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Comment by casca | Hacker News Reader

This seems like a very convoluted way of coming to the valuation. Revenue != profit. I can easily create business that generates $1bn/month in revenue by selling dollars for 90 cents. Dropbox may be worth $8bn, but surely it makes more sense to assess the valuation based on the growth in profitability?

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Indeed. Especially given that Dropbox uses Amazon for the actual storage and the massive scale, I wonder what % of that revenue ends up in Amazon's pockets.

Do they still? I would have thought that by this stage they'd have started building their own (at least mini-) data centers.

Their traffic is not even close to Netflix and yet, Netflix runs on AWS.

Netflix also has a very different use case. Building a data center that can meet the storage needs of Dropbox seems much simpler than building one that can meet the compute/bandwidth needs of Netflix.

hah

For computing. For delivery they use various CDN's. delivery is the expensive part, for them

They were planning to change at one point, I believe, but Amazon lowered their prices - and later introduced Glacier - which may have dissuaded them.

Doesn't seem like a stretch to imagine Dropbox has very attractive margins.

The theory is that since they have high gross margin they are only losing money while they ramp up to scale. In some time in the near future, they should employ economies of scale to have decent operating margins.

Selling dollars for 90 cents would be a negative gross margin business. Any business with negative gross margin should be valued as worthless

You can easily acquire 100 million dollars to burn every month?

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