Dropbox Could Have One of 2017’s Most Interesting IPOs
technologyreview.com
technologyreview.com
However, the vision they are selling will not come to pass. That of them being a collaborative platform. Google docs, slack, and a myriad of other tools have already taken that place and there isn't a large enough disruption in Dropbox to unseat that.
In the meantime Dropbox's core offering of syncing and sharing files seamlessly as well as providing more security minded options for businesses is something that no one else has quite gotten right.
Box targeted the high-end enterprise users and Dropbox ceded that market to them rather early on. But the massive number of individual users coupled with SMBs that do not need the complexity that Box entails is a large market. The only question is are those two markets combined larger than the enterprise market that Box is chasing.
According to the revenue reported it seems that currently on the revenue side it is.
And given that investors do value profitability and with only a 200 sales person team their burn should be within controllable limits should make them overall both on the profitability and revenue side more attractive than Box.
However if they grew revenue from $400 -> $750 they simply do not have the growth trajectory that gets Wall St excited because due to their maturity and larger revenue you get a more consistent view point into their future growth.
Then again if they are compared more to Atlassian that is trading at 10x revenue then they certainly maybe get justified in their close to $10B private valuation.
this is «any IPOed startup from last decade» all over again.
You do need to open the app to sync.
And iMessage should just do this transparently.
PS: I am a google employee, but my opinion on google photos literally has no bias. I don't use Iphone, I own android, so YMMV.
There is absolutely no mention whatsoever neither in the article, nor in your analysis above about Owncloud.
Owncloud (or any OSS fork thereof) is an existential threat to Dropbox's core offering: while the consumer side is not yet price-competative, it can already be one-click deployed by many VPS providers. And the business case for hosting mission-critical data onsite, or at least own leased equipment & encryption is strong, and enjoys economies of scale.
Why does anyone use hosted travis CI despite being able to run it ourselves? Why do people use google apps instead of hosting their own mail servers? Because instead of having your employees do something they're not necessarily good at, you will pay experts to do something they are (supposedly) good at for a fraction of the price.
Not saying that Dropbox doesn't face business risks -- but I think the open-source alternatives will not be the biggest risk ulttimately in the mainstream market.
I do think they will face margin pressures as long as Google/MSFT/Apple/Amazon believe this to be too important of a market to cede to Dropbox.
It's just like Linux. It can own the backend / developer world, but Linux is still no where on the desktop for the average consumer.
I'd argue that Dropbox haven't quite gotten it right either: to my knowledge, they still don't support client-side encryption, which is IMHO non-negotiable in any cloud storage product.
I really respect Dropbox's ease-of-use, but I think at this stage in history it's outright irresponsible to offer a cloud service in which one can see one's customers' data.
I'm probably inferring something you didn't mean here. By "if they are burning cash" did you mean "yes they're wasting money, but still less than they're making so that's great"
Or is it possible to be "cash flow positive" while spending >1x revenue?
They wanted to become a platform for photos earlier (with Carousel), but that failed.
Previously, companies went public much sooner and you could expect a match, not an exact one, but in the same ball park, between the VC valuation and wall street valuations. This helped lead to rising share prices after the IPO.
Now with longer gestation periods leading to more fund raises, the VC's get paid, but its the IPO participants and the employee's who get screwed. Once a company is public its GAAP that matters and GAAP analysis usually assigns a revenue multiple to a company that is based on its sector and assumed growth. This multiple is almost always much smaller than what the company's publicly stated valuation.
This leads to a bunch of broken IPO's as companies stretch to IPO at a certain price to meet mezzanine level funding requirements. If you can get borrow, almost certainly dependent on how much you pay on commissions to brokers, then atleast up until this year you could have made decent money shorting most tech IPO's, most other industries don't yet suffer from a phobia of becoming public.
How unsurprising.
it's customary to take some money to alleviate the everyday financial stresses of life and to maybe buy a decent house because people have families, but the original intent behind the IPO was designed to align everyone's incentives. when they aren't aligned i.e. when there is a super-class of owners that already cashed out, it's going to end badly for the people who aren't in control.
everyone who got in early is already rich or completely exited, and more idiots keep piling onto the funding rounds... hmm... what does that sound like?
GAAP is an accounting framework [1]. It defines, for example, how one may and may not recognise revenues [2].
GAAP does not tell investors how to value a company. "GAAP Analysis" isn't a thing (gap analysis is [3], but that's a management tool).
