The only thing stupid is your clueless comment... they have a 1B+ valuation and a foundational business model across a broad set of devices and a decent enterprise story.
If it was $999 million maybe should have considered... but if it was $100M then how smart of them.
It takes a lot of revenue to make your company really worth 4B dollars. Or at least it should.
It is called discounting the future revenue stream to its net present value. Basically, you figure out how much you would pay for a stream of revenue (often using a time horizon).
Lots of assumptions are necessary, including, most importantly, the proper rate of interest to use for the selected time horizon, and not to maention, the projected revenues over that horizon (and lots of other stuff).
Using certain assumptions, and given certain techniques, it is claimed that $4B is a fair price for the expected future revenue.
IOW, they could sell .25% of the company now and get what Apple offered them a couple of years ago. In theory.
Even if the valuation is off by a factor of ten (not bloody likely) they could get everything Apple offered them, and still retain 75% of the company, by selling off stock in a private deal with certain types of investors.
In 2009, 9 figures would not at all be a low ball offer. In fact, you wonder if it might have been an audacious offer for a company totally reliant on Amazon.
Well, given that a couple of years later, they are valued at 40 times that amount, it is anybody's guess whether Apple's offer was sufficient to get what Apple desired.
No, wait. We need not guess about that.
What is the subject of guesses is whether Apple's offer was reasonable.
Well, given that a couple of years later, they are valued at 40 times that amount, it is anybody's guess whether Apple's offer was sufficient to get what Apple desired.
No, wait. We need not guess about that.
What is the subject of guesses is whether Apple's offer was reasonable.
Assuming 100mm was the offer. And assuming 4 Bln is realistic.
The people who make the valuation are the people who are selling the deal. Might there be a bit of perverse incentive?
Of course there is. That is why these sorts of deals have audited financials and mandatory disclosures of many important factors.
So maybe the company is only worth 35 times what Apple offered, instead of 40 times Apple's offer. Because the investment bankers are optimistic with some of their projections.
Of course there is. That is why these sorts of deals have audited financials and mandatory disclosures of many important factors.
So maybe the company is only worth 35 times what Apple offered, instead of 40 times Apple's offer. Because the investment bankers are optimistic with some of their projections.
You sound very knowledgable about finance and valuation. Perhaps you might be interested in some Collateralized Debt Obligations that I can get you. All the investment bankers will assure you that they're fairly valued.
blah blah blah. echoing what others said, he's an idiot.
Mark my words: DB will be out of business within 5 years.
Why? Free services from Google, Microsoft, and Apple which will only get better as time passes.
There's a time for dreams and there's a time to cash out. Knowing the difference is what made Steve Jobs the success that he was and will make this guy fade in history broke and forgotten.
Quote:
Originally Posted by Jonamac
This is fascinating. A lot of people suspected Apple would have tried this.
I admire this guy for refusing. He must have been tempted. The deal would probably have meant huge wealth and a job at Apple integrating his technology with Apple's systems and who wouldn't be tempted by that? I think he has cajones.
People are talking about iCloud, but this was two years ago. It was a judgement call and it's far too soon to say he made the wrong decision. I'm sure DropBox are worried about iCloud; the excellence of their product shows they have the intelligence to understand Apple is a formidable opponent.
For the time being, DropBox offers functionality that iCloud does not, including being completely cross-platform. They'll be safe for now, but in the long-term I suspect it'll be a different story.
Either way, I admire a man who turns down enough money to retire to his own private island to carry on developing a company he loves. I would imagine Steve Jobs admired the decision even if he disagreed with it.
As much as I love APple, I believe they could have ruined the DropBox that I use every day. I liked it so much that I purchased the 50 GB plan and so have most of my colleagues. It just works great for workflow and multisite production. Plus sharing a folder is excellent.
What Apple has done with iCould is what I would expect, and that is fine for many consumers, but as a Pro DropBox will likely beat it for some time. We all know Apple could catch up, but for now I will stick with DropBox and just leave iCould for some personal stuff. Besides DropBox has been far more consistent than say iDisk and if the iClouds stumbles at launch (given they had millions of users all rushing in at once) are any indication of iClouds reliability I will just let it keep my calendar and contacts in sync. iCloud is way better than MobileMe was ever with that.
