> Dropbox is not laying off workers or shrinking; it hired nearly 500 people last year, 75 since the start of this year, and it plans to soon move into a sprawling, custom-designed office building for which it has signed a long-term lease.
Nail on the head right here. The only thing Dropbox has these days is consumer confidence in it's syncing process. Beyond that, they trail every competitor feature-wise and frankly, they are succeeding despite their management, not because of it. Recent product enhancements have been, let's be honest, mediocre at best across the board and show no signs of that changing anytime soon. They exist now solely due to brand recognition when it comes to cloud file sync'ing and the moment one of their competitors cracks the consumer confidence equation with the brand image to match, Dropbox is done.
What if -- hold your breath! -- Dropbox is simply a medium-sized, privately held, profit-generating company that will end up satisfying a certain customer segment and paying dividends to investors? The horror!
Their investors will revolt. Their investors need 10X returns in the next couple years to satisfy their fund's existence to their LPs. Funds need a few big wins like Hollywood studios need a couple blockbusters every year. Dropbox's investors are counting on them being a blockbuster. Dropbox's private valuation is an order of magnitude higher than Box's public valuation. And Box has a bigger sales team, more revenue, and more inroads into big enterprise than Dropbox. So it's a real pickle and dividends aren't going to get them out of it.
I fully concede your point. I think the private financing markets need to become more sophisticated out here, such that they enable the type of company I described -- which I reckon is the type of company Dropbox should be -- to thrive. There are a few very clever and small investors who already do this. But they're a minority.
I'm not an expert - just learning more about this myself over the last few months, but it sounds to me like the investment style you're talking about exists inside the world of private equity.
They're not playing the venture game - it's a different model. Buy and hold for either cashflow/dividends, or do some financial/managerial engineering and flip the asset.
Outside of the world of Venture Capital, there's a HUGE spectrum of investors out there doing every kind of investment - just gotta tune into it I've found.
(Great place to start is a podcast called PE Funcast - seems to me they've been doing this type of investing.)
Not every investor is looking for a 10X. DB raised 1.17B, with 1.1 of those in the last three rounds (according to Crunchbase). The last three rounds were 250M,350M, and 500M. A round was 6M.
Say A round wanted 100x. B round 10X. C round 7x. D round 5x. That will bring the total expected return to around 8B. However I am sure C and D would not mind a 3X or 2X, while B would probably settled happily for a 5X.
Exactly. Throw in a 2x or 3x liquidation preference and participating preferred and some of those investors will be lucky to get their initial investment back.
Not true. Investors probably have preferential shares and liquidity preferences which will safeguard their investments regardless. If it is indeed a small/medium size business, then the current $10B valuation is totally out of whack, and guess who gets screwed in the end - yep, employees..
Companies like that don't usually hire 600 people in 12 months, though.
Buuut I guess they could. I guess it just kind of looks like the explosive hiring you see sometimes when a company has projected huge growth but then falls flat and realizes it has way too many employees :(
During holidays you see retailers hire to capitalize on the season. We should consider the same for startups, i.e. hire a bunch of people for a year or two to capitalize on the opportunity, then let them go. Everybody wins if it is clear from the beginning that when the well dries, everyone leaves.
Let's say I am a dividend investor looking for a steady cashflow stream.
Why would an asset class like medium-size technology companies pursuing highly competitive cut-throat markets, requiring long lock-ups of capital (Dropbox was founded in 2007, so someone has been sitting on those shares for 9 years already) be more attractive than similar dividend-flowing asset classes like real estate or energy MLPs?
Are the dividends so outsized that Dropbox is basically swimming in cash and the yield is much better than I can get with similar asset classes? Do they have a stronger foothold in the market with expected longevity to out-survive an office tower, apartment complex or gas pipeline? Is it likely to attract better talent than Valley's established public companies (GOOG, AAPL, FB) or Valley's hyper-growth startups with IPO potential (Uber), and that better talent will out-compete the rivals on products, execution and market share (and, as corollary, fall under "dividend growth" umbrella, in theory allowing me to buy larger yields at substantial discount)?
Dropbox would have to compensate investors for (a) lack of liquidity and (b) for being in technology software market, known to be particularly unforgiving with its "winner takes all" mentality. Its peers would be highly risky single purpose private REITs (think casinos and fracking companies in North Dakota).
To accommodate that compensation the yields would likely have to be in the double-digits range, so let's say with profits of $20 mln of which $10 mln is allocated to dividends the expected valuation would be in the range of $60-100 mil (10-15% expected yield which seems reasonable in this rate environment with the type of risk described).
All of what you say is well taken. But there's absolutely a place for what amounts to a "data REIT." Investors prize dividends, and they prize having diverse sources for those dividends. Nothing new about that.
If Dropbox is delighting its customers and no longer interested in the lightning-fast one-uppsmanship of enterprise software/storage, then it can trim costs and pay an attractive dividend, sure.