That said, yes, public-company investors tend to look at Revenue, EBITDA or P/E multiples. But so do late-stage VCs. Both ascribe high valuations when expected growth provides for it, e.g. Amazon or Tesla or Uber.
A multiple gap has emerged between the late-stage private company market (at least at the top end) and comptable public companies. But it has nothing to do with "GAAP analysis" (which isn't a thing) or mezzanine funding (which most VC-backed companies don't take on).
[1] https://en.m.wikipedia.org/wiki/Generally_accepted_accountin...
[2] http://www.fasb.org/jsp/FASB/Page/BridgePage%26cid=135102720...
Many usages from hackernews readers are too techy and not for consumers -- like cross-platform or using as git repo. iCloud, Google Photos, Facebook and YouTube took majority of consumer storage needs aka large photos and videos.
I think enterprise market is their best bet but Box /Google/Microsoft are dominating in this space.
It was my solution for having access to all my photos on all devices, but then they canceled Carousel with the promise that its functionality would be rolled into the main app. That hasn't happened. The photos feature on iOS is pathetically limited, with slow loading times, no way to organize photos (you can't even access albums you create on desktop), and inadequate sync functionality. The web client isn't much better. What exactly are all those engineers doing with their time?
I am increasingly wary of Google, and do not wish to give them all of my photos. What solutions am I left with? I don't feel like my asks are a tall order for a company of Dropbox's size. I basically want what the old Picasa desktop app provided, except synchronized between all my devices.
I can't possibly be the only one with this problem: an ever-growing library of photos and videos, scattered across various phones, DSLRs and computers with the need to organize them and share them easily. I am happy to pay.
A filesystem should be just that, a filesystem. And thirdparty apps should be able to use it to store pictures and such.
Edit: While separating these concerns (storage and presentation) is a solid software engineering approach, without open standards it would seem to just add additional layers of vendor lock-in and brittleness. Syncing to local storage is a non-starter for mobile.
But this is an under-served market and many people would pay to some paltry amount a month to have their family photos (or professional photographs) kept safe in the Cloud. Unfortunately most cloud storage providers are chasing the (presumably much more lucrative) enterprise market with document-editing and office-y features.
Edit: it doesn't appear to provide any ability to organize photos yourself?
The uncertainty about the product direction is a bit off-putting, but it works decently well for my use-case [2], even if now you can't get that particular tier without Prime.
[1] https://www.amazon.com/clouddrive/home [2] https://news.ycombinator.com/item?id=12709221#12709936
If you want your photos on all devices, Dropbox does this for you. If you want software to look at the photos that is a different task and should be accomplished by a different piece of software.
We’re always looking to improve the Dropbox sharing experience. The Public folder was the first sharing method we introduced, and since then, we’ve built even better ways for you to share securely and work together with your team.
As a result, we’ll soon be ending support for the Public folder. Dropbox Pro users will be able to use the Public folder until September 1, 2017. After that date the files in your Public folder will become private, and links to these files will be deactivated. Your files will remain safe in Dropbox.
If you’d like to keep sharing files in your Public folder, you can create new shared links. Just make sure to send the new URLs to your collaborators.
Double-speaking crap. They've broken literally thousands of links I've posted around the Internet since I started using Dropbox. I pay for Dropbox Pro specifically to have more space in my Public folder. And they chose to be pretty jerkish about it, to boot. Gross.
This seems like a huge issue for a company that is entrusted with user data. If Dropbox continues to be successful, their support of warrentless surveillance will become the norm. I don't use their service. If you value the security and privacy of your data they seem like a poor choice.
[1] Condoleezza Rice (http://www.drop-dropbox.com/)
IMO, 1TB is completly reasonble. You can get ~10 GB of storage several places for free which covers most things and minmaxing 2-3$ per month is generally a waste of time.
Basically, there are only 3 Dropbox tiers: 0, 1TB, or infinity.
But the argument for dropbox is that you have a client for almost every platform you can use. With S3 you'll have to use a 3rd-party software, which might not function properly.
So really, most people are buying <30 GB of storage + a lot of bandwidth and a decent UI.
With that in mind the number of people with more than 1TB to store either need a streaming service or actually have original content which breaks their model.
For Dropbox, storage is the only source of income. Most of their income comes from people like me who are modest users ( < 100GB, not a lot of transfer).
Offering intermediate plans would make nearly all users high-loss users.
(I also can't understand why people are expecting to pay only $2 per month for 100GB of highly redundant storage with a top-notch client.)
Why do you consider Linux support worth $0 (since you want to switch from one $1.99/mo service to another) instead of a number between $24/year and $120/year?