Box.net offers 50 gigs for free until Dec 2. I personally haven't really fully used these types of services. I have an account with google docs that I rarely use and just signed up with Box.net for their 50 gigs. In addition to the 5 gigs from icloud, I really don't see any need to be converted into a paying customer when free services are plentiful.
icloud just has to be popular enough to steal enough customers to tank the business. and icloud will improve every year.
this year is just the core features for most people. expect apple to add more free features every year
IMO I think Dropbox did the right thing. My iCloud doesn't push mail at the moment and Find My iPhone through iCloud.com is all screwed up at the moment. Everything else iCloud, seems fine. Reminders, Calendars and Contacts seems to sync seamlessly.
Edit: Find My iPhone seems to be behaving better now but Push iCloud mail is still dubious and Find My iPhone still considers my MBP to be "Offline" even as I'm typing this.
Dropbox is a critical and essential service for many people. It is best they remain independent from Apple, especially without Steve now to crack the whip on the cloud team. Apple has a ways to go on cloud services. They have the vision, now they need their characteristic execution. The iCloud.com graphics are some of the most beautiful ever to see HTML form. But that's only the icing of the essential cake.
blah blah blah. echoing what others said, he's an idiot.
Mark my words: DB will be out of business within 5 years.
Why? Free services from Google, Microsoft, and Apple which will only get better as time passes.
There's a time for dreams and there's a time to cash out. Knowing the difference is what made Steve Jobs the success that he was and will make this guy fade in history broke and forgotten.
If Dropbox continues to be managed well as it is, Google and Microsoft even will probably throw closer to $1 billion for them. The exit strategy is clear. Keeping it running as it is under Dropbox per se, hey, that's just good karma for the company right now, because, "it just works", and it's awesome.
Did I mention Dropbox is awesome? $99 a year for the peace-of-mind it offers is... unbeatable, better than life or medical insurance at this stage.
Evernote is killer as well. Dropbox + Evernote = good stuff. They just need to maintain their momentum, throw some innovation into the mix, and secure, secure, secure even more.
BTW, yes, for critical information I make an encrypted DMG then put that on Dropbox.
FolderShare was good, Microsoft bought that and then it did the Microsoft thing, ie. go down the drain. Side note, Bill Gates should no longer be Chairman of the Board. He clearly has no more interest in Microsoft doing anything worthwhile. Maybe he knows the moment somebody else becomes Chairman Steve Ballmer is out the door. Sad, really... but evidence of "brotherhood" at it's best (or worst)?
There is no reason iCloud won't compete with dropbox. Either Apple will do it or a third party will. iCloud is a API level service. Some one just needs to write an app that uses iCloud to sync arbitrary files.
So maybe the company is only worth 35 times what Apple offered, instead of 40 times Apple's offer.
What was Dropbox's value at the time of the 9-figure offer?
Whether they accepted or declined Apple's offer I'm not fussed either way. I'm happy to use their free service in conjunction with iCloud until something better comes along. I suspect that as iCloud develops, I'll need Dropbox less and less. Even now I have to turn it off at times at work as it creates strange conflicts with FCS.
I just don't see it. They have 45 million users. They have maybe 1 million paying customers. They have to keep growing year on year. Infrastructure costs are high. Most consumers are just too stupid to see any value in paid joining. People are already spoiled by things they get for free. Google is big because they sell advertising, not because of their values. And Google is everywhere. Apple is big because they sell profitable hardware, lots. Microsoft is big because they are on every PC. Dropbox wants to stick to values, and also get big? Not going to happen. They can be small, and still be in business, you say? Well, investors want to see money, and they have given a lot. Infrastructure cost are way high for the bandwidth they need for all those free customers. I just don't see it.