I don't think you're going for medium sized when you raise over a billion dollars. The investors who put in $500 million at a $10 billion valuation would need a lot of dividends to even break even, much less make the 10x return they want out of a decacorn.
>Dropbox is simply a medium-sized, privately held, profit-generating company that will end up satisfying a certain customer segment and paying dividends to investors? The horror!
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how well did that work out for basecamp?
They could have been the next slack if they had not stuck to their stupid philosophy of staying small.
Is Basecamp in trouble or out of business? Not everyone needs to be huge, and it's not always profitable to grow out of control. Sometimes the costs of growth exceed the additional profits. Sometime to pivot to a market that doesn't actually exist. But sometimes you make some pretty decent money with a pretty decent profit, even if it's not exciting.
I loved Dropbox for its simplicity, the fact that it has MIT in its genes, it not being Microsoft or Google, and for Carousel.
But my dropbox was super slow in Japan, MS Office products keep spawning conflicting copies, Photoshop randomly pauses batch processing because of sync file locking, and they are shutting down Carousel.
So I am moving to Google Drive. All the frustrations above are not unique to me. Dropbox even has a Japanese web site. But this is what destroys consumer confidence. There were trivial complaints on their support site regarding speed issues and Carousel issues with pages of responses. It is the loyal customers that bother to post, yet the impression everyone is getting is seriously, WTF are they doing?
You can't have it known that you are healthily funded, have hundreds of engineers, not free, and NOT care.
For most users in the US, they won't see a difference in speed. However when I lived with 100down/up internet, there was a huge speed difference between Drive and DropBox. Drive was like 4x faster.
I've had ridiculous sync issues with Google Drive. Can't remember the details, but it had something to do with switching accounts and then having to re-download tens of gigs of data. Left my system in a confused state where it wouldn't sync any more. I had quit Dropbox, but went back to it.
I agree. The whole Carousel thing has just been really confusing. It's telling me Carousel is deprecated, but there is simply no way to "go back" to Dropbox -- you still have to use it to synchronize photos to Dropbox. Stupid stuff.
The only reason I use Dropbox is that it is not made by either Apple, Microsoft or Google, so I can sort of trust that there will be client support for all platforms.
Dropbox works better for me than Google Drive. That's quite surprising, since I'd expect Google to be good at sync. Maybe not consumer sync, I guess...
Also, I don't want any more features. Same with Evernote. I just want to keep notes, and it works quite well for that.
Too bad the investor pressure will likely make each of these products worse.
Have an actual profitable syncing business with several pricing tiers and tons of hooks to third party apps?
I mean, unlike tons of billion-valued "unicorns" that not only don't have an income plan (apart from "some day we'll maybe sell ads") but are also losing money.
You'd be surprised with how many 1000+ people companies are there, profitable and fine in all kinds of sectors, that are way less known than Dropbox.
Source? Everything I've seen says Dropbox isn't even close to being "profitable" -- the vast majority of their customers don't pay a dime according to their CEO.
>the vast majority of their customers don't pay a dime according to their CEO.
That doesn't matter as long as those who do pay subsidy the others. From what they said, they have 100,000+ paying businesses and smart ways (like hash-based de-duplication) for minimizing their storage costs.
Their CEO also said that they have enough cash to not need new financing.
Yes I've seen the 100K estimate on paying users but that isn't that significant considering how many millions of free users they have (and how many full-time employees they need to pay for).
And "not need new financing" is no indication of profitability either.
What that means is that Dropbox is shifting from a consumer to an enterprise company. We all know for consumers they're way too expensive - 1TB for $100 is way to much free space for the average person.
The problem is they've screwed up other things. Google owned Carousel with Google Photos. Mailbox turned out to be an overly expensive acqui-hire. Luckily that doesn't affect them that much because they raised a boatload of cash and have lots of customers.
Now will Dropbox go away or die? Probably not but they'll always be behind Box when it comes to enterprise features.
It's too bad Box and Dropbox can't merge. Box has crap sync and Dropbox lacks a lot of Enterprise features Box has.
I remember thinking years ago that Dropbox's product is the perfect example of the 90/10 rule of programming. I feel like the code Drew wrote at YC covers 90% of the usefulness of Dropbox. The rest has been really advanced and convoluted optimizations.
Why i like and dislike DBX (note: i'm completely on AAPL ecosystem in HW):
+ sync works better than any other out there
+ its quick in sync esp between other machines in same network
+ sharing folders and links is much easier than other including iCloud
+ developer adaptation is high on mobile apps which is turning out to be increasingly valuable last year or so
- expensive and limitation of option plans
- extremely poor biz plans and tools, esp if you're a startup
- privacy: hugely concerned about it and haven't heard much from their comms teams about what they are doing to protect me or providing backdoors or govt snooping. (better to move to iCloud for personal info)
- no new noteworthy features - almost 'feels' like the product is stuck in 2012 era
- MS and DBX integration sounds awesome on paper, i have had an incredibly frustrating time using it. Both companies are pointing finger at each other for live editing and sharing.