Even going past the fact that OverGrive is $5, I won't support companies that think currency conversion is a way to leech more money from non-US customers. Yeah yeah taxes, but then the £ price should be around £27 and not £29. Its crystal clear what they're doing.
And Google is permitted to mine your Google Drive data for advertising purposes. You are just paying in a different way.
If that's acceptable to you, that is fine of course. But for me, data privacy is worth more than $2 or $3.
(No, I don't trust Dropbox either, but for different reasons.)
Aaaaagghh!!!
Just... no. Dropbox used to do one thing well (modulo creepy stuff [1]): sync a directory across multiple computers. This wasn't so hard to do, but shockingly, Apple and Google didn't just implement this feature and make them obsolete. They could have been satisfied with owning that market, but now they want to create yet another office suite? Ugh...
[1] http://venturebeat.com/2016/09/20/dropbox-now-asks-for-acces...
The difference is a small company recognizes it can't afford to do those things poorly and won't pursue it. Large companies will keep dumping money into bad, poorly planned products. See Apple and cloud, Google and everything not Pagerank, Microsoft and mobile.
The world has more small companies than large ones.
Very few companies have a revenue multiple of 13x. Looking at this chart https://blog.intercom.com/wp-content/uploads/2014/07/4-forwa... it looks like Dropbox can expect something in the 6x-10x range, valuing them at $4.5-7.5B.
That being the case, DropBox probably isn't profitable yet which would throw their P/E through the roof and make that a useless metric.
Box is already public and it has revenue around $300 million and a valuation of ~$1.9B. DropBox will probably get a better revenue multiplier since their customer acquisition cost is lower than and their overall network effects and future outlook is better than Box. I'd place DropBox at a ~$6B valuation. Hopefully their revenue grows enough between now and IPO to support something closer to $10 or $12B.
I hope their IPO fails spectacularly so that support of warrentless surveillance does not become the norm in tech companies.
[1] Condoleezza Rice (http://www.drop-dropbox.com/)
But it's quite clear that Rice's value to Dropbox is based around her background in politics.
And in particular, her background in politics is one that is diametrically opposed to what Dropbox should be providing its users. A secure, private storage service.
> refusing to work with people because you dislike their politics is, in general, not a smart thing to do
Like vaccinations, it can be effective when most people do it. I think (hope) many companies would have declined the chance to work with her.
From their website[0]: "Dropbox file data is stored in discrete file blocks that are fragmented and encrypted using 256-bit AES."
It's also clear that if it's encrypted server-side it's encrypted with a key known to dropbox (which in my opinion makes the encryption meaningless).
So, technically it's possible that my statement was slightly misleading. It may be encrypted.
But the conclusion is, they have access to all your data. It would be available under warrentless surveillance programs, or potentially to attackers in general.
That doesn't seem acceptable to me.
However, my guess is that it's very unlikely to make the difference between a viable and a non-viable company. Particularly as they had a viable business when storing data on S3 [1]. I'd expect the cost savings of moving from S3 to their own hosted storage to be far greater than those earned through deduplication.
[1] https://www.wired.com/2016/03/epic-story-dropboxs-exodus-ama...
Curious: how would one design a service like Dropbox with Web + mobile + desktop clients such that the service operator could not access the data?
(This is a mass-market service, so I mean without requiring Web users to install certificates, etc.)
What design changes would you suggest they make?
Warrants are only required in some cases of surveillance. Those who are not U.S. persons do not have a constitutional right to a warrant before being surveilled. Public information does not require a warrant (e.g. the government does not require a warrant to open a phone book). Third parties may volunteer information without a warrant. Items crossing a national border — including communications crossing a national border — do not require a warrant.
There are plenty of constitutional, legal warrantless searches. You may not like some or all of those; I may not like some of those. But neither you nor I are the dictator of the Constitution or the law.
I think this is just a business decision. Dropbox does not want to be the simple bit-pipe that is used to sync stuff between your computers. They want to provide more advanced services, because they believe that is where the money is.
But it relies on the user trusting the vendor with their data. The user can't audit Dropboxes internal systems. They can't rely on the fact that security researchers will audit the client, and ensure that data is transmitted securely.
So it comes down to trust. I can't really see how I can trust dropbox when they think having board members who advocate warrantless surveillance is reasonable.
They chose a board member who is in favor of providing their users data, without the need for a warrant.
In contrast, Apple have made a stand against government access to their users data outside of legal requirements. Their service has similar issues, but I'd be more likely to place my trust in Apple than Dropbox because they have some track record of fighting back.