Dropbox was novel for the time and is still incredibly useful, but trust me, it will become more irrrelevant as time passes. Everyone is baking in similar functionality in their ecosystems and OS, and it will be only a matter of time before dropbox is simply a service that duplicates native functionality for most people. Yes, he had 'guts' to say no, but there's a fine line between that and irrational hubris/pride/stupidity. There's something to be said of taking a good opportunity when one presents itself, after a rational look at the situation. I simply can't see dropbox becoming MORE valuable than it is now, simply less- this is the only reasonable conclusion when taking a birds-eye view of the industry.
That, and when people realise iCloud and other services like box.net do the same thing without limiting itself to one folder on the entire system, dropbox will either need to change in someway or be run out of town.
I had drop box for a while, but I swapped it out for a box.net account. I mount the box.net webdav folder using transmit and can basically have a mirror image of my file system - with box I had to duplicate everything inside that one stupid folder. Waiting hard disk space and screwing up all my lovely file structures. I'm like the Germans, everything needs to be neat und tidy.
What about revenue? $240M this year. And that's with only 4% of 50 million users paying for storage. Imagine the growth when 10% of the remaining 96% exceed their 2GB limit of free storage.
That's not particularly relevant. What matters is what the revenues were in 2009 when Apple made the offer.
But let's take the $240 M number. People are throwing around valuations like $4 B or more. Sorry, but it is extremely unlikely that the company would be worth 16 times revenues. A new, startup company with a brand new product? Sure. But Dropbox has been around a while and is well established - and has quite a bit of competition.
Quote:
Originally Posted by stelligent
As for iCloud clobbering them? Not every smartphone company has Apple's reach and those will need a storage partner. Dropbox is already in partnership with HTC.
The difference is API level services. Apple has the ability to make it completely transparent (no need to sync files manually). HTC and Dropbox can't do that.
Quote:
Originally Posted by ConradJoe
That sounds like an offer of around 6,000 times what Apple offered to Dropbox. Turning down Google's generous offer may have been a huge blunder.
But the current situation is very different.
$6 B is 6,000 times $100 M +? You're really confused.
Quote:
Originally Posted by DESuserIGN
You sound very knowledgable about finance and valuation. Perhaps you might be interested in some Collateralized Debt Obligations that I can get you. All the investment bankers will assure you that they're fairly valued.
Hardly. His math skills are no better than his logic skills. But, then, maybe that makes him perfect for your collateralized debt obligations.
I beg to differ. The initial download numbers were in the millions and iOS use iCloud also, hell, Apple sold 4 million new 4S (and no telling how many 4's also) copies this weekend.
I would say that if you don't count all those that installed on existing (laptops, iMacs, etc?) machines and just those + future sales you have a pretty good base (i.e., just new sales). At $25/year for Apple's MatchIt ($2.08/month) compared to just less than $120/year (or $9.99/month) the economics don't wash. Most fold I know find the free service more than adequate (and the fact that for getting your mom, sister, gramma, 2 yr old child signed up they keep incrementing the size).
I think they should have walked directly to the cage and cashed in that big ole pile of chips. (especially if the VC was that small).
They are young enough to do something again but hard to count on a 9 figure offer for a feature every time.
Comments
I can't believe they refused. How stupid of them.
The only thing stupid is your clueless comment... they have a 1B+ valuation and a foundational business model across a broad set of devices and a decent enterprise story.
If it was $999 million maybe should have considered... but if it was $100M then how smart of them.
2. What are their revenue prospects?
It takes a lot of revenue to make your company really worth 4B dollars. Or at least it should.
It is called discounting the future revenue stream to its net present value. Basically, you figure out how much you would pay for a stream of revenue (often using a time horizon).
Lots of assumptions are necessary, including, most importantly, the proper rate of interest to use for the selected time horizon, and not to maention, the projected revenues over that horizon (and lots of other stuff).
Using certain assumptions, and given certain techniques, it is claimed that $4B is a fair price for the expected future revenue.
IOW, they could sell .25% of the company now and get what Apple offered them a couple of years ago. In theory.
Even if the valuation is off by a factor of ten (not bloody likely) they could get everything Apple offered them, and still retain 75% of the company, by selling off stock in a private deal with certain types of investors.
