Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

techcrunch.com

Post reply on HN
Print view View original

21–30 of 43 posts

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#21

Post by georgemcbay »

sdizdar wrote: post #18
johnrob wrote: post #6

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…

I believe that everybody will have a least one "cloud storage" account. Actually probably multiple "cloud storage" accounts since cloud storage providers will try to specialize and differentiate (i.e., you will have Google Docs account, Dropbox account, iCloud account, etc.). So 21M is a conservative number. And don't forget companies of all sizes are going into cloud: so replace 21 million users with 21 millin users…

I believe that cloud storage accounts will find widespread usage, I just don't think it is a $5 billion industry. I think it is more something that will exist as a free bonus within some other business model (eg. buy one Amazon album, get many gigs for free, or use Google Docs storage so google can have even more info on you for ad targeting).

In short, I think Dropbox got on to something big early on, but they will eventually be like the early Netscape of this area.... Other competitors are pretty much guaranteed to come in and erode their value with "free" (enough) alternatives that exist to prop up other business models.

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#22

Post by gruseom »

georgemcbay wrote: post #21
sdizdar wrote: post #18

Earlier quoted context omitted.

I believe that everybody will have a least one "cloud storage" account. Actually probably multiple "cloud storage" accounts since cloud storage providers will try to specialize and differentiate (i.e., you will have Google Docs account, Dropbox account, iCloud account, etc.). So 21M is a conservative number. And don't forget companies of all sizes are going into cloud: so replace 21 million users with 21 millin users…

I believe that cloud storage accounts will find widespread usage, I just don't think it is a $5 billion industry. I think it is more something that will exist as a free bonus within some other business model (eg. buy one Amazon album, get many gigs for free, or use Google Docs storage so google can have even more info on you for ad targeting). In short, I think Dropbox got on to something big early on, but they will…

Dropbox got on to something big early on

Early on? Just the opposite. The space was so saturated that new entries into it were considered a cliche joke. http://www.joelonsoftware.com/items/2008/05/01.html

The other great example of successful late entry into a saturated space, of course, is Google.

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#23

Post by djchung »

Havoc wrote: post #12
johnrob wrote: post #6

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…

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?

Easily duplicated UI doesn't justify billions, but the number of users, expected growth and team do.

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#24

Post by fourspace »

alain94040 wrote: post #15
fourspace wrote: post #8

Earlier quoted context omitted.

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 wan…

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).

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

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#25

Post by georgemcbay »

gruseom wrote: post #22
georgemcbay wrote: post #21

Earlier quoted context omitted.

I believe that cloud storage accounts will find widespread usage, I just don't think it is a $5 billion industry. I think it is more something that will exist as a free bonus within some other business model (eg. buy one Amazon album, get many gigs for free, or use Google Docs storage so google can have even more info on you for ad targeting). In short, I think Dropbox got on to something big early on, but they will…

Dropbox got on to something big early on Early on? Just the opposite. The space was so saturated that new entries into it were considered a cliche joke. http://www.joelonsoftware.com/items/2008/05/01.html The other great example of successful late entry into a saturated space, of course, is Google.

I'm an enthusiastic Live Mesh supporter that has been using Live Mesh from the beginning, so I'm aware that Dropbox (or Mesh for that matter) is not the first way to share files over the Internet, but none of what Joel is talking about in that piece was really both consumer facing and as simple as "run the app and forget about it" back then, so it is basically irrelevant to the value Dropbox (and the current Live Mesh) bring to the table.

Claiming the existence of those older services diminishes the value of Dropbox (or current Live Mesh, etc) is like saying that the iPad is no big deal because Fujitsu was making tablet computers almost 20 years ago.

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#26

Post by johnrob »

gduffy wrote: post #20
johnrob wrote: post #6

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…

1. Why is a 20x P/E ratio appropriate for a high-growth tech startup? 2. http://tech.fortune.cnn.com/2011/04/18/reviewing-dropboxs-vi... 3. File sharing is, like, what the Internet was originally invented for. Quite a few people use the Internet (>1billion), and it's still hard to share a photo album with your family.

People have always wanted to do certain things online: search (google et all), shopping (amazon, ebay, et all), communication (email, aol, facebook, et all) are good examples. I've never really sensed a similar demand for syncing and backing up files. The idea that a single player has a 5 billion valuation implies the industry is significantly larger than that. That's what caught me by surprise.

The numbers I threw out there were just guesses (including the 20x P/E ratio); I was trying to understand the basis of such a valuation. There are some good explanations in this mini thread, yours included, but I still struggle to imagine there will be this much money in a such a service. It seems like competition would drive the free offerings to the point where the paid usage gets pretty low.

I guess what I'm really saying is that file sync/backup as a service doesn't feel like a 10s of billions industry. I don't have much real data to back that claim though ;)

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#27

Post by seminal »

gruseom wrote: post #22
georgemcbay wrote: post #21

Earlier quoted context omitted.

I believe that cloud storage accounts will find widespread usage, I just don't think it is a $5 billion industry. I think it is more something that will exist as a free bonus within some other business model (eg. buy one Amazon album, get many gigs for free, or use Google Docs storage so google can have even more info on you for ad targeting). In short, I think Dropbox got on to something big early on, but they will…

Dropbox got on to something big early on Early on? Just the opposite. The space was so saturated that new entries into it were considered a cliche joke. http://www.joelonsoftware.com/items/2008/05/01.html The other great example of successful late entry into a saturated space, of course, is Google.

Facebook too. Can't think of many recent instances where the winner of the early adopters won the space. Netflix?

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#28

Post by phaker »

Havoc wrote: post #12
johnrob wrote: post #6

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…

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?

> do a few easily duplicated UI difference really justify billions?

A large (paying) customer base would. But, just like johnrob, I'm not sure dropbox has that many users.

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#29

Post by mkl »

olivercameron wrote: post #19
johnrob wrote: post #6

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…

Dropbox already has 25 million[1] users. 1. http://techcrunch.com/2011/04/17/dropbox-hits-25-millions-us...

But how many are paying users?
Post reply on HN