Once developers start offering iCloud as sync option often, i'll move over.
I can't blame Dropbox for the Microsoft thing -- Microsoft hasn't figured that out in a decade in SharePoint.
Mostly DBX makes me sad, as there is so much potential there. I also find it frustrating that they cannot come up with a pricing model that allows me to actually give them money.
This stopped me from becoming a paying customer for years. I had 20GB of free space from referrals and it's a big leap from not quite enough space for nothing to too much space for a $100/yr. I started using the free space from Google and Box for my overflow while waiting for Dropbox to offer a $50/yr plan... and I blinked first.
The Google and Box clients are serious contenders for dethroning iTunes as the worst software on my computer. Dropbox just friggin' works and I've never noticed it crash or have a negative impact on any computer I've put it on.
My first renewal is in four months. Maybe I'll find some time to give ownCloud a try before then... or maybe not.
You have a pocket computer that's really good at storing random bytes. Store a decryption key there, and get it into your random browser's memory via QR code or encoded mnemonic phrase. The UX is hard, but probably solvable.
I expect they're going to branch out into physical storage. Prediction: by 2020, there will be thousands of DropBox locations where you can rent space ranging from a small locker to a large garage. If they're smart, they'll start in rural areas.
It's not that far-fetched. Omni and MakeSpace are both already selling 'on-demand' physical storage and have similar business models to what shasta outlined. They pick up your stuff and store it somewhere, like Iron Mountain does for documents.
Man I've meet some dropbox employees and talked about to them about their company. Its kinda frightening. The sheer amount of decadence makes me think the company won't last. It was shocking to listen to them and be around them. They acted like they were the kings of the world and spent like it too. I guess it wouldn't be a bubble if such behaviors weren't common place.
Not working on Mailbox. Still bitter about them cutting that product.
But seriously, it's a bit odd. Dropbox's product seems fairly mature. Are these sales staff, or developers, or...?
Reading between the lines, it sounds like Dropbox is going all out to build up a sales team so they can be more like Box, and I imagine the bulk of those new hires were picked up for their skills in cold calling, not coding.
Unless I'm reading this wrong, the takeaway from this article is that Dropbox is a reasonably successful company, with enviable brand-recognition and reach, that's `suffering' from being overvalued early on and is simply no longer hot and new. That seems like a reasonably good problem to have, and is certainly better than being a loss-maker.
For all of the employees that received options based on the inflated $10bn valuation, not a good problem to have.
This is the danger of VCs wanting everyone to be a unicorn, and structuring their firms around that mindset. I agree that a $5bn or $2bn company is fantastic. Until those with capital agree, however, founders are almost required to pitch a fantasy.
I obviously don't know the specifics of the dropbox option pool, but it's not uncommon to have employee options issued at a 409(a) valuation instead of the fundraising valuation.
So even if money was raised at a 10bn valuation based on the expectation of future value, a 409(a) valuation would probably place the company at somewhere closer to 10-40% of that, which puts employees in a much better situation.
You're right that options are granted at the 409a price (the common stock price) instead of the price investors pay in the financing, but as companies become more mature, the common and preferred prices usually begin to converge somewhat. In a seed financing you might see common stock valued at 10% of the preferred price, but in a late stage, billion dollar company there will be much less of a discount applied.
Employees granted options recently after the highest valuation financing would probably be completely underwater if the company is really worth $2b.
Right, but if the 10bn funding was at a high multiple relative to revenue, the 409a will probably still be a lot lower. I'm not saying that it would be at 2bn, but the GP was talking about people being granted options at 10bn, and potentially they're being granted at a much lower value.
Common hasn't been close to 10% in a loong while - common is likely presently valued at >75% of Preferred. Anything 1/9 to 1/11 is strictly seed-level discounts for common to preferred. Dropbox may even be at a point where it's no longer options but RSUs.
When common is equal to prefererd, you have a public stock price.
My dropbox scenario is I have a 2TB HD and 2TB dropbox storage with the 1year packrat service. I record and edit music on the HD and dropbox is always syncing my changes. The next day, when I'm at work, I can pull up the website and listen to the stuff I worked on the previous night. If I go into a studio I connect to dropbox and sync whatever folder(s) that contains the song(s) I'm working on. When I get home the files are there.
Once I forgot to disconnect my dropbox and someone at the studio trashed the folders and they were deleted on my home machine. I remotely disconnected their connection from the web interface and restored my folders to the previous checkpoint.
I can't imagine a simpler, more efficient mechanism for keeping things organized and backed up. I also have a separate backup service on the same drive of course, just in case.
The only annoyance with dropbox I have is there are certain scenarios where you can't play audio from the website and are forced to download it, which is annoying when sharing links.
That and I wish I could give them more money for more space.
Moral of this story is that packrat is really important. It's more or less reckless to use Dropbox without it, because explaining the difference between a syncing service and a backup service seems to be next to impossible. In fact, IMHO they could even rename the company "PackRat."