Ideally, what I'd like to see is optional client-side encryption that was externally audited. Unfortunately I think it's a feature that most users don't see as critical.
I used to love Dropbox, but the pricing model is terrible.
Android makes it so much easier - just install a file manager and you're good to go.
[1] https://photos.google.com/ [2] https://www.amazon.com/photos/home
I just don't understand why they are annoying Pro users. Not every Pro user uses Dropbox for company work. Not every Pro user is in a company/organization that will ever switch to Dropbox.
That eliminates a rather large fraction of the most popular online services, including Twitter, Skype, Spotify, Google Search, Square Cash, OKCupid, GitHub, and so on. Oh well, there's always Hacker News. Oops, Y Combinator owns that.
There are plenty of open protocols for file sharing, like HTTP or SFTP. What unmet requirements do you envision?
Well, for starters, automatic synchronization in the background.
Though every time they release a new major version it breaks compatibility with the older major versions and this happens quite often. They need to stop doing that if they want mainstream adoption.
There seems to be one open source project that aims to implement Resilio Sync's model:
It's actually a true bonafide distributed systems problem, where the implementation and service matter just as much as the specification.
EDIT: Fixed typo
* When syncing a folder tree (uploading or downloading), it transfers files smallest to largest (globally across all files queuing to sync, regardless of folder). This simple algorithm is remarkably close to optimal behavior.
* When modifying a small file while larger ones are syncing, the small file immediately cuts to the front of the line (even sub-file). This avoids situations where a large folder uploading or downloading prevents you from getting the utility of the quick syncing of small work files.
* Files deleted from the server or another computer are briefly retained on the client in a special folder before being deleted from local storage so that their contents can be matched to other incoming files. In other words, even for very complex folder move and file rename operations, if the new files contain the same data as the old ones in whatever permutations, the client will sort it all out without re-transferring actual file data.
* There are no data loss holes. All operations are on a files-first basis (not folder-first), and Dropbox will never decide that a file was intended to be deleted unless the client app explicitly observes deletion. You don't need to worry that offline renames or moves, even multiple conflicting ones from different machines will result in deletions when the Dropbox clients go back online.
* "No data loss holes" also applies to conflicts of a single file. If a file is modified in two different ways by offline clients, one file or the other will be renamed to make sure that a modification isn't lost.
* The Dropbox client never gets stuck requiring the user to "resolve conflicts". It picks the sanest thing to do and does it (always observing the "never lose data" principle). Syncing is delightful and never fails, not a chore to be dreaded and carefully planned for with a bunch of "conflict" choices, like all systems prior to Dropbox.
(I signed up in 2009, and probably last touched it in 2011 ...)
P.S. their studiously ignoring user-side encryption was a factor - if I'm getting my files exposed, might as well go with the big default services.
EDIT: I don't care if my files are encrypted.
EDIT 2: Dropbox sync is rock solid. Every experience with the Google Drive sync client has been trash. I can (and do) pay for convenience.
(Unless MS changes their mind again - they already did last year, stiffing Lumia customers, and so I bought a NAS instead of signing up.)
Meanwhile three years ago the message read: "Drive for Linux isn’t ready just yet"
2: Salience: Dropbox is in the business of providing the Dropbox service - and everything else is non-core. So if I pay for my service at Dropbox I would expect to be more important to them than to Google, who make far more income from advertisers. Meanwhile Google is famous for being hard to do business with for customers of all levels.
3: Simplicty: Dropbox just works, and very elegantly. It's the product of choice for a very large number of people and SMEs and getting it working outside of a corporate network is easy. Meanwhile Google products (and Hangouts is the worst here) are often inaccessibly appalling to operate for people who are not deliberately immersed in the Google ecosystem.
It's not perfect. I would like to see a far higher standard of security from Dropbox, and wish they had not wasted so much effort on non-core functions like photos. This trend appears to be getting worse - with the article stating "Dropbox intends to offer software that businesspeople use for hours each day to create content and get work done."
(I just use the cloud to sync files and generally as an USB stick of sorts - not a folder where I constantly edit stuff - so I can't vouch for their extreme sync abilities)
If there were an easy way to attach to S3, iot devices, etc (credentials management is a pain) they could probably go out on the strength of that.
It is very convenient to be able to add references at work, then come home to find it all up to date on my home PC.
Dropbox integration with the camera on my phone is something I also use a lot. Take a photo of something in the lab, it is waiting for me on my PC by the time I am back at my desk.
The only thing that I really find lacking is a linux armhf cli client...