In 2009, 9 figures would not at all be a low ball offer. In fact, you wonder if it might have been an audacious offer for a company totally reliant on Amazon.
Well, given that a couple of years later, they are valued at 40 times that amount, it is anybody's guess whether Apple's offer was sufficient to get what Apple desired.
No, wait. We need not guess about that.
What is the subject of guesses is whether Apple's offer was reasonable.
Well, given that a couple of years later, they are valued at 40 times that amount, it is anybody's guess whether Apple's offer was sufficient to get what Apple desired.
No, wait. We need not guess about that.
What is the subject of guesses is whether Apple's offer was reasonable.
Assuming 100mm was the offer. And assuming 4 Bln is realistic.
I'm on the $9.99/month plan and it's worth it for cross-platform syncing.
The people who make the valuation are the people who are selling the deal. Might there be a bit of perverse incentive?
Of course there is. That is why these sorts of deals have audited financials and mandatory disclosures of many important factors.
So maybe the company is only worth 35 times what Apple offered, instead of 40 times Apple's offer. Because the investment bankers are optimistic with some of their projections.
Of course there is. That is why these sorts of deals have audited financials and mandatory disclosures of many important factors.
So maybe the company is only worth 35 times what Apple offered, instead of 40 times Apple's offer. Because the investment bankers are optimistic with some of their projections.
You sound very knowledgable about finance and valuation. Perhaps you might be interested in some Collateralized Debt Obligations that I can get you. All the investment bankers will assure you that they're fairly valued.
What do you think will happen when when other folks offer an equivalent product?
Will this enterprise, no matter how good it is, still be worth 4 Billion?
Mark my words: DB will be out of business within 5 years.
Why? Free services from Google, Microsoft, and Apple which will only get better as time passes.
There's a time for dreams and there's a time to cash out. Knowing the difference is what made Steve Jobs the success that he was and will make this guy fade in history broke and forgotten.
This is fascinating. A lot of people suspected Apple would have tried this.
I admire this guy for refusing. He must have been tempted. The deal would probably have meant huge wealth and a job at Apple integrating his technology with Apple's systems and who wouldn't be tempted by that? I think he has cajones.
People are talking about iCloud, but this was two years ago. It was a judgement call and it's far too soon to say he made the wrong decision. I'm sure DropBox are worried about iCloud; the excellence of their product shows they have the intelligence to understand Apple is a formidable opponent.
For the time being, DropBox offers functionality that iCloud does not, including being completely cross-platform. They'll be safe for now, but in the long-term I suspect it'll be a different story.
Either way, I admire a man who turns down enough money to retire to his own private island to carry on developing a company he loves. I would imagine Steve Jobs admired the decision even if he disagreed with it.
As much as I love APple, I believe they could have ruined the DropBox that I use every day. I liked it so much that I purchased the 50 GB plan and so have most of my colleagues. It just works great for workflow and multisite production. Plus sharing a folder is excellent.
What Apple has done with iCould is what I would expect, and that is fine for many consumers, but as a Pro DropBox will likely beat it for some time. We all know Apple could catch up, but for now I will stick with DropBox and just leave iCould for some personal stuff. Besides DropBox has been far more consistent than say iDisk and if the iClouds stumbles at launch (given they had millions of users all rushing in at once) are any indication of iClouds reliability I will just let it keep my calendar and contacts in sync. iCloud is way better than MobileMe was ever with that.
Box.net offers 50 gigs for free until Dec 2. I personally haven't really fully used these types of services. I have an account with google docs that I rarely use and just signed up with Box.net for their 50 gigs. In addition to the 5 gigs from icloud, I really don't see any need to be converted into a paying customer when free services are plentiful.
I can't believe they refused. How stupid of them.
idiots
icloud just has to be popular enough to steal enough customers to tank the business. and icloud will improve every year.
this year is just the core features for most people. expect apple to add more free features every year
IMO I think Dropbox did the right thing. My iCloud doesn't push mail at the moment and Find My iPhone through iCloud.com is all screwed up at the moment. Everything else iCloud, seems fine. Reminders, Calendars and Contacts seems to sync seamlessly.