The only annoyance with dropbox I have is there are certain scenarios where you can't play audio from the website and are forced to download it, which is annoying when sharing links.
Agreed.... and once they really get their media and file rendering act together, that multi-billion dollar valuation is going to make a lot more sense. Despite what I said earlier about renaming the company, they're not in the "storage" business, but rather the "delivery" business.
Have you tried asking to pay for more space? I would be willing to pay for a package somewhere between the 1TB pro account and the very expensive Business account.
Yeah as toomuchtodo mentioned there is no option except business and there is a minimum of, I believe, 5 accounts, so at $15/per user/mo thats $900/yr vs the ~$200/yr I'm currently paying. Maybe worth it as each band member could have their own account, but it's a pretty big leap when I really only need 1-2 TB more.
I really don't understand all the negative Dropbox sentiment these days. Who cares if the investors aren't getting a 10x return? How does that materially affect you as a customer? Why are you even cheering for that anyways?
I am a very happy paying Dropbox customer. It's a solid product that does the job very well and isn't stuffed with a bunch of other useless features I don't need. It's pretty much perfect.
Companies that don't satisfy their investors' expectations... they often resort to moves of desperation. And those moves are more often than not anti-consumer and even anti-business.
My last two companies invested heavily in dropbox and both ditched it for box.com within 2 years. Dropbox is "growing" their business while they're getting beaten on value by more than one competitor.
I'd be shocked if Dropbox is still in business in 5 years. It's kind of sad because it was the first mover and I loved the service when it was the only one, but now there are a million options that are probably just as good. Not to mention they've never made a dime on me personally or anyone I know (and as I understand it that's true for 95% of their user-base). Our company actually banned Dropbox.com because we decided we'd rather do everything on Google drive for free instead of pay Dropbox for corporate use. The whole industry also has bearish macro outlook as storage continues to get cheaper and yet people's need for it doesn't grow proportionately.
but now there are a million options that are probably just as good
Few of them have block-level sync or LAN sync. In practice, Dropbox is often much faster than alternatives, especially when syncing/modifying large files.
The only programs that are better at it are Bittorrent Sync and SyncThing. And they are specifically made for peer to peer syncing.
Yeah, I was sold on Dropbox the first time I stood up a machine and it synced a couple of GB in a few minutes. After scratching my head because my broadband isn't that fast, I realized it had quietly sideloaded the data from my other signed-in box on the network. That was pretty spiffy.
I think you make some interesting points, but I'm not convinced that I agree with all of them.
> I'd be shocked if Dropbox is still in business in 5 years.
I agree that Google Drive, iCloud, Amazon Cloud Drive, Box, etc. are all viable competitors. But (admittedly, anecdotally) everyone I talk to seems to use Dropbox. Personally, I use it on all of my devices.
I also use Box for business-related storage, and Google Drive for presentations, documents, etc. I use Amazon Prime Photos to store my photo roll. I don't think that any of those detract from Dropbox's primary use case of sharing files between different machines. I don't think people think of Dropbox as "cloud storage," but instead as a way to move files back and forth and have constant availability on machines they use.
> Our company actually banned Dropbox.com
I work in information security, and although I haven't banned Dropbox from a network layer, I can certainly relate to the sentiment. You have to remember that it's not just corporate use that caused the Dropbox ban -- your sysadmins also don't want people putting work documents in Dropbox to work on from home, because so many people already use Dropbox in their personal lives. The fact that your organization blocked Dropbox, instead of just saying "we use Google Drive," speaks to the fact that so many people are already happy Dropbox users and would just as soon continue to use it.
That said, I agree with you wholeheartedly that Dropbox, if going for major corporate adoption, will fail in its endeavor. I don't think that Google Drive is the primary competitor -- in my opinion, it's Box. Yes, you have to actually pay for Box, but in many corporate environments, that's not really much of an issue.
Said another way, I predict Dropbox failing in a corporate environment for the same reason they will continue to succeed with personal users: businesses want "cloud storage," and personal users want "easy file share with myself."
Maybe I'll look back on this comment in a few years and see that I was dead wrong, but for now that's where I'd put my money.
I suppose my point is more that it's great for personal use, but they've failed to monetize that aspect and AFAIK their primary monetization strategy is corporate which I agree will fail. In other words, I don't think success in the consumer space will be enough to sustain the company. Perhaps they won't completely fail--I could see them being acquired, but it would definitely be under even their valuation raised 2 years ago. Drew Houston and the early VCs will still make out like bandits, but the workers won't get much for their stock options.
Dropbox will be in business by acquisition. How about Microsoft acquiring dropbox? Their onedrive is not as good as dropbox and will surely help in their cause.
"In 2009, Steve Jobs wanted to pay more than a hundred million dollars for Dropbox. As Houston later told Forbes’ Victoria Barret, when he politely turned down his hero’s offer, Jobs declared that Dropbox was a feature, not a product."
>Replace your iCloud abomination with Dropbox when the time comes.
Sure, but if they did who says they will let you write files directly to Dropbox?
