problems so well, it's become part of a lot of people's background workflow.

Microsoft's competitor for Dropbox has been Live Mesh for quite some time now. And unlike FolderShare, it does do online backups. Unfortunately, many of us need solutions that work on multiple platforms (your macbook, windows desktop, iPhone etc). Unlike Dropbox, Live Mesh doesn't even come close to serving that need.

I kind of agree.

Although Microsoft and Google have tried this sort of thing before (and a long time ago if we include WebDAV & Web folders) there is nothing quite like a successful product that gets it right and takes over to light a rocket underneath the bigger companies.

If iCloud takes off most Apple users won't look at Dropbox. Those of us already using it may find we use it less and if they then add a simple, cross-platform way to share files & folders we may just move on completely.

There's a lot of ifs there, but I believe that iCloud will at the least hamper Dropbox's move into the mainstream.

I really enjoyed that. Thanks for posting

It's been fascinating to follow Drew's story from the link to the early video on HN, to the YC application as a solo-founder to a "nine-digit" offer. This speaks to the importance of a good product. When Dropbox was pitched early on, everyone would point out how many competitors there were. Drew would silence the crowd by asking "how many of you actually use one of those services?"

It's all about the product.

It is all about the product but it's not as if Dropbox isn't facing some very serious competition. iCloud, G-Drive and Skydrive are all concerns. Dropbox's advantage may be being platform agnostic but one has to wonder if Dropbox's fate may eventually be the primary storage of pirates. There have already been stories written regarding the content owners' interest of litigation.

While I agree with your central point that Dropbox faces competition (still, who does't? this isn't inherently bad) note that as of yet iCloud doesn't exactly let you solve the problem of syncing any document across devices. Although I'm assuming this will either become integrated or could be made possible via the iCloud developer API.

one has to wonder if Dropbox's fate may eventually be the primary storage of pirates

That's further reinforced by the existence of Dropship[1] (although I don't know if it still works), which enabled people to get copies of any file in the whole Dropbox network with just its hash, by taking advantage of their deduplication techniques.

[1]: http://forwardfeed.pl/index.php/2011/04/24/dropship-successo...

Dropship no longer works.

"Houston cut Jobs’ pitch short: He was determined to build a big company, he said, and wasn’t selling, no matter the status of the bidder" Props to Drew. I don't think many other entrepreneurs would've been as zealous and decline such an offer.

Nine figures buyout? You really do have to believe in your future success to turn that down, especially as a two year old company and long before the current milestones.

That kind of money, Drew's payout would have been substantial, enough to bankroll any project he could dream of (or live comfortably forever).

He must really believe in what he's doing.

I'm sure he's flying high right now, but I think he's foolish to turn down an offer like that in the same way Groupon was foolish to turn down Google's 11 digit offer.

Sure, one could argue that money is less important than achieving a vision, but with that kind of money, Drew could work on 5 additional visions of similar size, knowing his product was in good hands.

It takes real balls and vision to turn down that much money. The thing is, without having the confidence to be able to turn down millions, it's unlikely one will ever be able to build a product worth millions. Those in it for the quick buck usually will fold under the slightest bit of trouble.

I would disagree that saying yes to an enticing offer is the same as looking for a quick buck.

Drew's payout would have been substantial, enough to bankroll any project he could dream of

maybe dropbox is that project...

Or simply be lying.

What is interesting to me is when this got posted several weeks ago, an admin/mod deleted it off HN.

The main purpose of this site is to promote YC backed startups (same as TechCrunch).

I still learn a lot from this site, so I don't really mind. Although I wish it would be different.

At least they are motivated to maintain it well!

Dropbox is YC backed. It is probably the greatest thing to come out of YC (from a monetary standpoint).

What you're saying is:

A) Wrong

B) Ridiculous

How do you know an admin/mod deleted it?

I use Dropbox, but only the free version. For bulkier data I am just rsync'ing to my linode, with exactly the same utility to me. It is quite telling that the dropbox app uses librsync.

In other words, the value to the consumer is in the simple, reliable interface and easy sharing. They have got this right where Jungledisk got it wrong.

However, the value to investors is in the customer base and an implied CLV for those that pay offsetting the exponentially decaying cost of storage for those that don't.

In other words, it's a Ponzi scheme for storage and they're betting on Moore's law. Unfortunately, it is almost trivial to reimplement their utility; any half-decent systems programmer will instantly grasp what they're doing. So I would not invest in Dropbox, but whilst they maintain some momentum I am happy to store low-value documents on their service.

