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Dropbox buys HelloSign (YC W11) for $230M

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Re: Dropbox buys HelloSign (YC W11) for $230M

#161

Post by mvkel »

runako wrote: post #142
tombert wrote: post #92

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…

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.

Re: Dropbox buys HelloSign (YC W11) for $230M

#162

Post by a-walker »

tombert wrote: post #92

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?

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.

Re: Dropbox buys HelloSign (YC W11) for $230M

#164

Post by javier2 »

gruez wrote: post #8

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?

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).

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