They'll probably have you store your stuff in a hundred different crappy SQLLite databases tied to iNamed applications on your phone and Macbook, just like they do now.
If Microsoft and Apple weren't able to build good alternatives, what makes people think that they won't fuck up an acquisition? Clearly storage for them isn't a priority. So I don't get it. But then I wasn't much into sports either.
Building something is hard. Writing a check is easy. Apple could easily make the payout contingent on a smooth integration. Apple could even have a foreign subsidiary purchase Dropbox, thereby allowing for full use of its external profits it hasn't brought back to the US due to taxes.
That's the benefit of cash. It solves almost every problem.
They have rules to prevent this. See IRC Section 956. In essence, the use of a foreign sub to acquire a US company would be treated as a deemed dividend back to Apple.
I'm not a tax expert, but I think dropbox would have to be a foreign company in order for them to purchase it with foreign cash and avoid tax problems.
Probably not for 'power' (does that work?) users, but for people like my mom they're pretty much already gone. They started disappearing for her when iTunes was dumping her music into a directory and she had no idea, to her it was indistinguishable from how Spotify works, so now that everything streams like magic she pays zero attention to files or the idea of files. She thinks in terms of galleries, not image files. If I open some sort of file explorer in front of her, I've just gotten 'techy' on her.
A few years ago when I was doing a help desk job, the sentiment was similar. I asked a user to navigate to a directory on Windows and he stopped me. He said, "Hold it now, I'm not a computer person."
So maybe not 'go away,' but perhaps become increasingly invisible and especially so to average users.
iCloud backs up your entire phone. Most apps store stuff remotely on their servers. And even in the case of photos various services will sync those off your phone as well.
I agree but it's from mismanagement/sprawl/lack of focus rather than poor macros. If storage costs and storage needs are really going down then I would be much more likely to use a cloud storage service. I would much rather have some "it just works" cloud magic but as it is right now they are just not economical for individual users. Are storage costs really decreasing? There haven't been any price drops on consumer HDs in years and I don't recall any S3 price drops recently...
Given Apples 7.6% share of the 'PC' market as reported in 3Q15 (http://www.gartner.com/newsroom/id/3146617) I wouldn't be suprised that the vast majority of dropbox users are on Windows, simply because the vast majority of computer users are.
What's the actual issue with iCloud? It takes three seconds to turn it on, and select what I want to sync. Done. Backing up, syncing calendars, contacts, and notes to all my devices with zero problem.
I'll admit I haven't tried yet, but I'm going to hazard a guess that if I try to setup icloud on my Linux machines at home or my Android devices, I'm not going to get very far.
With Dropbox I get all the way, everywhere, with no hassles. Thus Dropbox has my business.
I'm not sure I can answer generally but from a personal point of view currently my notes are not syncing with my iPhone - God knows why - and last year when my iOS update f'kd up and I had to wipe the phone my iCloud backup wouldn't restore - some kind of corruption. Luckily there was a 3 month old iTunes backup on my disk so I didn't lose all data. So it's not perfect.
That's like saying well I'm not going to get very far running a Playstation 4 game on my Super Nintendo. You can't count software that isn't even supported on a system. Yes, DropBox has a client for many systems, but saying DropBox is better because iCloud doesn't even exist on Linux make no sense.
> but saying DropBox is better because iCloud doesn't even exist on Linux make no sense.
makes sense for me. I don't use iCloud because of that. It doesn't have the features that I need. Although "Better" is subjective. Dropbox might not be better for you, but it "makes sense" for some people
Well it does make sense if he says Dropbox is just as good as iCloud on Mac and even supports other platforms. Thus it's better if you aren't only using Mac.
I've noticed that iCloud has a really hard time removing things. For instance, I've tried to delete some "keyboard shortcuts" for about a year now and every few weeks it manages to restore every last one to all of my devices. It doesn't seem to matter if I explicitly delete them from all devices.
Every cloud service needs a "delete, damn it, I really mean it" option, otherwise it seems their sync mechanisms are too conservative and resurrect things forever.
When (not if) it breaks, you're screwed: no way to get access to the data, the client is completely opaque and there's no logging or a way to reset it. When it stops syncing, or they “handle” a network or server error by silently logging you out, you won't know until you miss a meeting or use stale data.
The main reason I pay for Dropbox is that simple model. I have a full copy on every machine, and if my internet connection fails, they go down, or something breaks I can just copy files like normal. If I see something odd, there's a full log & the ability to revert any changes.
There are times where boring is good and your core personal data is one of them.
dropbox is so easy, people accidentally install the client on the way to their files. i dont see people accidently installing icloud. i cant see anyone making the case that icloud is EASIER to initialize than dropbox. it just ISNT better at being foolproof. no matter how foolish you are, you cant screw up getting dropbox going.
Ditto. Pretty sure having iCloud on is actually the default in the El Capitan (latest OSX) setup.
It integrates really nicely to become the default document storage location for most (non-developer) apps as well.