> (pronounced like the New York City street, not the Texas city)

What does that mean in non-US-English?

Houston the NYC street is pronounced "How-ston" whereas Houston the Texas city is pronounced "Hew-ston".

Maybe Hyew-ston is more phonetically clear for how people say the city in Texas?

how-ston, not hugh-ston

Huhston, not Hyousten.

I still don't understand why google didn't launch the gdrive... we really begged for it.

There was an interesting point in "In The Plex" where, IIRC, some executive at Google decides to shoot down GDrive because they (Google) wants to push for a reality where you don't even need to keep files on a device in the first place - the files would just always be in the cloud, and then who needs a copy on whatever device you happen to be using?

If true, this seems like a real wasted opportunity - even if that is the future we are getting to in several years, why not release a ready product that people would find useful in the meantime (and would help people arrive at that vision)?

edit: here is the excerpt: http://allthingsd.com/20110425/how-google-killed-gdrive-and-...

He went to Bradley Horowitz, the executive in charge of the project, and said, “I don’t think we need GDrive anymore.” Horowitz asked why not. “Files are so 1990,” said Pichai. “I don’t think we need files anymore.”

I still remember that as well. They wanted to get rid of the whole "file" concept, as in a single isolated opaque blob of data. They thought it is an outdated concept in today's interconnected age.

Although there is some truth in that, personally I don't think locking data in cloud-based silos is any better than locking it locally in proprietary data formats. If anything, it is a further step backward.

For example: Does anyone know the native format of Google Documents? Can you import/export it losslessly? I don't think so.

Can you import/export it losslessly? I don't think so.

Apparently not: my students occasionally use Google Docs to get papers from their computers to printers in the library (or vice-versa), and the formatting of their papers constantly gets fucked up. When I see weirdly formatted papers, the students almost always blame Google Docs. Granted, I don't know if that's because the students don't know what they're doing or if Google Docs is hard or confusing to use, but still.


We build a Google Docs to InDesign linking product (http://emsoftware.com/products/docsflow/), and there's lossage/lack-of-direct-mapping when converting both from Word to Docs, and then from Docs to anything else (HTML, ODF, etc.).

They're hardly the only ones trying to abstract files away from the user. iOs has had a lot of success with non technical types doing just that. Here's hoping that osx doesn't fully take the plunge

I'm curious about how many paying customers that they have. I know of very few people who use the pay service, most people seem to go with the free version. I wonder if they are profitable yet?

It's all there in the story, just read it :-)

Why not actually link to the Forbes story and not another site's regurgitation of it?

The major difference for me is Apple builds applications which work with its own products and not other platforms. Can I use icloud on my Linux box? Nope, but I can use Dropbox.

Granted, Dropbox comes with its own limitations, but when I'm looking for software, I want to make sure I'm not pigeon holing myself based on my OS.

not surprising, Dropbox is an actual business with long term potential. And with recurring revenue model, they have growth in revenue every month.

There is no need for them to flip like other sites who either need to make sales every month to stay in business or are reliant on Google staying nice to them in order to keep their traffic numbers.

Recurring revenue really is the key to lasting success on the internet.

Any company that mediates between a bunch of other companies which each provide similar complementary products/services will always be in business.

Dropbox is aiming to support every system under the sun. Android, Windows, Linux, Mac OSX and all the hardware that they run on. Thats why Dropbox is bigger than Apple's iCloud.

Apple isnt going to manufacture every device you own. But you will want your files on every device you own. Lets say you have the following: Samsung phone, ipad, windoze at work and a linux system you hack on at home. Install dropbox and you have all your files everywhere.

Hell I dont even want my own devices. I want to be able to go anywhere, use any make of OS/hardware and have all my stuff available to me. Why? Because its so damn convenient.

Dropbox is building that. And its a very solid business business model.

Again any company that mediates between a bunch of other companies which each provide similar complement products/services will always be in business.

Dropbox is infrastructure. And one that creates a huge convenience for the end user.

Sonos is a company that's not often talked about but which seems to be doing fairly well (although I don't know that for a fact; I'm just a (very) happy customer).

Sonos is a direct competitor to AirPlay, and even a kind of crippled one: Sonos only works on Sonos devices; AirPlay works on many non-Apple devices.

So why would anyone buy Sonos?

It just works. The quality is incredible. You can stream audio from the web to all your speakers (which I don't think is doable, realistically, with AirPlay).

Point is, just because Apple invests a market doesn't mean everyone else dies.