The only trouble I had was to have it replace the "Documents" folder in the Dock so I could just treat it like a cloud version of the regular documents folder.
iCloud data store syncing is OK, but file syncing is unreliably slow. Unlike Dropbox, it doesn't have the "two computers synced before I even turned around from one to the other" experience.
Dropbox really proved out how valuable "it just works" in the cloud can be. Their first few years of execution were phenomenal and the product provided a real value. I remember discovering that I could mock up iPhone apps in photoshop on my desktop, save jpgs to dropbox and open in the app to see what the screens would look like immediately on my phone. Delightful. And then... none of their acquisitions or product initiatives stuck and they added a questionable board member. Anyone have insight in the last couple years of stumble? I'm at a loss.
It's not often that companies nail one thing really well ... and then nail a second and third thing. Dropbox is amazing at cloud storage and syncing. Why do people expect them to develop great products beyond that?
1. It works, with fewer problems than any other sync / cloud storage that I've used.
2. It has enough people using it outside of work that it's getting paying business customers (the Linux effect?)
If either of these falters (if 1 falters, 2 does too) then they'll be gone. There are plenty of competitors and some even do sync well enough that people will use them.
I'm rather upset that they've dropped Carousel, as it's probably the app my girlfriend and I use most on our phones, but I'd only leave Dropbox if they didn't fold enough of the Carousel features back into the Dropbox client - or there wasn't a third party app that could provide similar functionality using our Dropbox storage.
I agree. I actually use Dropbox, Drive, and OneDrive. I've only used OneDrive once to share some download links once. The only real reason I use Drive is because of Google Docs. For everything else I use DropBox because I trust them more. I've never ever had a problem with it. Also DropBox hasn't had major scandals and for the most part stays out of the news. When a company is basically holding your private stuff for you that's a huge plus.
They were the first dominant syncing solution. Practically everything needing this feature has integrated DB. Beyond DB, the competition is a mix of Google Drive and iCloud, and maybe something else. Maybe if iOS and Android had centralized the interface to these types of features, DB would have gone away years ago, or adapted to the market.
Me too. Dropbox is fast and simple, it's my "sneakernet" at home. I commonly copy files between a Mac and a PC for some projects I work on. Letting Dropbox handle the sync is the most simplistic way to go about it. Most of the files are 1GB or less, so it really doesn't take much time for them to sync, and I have the added bonus of backup and easy off-site access.
My dayjob uses Box, and it works OK, but has just never seemed unique enough to switch over too.
I think I have the $100/year or whatever it is Dropbox plan, I honestly don't even know. I don't seem to run out of space, and it doesn't cost very much so I just don't think about it at all. That, to me, is the hallmark of a valuable service.
But how long will it be until OneDrive or iCloud Drive catch up? I have 1TB of OneDrive space for "free" with Office. I have plenty of spare space in my iCloud storage plan. If either of those two options catch up to Dropbox's reliability, why would I stay with Dropbox?
In addition to the points made by 'thesimon' about OneDrive pricing:
Apple's cloud storage offering includes 50GB ($12/year), and 200GB ($36/year) tiers. I'd bet 99% of Dropbox users could fit in one of those tiers and save a lot of money.
I have a 1TB OneDrive and 200GB iCloud, but I spend money on Dropbox because I trust them to be reliable. If the others catch up on reliability, where is the path for Dropbox's survival? (They're smart guys, so I'm sure they've thought about it)
Now imagine there are many other people who have this one other reason they still use XYZ. That's how many companies stay in business. I worked at a company where customers would call angrily and shout "The only reason I am still with you guys is because of the designs you guys have, but your service sucks, blah, blah, blah...," and this conversation usually ended with "OK, 4125-5623-8451-XXX...Expiration Date XX-YY... OK, Thank you!"
I stopped using Dropbox after the Snowden revelations broke loose. Dropbox does not use end-to-end encryption. You have to encrypt by yourself.
That is not particularly hard, but it still means that you are storing your files in a honeypot from which the NSA regularly draws a juicy feed.
Especially users outside the USA should never use a cloud service that lacks automatic end-to-end encryption.
As a non-American, you would also reveal your identity (along with your data) to a host of American surveillance agencies by paying by credit card. So, that is another non-starter. Along with unencrypted data, that is just an accident waiting to happen. They would store your dropbox data alongside Angela Merkel's digitized private phone calls to her husband. "I love you honey!". Seriously, I pay for cloud services only with bitcoin.
As an otherwise-happy Dropbox customer, it does concern me somewhat that there has been very little innovation in the core product for several years. They seem focused on building a halo of lock-in services instead.
I don't know, their core product is so solid. It's one of those things I can install and never think about again, it just works. Maybe there's no need to innovate there?
There's need for innovation because Google/MS/Apple and such are integrating cloud-sync right into the operating system (and its only a matter of time before their sync tech is good enough or better than DB's sync tech).