There is a huge difference when you do something because you think it's just a feature that'd be nice to have than to dedicate yourself to something and do a great job implementing it because you think that it has to be done, dropbox is doing the latter.

If Steve was going to crush them, why bother to buy them, especially for nine digits?

Because first he tried buying them, and when that failed, he built it himself (well, ordered the Apple employees to).

I simply don't believe this story. If you have $100+ million to throw at as fundamentally simple a product as Dropbox is, you have more than enough to make a good clone of it.

It's not like Jobs can deny it now.

you have more than enough to make a good clone of it

You are being naive if you think that given enough money, you can clone any product. That's simply false, especially for large orgs where more money invested towards a project can even become more of a problem than aid.

Sounds like someone once read a blog post about The Mythical Man-Month!

Hint: lots of companies that aren't five guys and a GitHub account produce software. Apple is one of them, and DropBox isn't that mysterious a product.

Let's not change the topic of debate. The topic of debate never was whether Apple can produce software. It was whether Apple can achieve the same goals or even better by building instead of acquiring Dropbox mostly because they have money. I believe the answer is no.

There is no "topic of debate", there's just you making inane remarks and my observing that you're full of shit.

Plus there's the issue of time: If you have 100+million to throw at something and get it right now(in 6 months after due diligence), or spend the 100 mil on an in house project, wait 3 years, and get it then...which would you take?

Personally, if I had that kind of money to throw around, I'd want it now, so I can start implementing my vision now.

Don't take the numbers here too literally, 3 years might only be 1 year. I highly doubt it'd be less than that, given Apple's size.

Why on Earth would you think it would take $100 million or more to do this?

Why would Apple (or any other OS company) be in a hurry to get this product?

The right decision, in my opinion. As popular as the are marketed to be, most people don't have iThings.

I have a few rules in life. One is to never turn down a $100m+ acquisition offer from Steve Jobs. (Unless my percentage/net would have been too small of course. Which then gets back to the rule that ideally you never want to take outside investors or lose majority equity/control.)

I think the fundamental differences between Dropbox and iCloud is the sharing feature and Windows/Linux/Mac/etc support. iCloud is never going to be on Windows and our company uses Dropbox to share project resources and our machines are a mixed of PCs and Macs so iCloud means nothing for us.

Exactly. As Steve Jobs is quoted in the article; Dropbox is only half the solution.

Apple's 'full' solution involves the necessary purchase of their hardware and software as well. Dropbox works across the board, without prejudice.

No, the other half is getting people to use the product. It's easier if you can make it seamless and bake it in rather than a third party solution. They probably wanted to own the solution to leverage any trust they have with their customers.

It's the same thing that happened with backups, they came up with Time Machine. Pretty much all the Mac users I know have a Time Machine backup.

I believe the same thing will happen with version control once Versions support is wide spread. Normal people will know about keeping versions of their work rather than multiple differently named files.

"No, the other half is getting people to use the product."

More than 45 million people use Dropbox. I think they have that part of the problem solved.

iCloud is already available on Windows: https://www.apple.com/icloud/setup/pc.html

I bet it comes with Quicktime, iTunes and a lot of extra plugins which are absolutely necessary for to run the software. /joke

Does the Windows versions suck as much as iTunes? (including installing that pesky apple updater).

Going on-topic, I have a dropbox account but the 2 GB limit (which I managed to make 3.5GB after referring) is very limited. In addition they do not support WebDav.

I recently opened a free Box.net account and I am really happy with it. Because it has webdav support (box.net/dav) I can "mount" the disk in any computer as a drive (windows) or folder (linux).

I personally prefer this approach to the DropBox "replicate everything on each PC you enter". But I understand they are solutions to different issues.

Don't forget Android, Windows Mobile, and Blackberry. iCloud is available on Windows, but I don't think it will be going to competing mobile platforms any time soon.

More to the point iCloud will never be on Linux.

"iCloud is never going to be on Windows"

The same was said about iTunes, but it eventually appeared there. It wouldn't surprise me if more aspects of iCloud eventually appear on Windows.

iCloud is available on Windows - https://www.apple.com/icloud/setup/pc.html

See! It only took 35 minutes.

Doesn't look like there is a Linux or Android version.

Woah... 5GB! I'm so there.

Do you think that if Apple bought Dropbox, Dropbox would still be on all those platforms with such strong support? I don't think so.

I think you have a good point generally speaking, but iCloud does in fact run on Windows.

wait for Google, Facebook or Microsoft to implement their own Dropbox clone.

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