>>> Dropbox signed up 13 large companies with more than 1,000 users each
So let's say the average employee count is 2k and they negotiated to pay $100/user/year. 13 * 2000 * 100 = $2.6M. Even if we double the average employee count and assume they pay standard $150/yr, it's $7.8M.
Assuming that business offering is their strongest bet to get as strong as some investors might like (i.e. justify the valuation), how many of these do you need to justify $10B valuation? And how big is the market?
It's very hard to be optimistic about their future when their main competitors are Google (Drive), Microsoft (OneDrive), Apple (iCloud), Amazon (CloudDrive), Box etc. Virtually every single one of big players nowadays offers cloud storage. I cannot see Dropbox succeeding in the long run, especially with the amount of innovation they've put in their product in the past two years (close to none).
I think they missed their opportunity - namely what they're doing with Paper now. I like Dropbox a lot, but most people I know work with Google Drive/Docs. The whole idea of "files", to me, is becoming more and more abstract and remote. I'd probably find more use for Dropbox if I was using Office 365, but then there is OneDrive for that.
Bottomline, I have less need for Dropbox outside of backing up photos. And there are any number of services for backing up photos that are frankly better from a usage PoV (though not from a syncing PoV where they are clearly better). I have an iPhone - I used iCloud to download the pictures to my MBP and then have Google Sync running to push them to Google Photos. iCloud's photo service is still pretty terrible - but using this method I get all the goodness of Google Photos (e.g. let me find all the pictures of my dog or my kid).
Dropbox has the same problem a lot of the moderately successful unicorns have; it's a good product managed by smart people that would be much better off as a right-sized stable lifestyle business a la 37 Signals / Basecamp than as an attempt at a world-beating massive-growth juggernaut like Google or Facebook. Unfortunately for them (and Evernote, and a whole host of others), once you've signed that deal for the huge late-stage VC cash infusion at a fantasy-land valuation, there's no going back.
The problem being, how many of these businesses would have won any market share without early VC investment enabling the companies to dump money into customer acquisition at a loss?
Probably a few of them, but I'm guessing some other company with a similar business model would have come along with VC backing and eaten their lunch (sure, that company might then be in the exact same place as the current over-valued late stage companies).
> The problem being, how many of these businesses would have won any market share without early VC investment enabling the companies to dump money into customer acquisition at a loss?
The problem isn't with early VC money. Dropbox's early backers would have still made a gigantic return on Dropbox setting at a $1bn valuation.
Really, it's not even a problem with their series B ($250M at $4bn). $4bn is a reasonable eventual valuation for Dropbox.
The problem is that they didn't stop there. They raised another $850M in 2014 (in two rounds), which was basically sold on the promise of it being necessary to "win" the storage wars and acquire a monopoly.
By 2014, Dropbox was already a stable company with hundreds of millions in revenue. The only reason to raise money was to shoot for hitting Google/Facebook status (owning a lucrative monopoly). If they had instead accepted that their eventual outcome was a $3-5bn software company, everyone could have won: employees, investors, founders, etc. (Atlassian is an example of a company which did eventually raise substantial VC, but instead of gunning for a monopoly IPOed at a $4bn valuation.)
The problem is that founders ultimately have huge egos and want to be the next Mark Zuckerberg or Larry Page: commanding monopolies so lucrative that they can spend billions on zero-return "cool nerd shit."
There has been a major shift as of late where IPOing at those mid-late rounds just isn't the trend anymore. Public markets are a cruel beast where companies are living and dying by quarterly reporting so these skyrocketing growth startups have less incentive to let the public judge them. They also don't want to leave too much growth opportunity on the table when going public anymore.
So it makes sense why companies would want to stay private if someone is willing to give them the cash they think they need. Problem is, those investors also want to make a huge return, so a 20B valuation is going to come with some nasty liquidation preferences/ratchets etc. to protect the money.
That's a great question, and one I won't pretend to have the answer to. On one hand, Basecamp has carved out a very profitable niche for themselves despite venture-backed competition from Jira and others, so it's certainly possible. I also think that there is a big difference between taking money when you are small with typical angel / seed-round terms and taking late-stage money with 2x VC liquidation preferences and a private valuation north of $1 billion. Then again, like you said, it can be very tough to turn a profit when you have to compete with companies undercutting you by subsidizing their prices with an enormous reserve of easy VC cash.
Which of course is precisely why we should have an economy which allows ordinary people the financial freedom to create these companies on their own, rather than vesting that power in only a few.
Not quite sure what this quote is implying? That the government should take over VC, or that by solving income inequality, customer acquisition would be cheaper.
With regards to the second point, as long as as potential outcome of the VC method can bring about some EV of $1B, then there will be someone willing to spend $999M to capture that market.
> once you've signed that deal for the huge late-stage VC cash infusion at a fantasy-land valuation, there's no going back.
Can't you just raise money at a lower valuation (the dreaded down-round)? You might lose the employees who bought options at the unicorn valuation, but it wouldn't necessarily kill your business.
There is currently no way that 50 people (roughly the number of employees at Basecamp) could support a Dropbox-like product at scale. It's just impossible. At their scale, the technical challenges of maintaining a decent user experience (good transfer speeds, little downtime, no lost data, etc.) are enormous.
Why do you need more people when you grow past a certain size? At Drop box's scale they surely must manage their backend at scale and not have people babysit servers. If DBX are using Amazon's S3 for storage then that's one less massive headache to take care of.
Just for comparison, Instagram had 13 employees when they sold to FBK and they sure had scale at that point.
Is there a significant difference between running a 1000-employee business vs. a 50 people company going after the same opportunity?
I like a lifestyle business, however if you can clearly go for a $10B instead of $30M while spending the same 10 hours at work and surrounding yourself with 10 times the amount of smart people, then why not.
I think you're underestimating the complexity of building scalable file syncing across multiple platforms that pretty much just works from the end users' perspectives.
Nowhere did i say, "Dropbox should be the same size as 37 Signals." I merely suggested that they would have been better off trying to be the right size for their revenue profile (which is probably larger than 37 Signals, but certainly much smaller than their current growth target of Google/Facebook/Amazon/etc. size).
$5M valuation isn't exactly suffering. The problem is that the failure of Box as a thriving company has put a ceiling on how much Dropbox can make in the public markets.
If Dropbox does need more money, if it can't get profitable with the funding it already has, then it will be in for tough times. If it is forced to go public before it's ready, like Square, then its employees will suffer much like Square's employees have with its stock price.
I have used Egnyte, almost since their beginning. Surprised no mention here. Pretty good enterprise offering, including hybrid cloud or self-hosted options. The only complaint I've had is they unilaterally tried to double my subscription price to match their competition. I negotiated a compromise and now I have some weird custom tier.
Completely commoditized service with a few core parterships scattered here and there. Not able to take on the better capitalized players i.e Microsoft, Google, Apple, heck even facebook. Long term odds are not great, unless they merge with a complete ecosystem player like the above
I use rdiff as an open source, simpler alternative to Dropbox for syncing files across a network. Dropbox uses the same library of functions as rdiff: librsync.
online consumer storage businesses are dead-ends; consumers will own data appliances in their homes that are as easy to use as a fridge, with massive symmetric piping, port control, redundancy, etc.
In my mind Dropbox became a company not worth supporting when Rice joined Dropbox's board (http://www.drop-dropbox.com/). I don't know what their future holds. But personally, with a board member who advocates warrentless surveillance it seems unlikely that we share similar views on the security of my data, and I wont be using their service.
I'd hope their customers are also looking at the security of their data in light of this and seeking out alternatives.
>with a board member who advocates warrentless surveillance it seems unlikely that we share similar views on the security of my data
Finally someone said it.
Putting my files on someone else's computer is a concept totally alien to me.
If the mob or a russian crime ring offered free online storage, openly advertised as such, I'd fully expect people to line up to store their tax returns and visa statements on it.
I keep that stuff encrypted and offline most of the time in my own home, much less on dropbox.
I think in a twisted way it's sort of beneficial as outright there's no promise of encryption or security, implying you should take care of it yourself, client-side.
This follows the Unix philosophy where a utility does one thing and does it well, and if you need two jobs done, you pipe one through another.
In reading about Sync, I was surprised to see their claim that they never hold the encryption keys, even when signing in from mobile devices. This is in contrast to SpiderOak, which says that if one signs in from a mobile device or on the website, they hold keys in RAM for the session.
It's off topic but... Personally I'm the guy who ticks "prefer not to say" when a form requests my "ethnic origin" so I don't particularly like that method of measuring diversity.
I wish they had more choice regarding purchasing more space. I'm not interested in 1TB and find 10$ per month too much if I wont even use 10% of it. Although if there is a cloud provider I'd trust that sync would never fuck up, I'd be Dropbox.
Google Drive still thinks it's normal to re-download the cloud folder instead of letting me install Drive in the same location after a system reinstall, where all the files already exist. And to trust them 1TB with that behaviour ? Hahaha.
Your first concern often comes up in Dropbox threads. Of course they could easily offer a plan at 0.5TB / $5 or some such. They just don't want to. They'd lose more revenue from existing customers dropping from $10 to $5 than they'd gain by new customers going from $0 to $5.
It's not that Dropbox can't offer less space, it's that they're not interested in making the baseline price anything lower than $10. Put another way, Dropbox is perfectly happy to get along without customers who think the difference between $5 and $10 is something to care about.
Your latter statement is just plain incorrect. Google Drive app will recognize your old files and re-associate them with the cloud counterparts. Its had this capability for over a year now.
The problem is that Dropbox isn't that complicated. They were able to win in the beginning because they were a novel idea. Now that they have proven the business model, it will invite competitors (which has already happened).
A bigger company with more resources will eventually be able to put them out of business.
It would have been better to cash out. Unless they truly have something proprietary with a higher barrier to entry, it will be a difficult road ahead.
Honest question: WTF are they doing?