Edit: Find My iPhone seems to be behaving better now but Push iCloud mail is still dubious and Find My iPhone still considers my MBP to be "Offline" even as I'm typing this.
Dropbox is a critical and essential service for many people. It is best they remain independent from Apple, especially without Steve now to crack the whip on the cloud team. Apple has a ways to go on cloud services. They have the vision, now they need their characteristic execution. The iCloud.com graphics are some of the most beautiful ever to see HTML form. But that's only the icing of the essential cake.
blah blah blah. echoing what others said, he's an idiot.
Mark my words: DB will be out of business within 5 years.
Why? Free services from Google, Microsoft, and Apple which will only get better as time passes.
There's a time for dreams and there's a time to cash out. Knowing the difference is what made Steve Jobs the success that he was and will make this guy fade in history broke and forgotten.
If Dropbox continues to be managed well as it is, Google and Microsoft even will probably throw closer to $1 billion for them. The exit strategy is clear. Keeping it running as it is under Dropbox per se, hey, that's just good karma for the company right now, because, "it just works", and it's awesome.
Did I mention Dropbox is awesome? $99 a year for the peace-of-mind it offers is... unbeatable, better than life or medical insurance at this stage.
Evernote is killer as well. Dropbox + Evernote = good stuff. They just need to maintain their momentum, throw some innovation into the mix, and secure, secure, secure even more.
BTW, yes, for critical information I make an encrypted DMG then put that on Dropbox.
FolderShare was good, Microsoft bought that and then it did the Microsoft thing, ie. go down the drain. Side note, Bill Gates should no longer be Chairman of the Board. He clearly has no more interest in Microsoft doing anything worthwhile. Maybe he knows the moment somebody else becomes Chairman Steve Ballmer is out the door. Sad, really... but evidence of "brotherhood" at it's best (or worst)?
So maybe the company is only worth 35 times what Apple offered, instead of 40 times Apple's offer.
What was Dropbox's value at the time of the 9-figure offer?
Whether they accepted or declined Apple's offer I'm not fussed either way. I'm happy to use their free service in conjunction with iCloud until something better comes along. I suspect that as iCloud develops, I'll need Dropbox less and less. Even now I have to turn it off at times at work as it creates strange conflicts with FCS.
Dropbox was novel for the time and is still incredibly useful, but trust me, it will become more irrrelevant as time passes. Everyone is baking in similar functionality in their ecosystems and OS, and it will be only a matter of time before dropbox is simply a service that duplicates native functionality for most people. Yes, he had 'guts' to say no, but there's a fine line between that and irrational hubris/pride/stupidity. There's something to be said of taking a good opportunity when one presents itself, after a rational look at the situation. I simply can't see dropbox becoming MORE valuable than it is now, simply less- this is the only reasonable conclusion when taking a birds-eye view of the industry.
That, and when people realise iCloud and other services like box.net do the same thing without limiting itself to one folder on the entire system, dropbox will either need to change in someway or be run out of town.
I had drop box for a while, but I swapped it out for a box.net account. I mount the box.net webdav folder using transmit and can basically have a mirror image of my file system - with box I had to duplicate everything inside that one stupid folder. Waiting hard disk space and screwing up all my lovely file structures. I'm like the Germans, everything needs to be neat und tidy.
What about revenue? $240M this year. And that's with only 4% of 50 million users paying for storage. Imagine the growth when 10% of the remaining 96% exceed their 2GB limit of free storage.
That's not particularly relevant. What matters is what the revenues were in 2009 when Apple made the offer.
But let's take the $240 M number. People are throwing around valuations like $4 B or more. Sorry, but it is extremely unlikely that the company would be worth 16 times revenues. A new, startup company with a brand new product? Sure. But Dropbox has been around a while and is well established - and has quite a bit of competition.
As for iCloud clobbering them? Not every smartphone company has Apple's reach and those will need a storage partner. Dropbox is already in partnership with HTC.
The difference is API level services. Apple has the ability to make it completely transparent (no need to sync files manually). HTC and Dropbox can't do that.
That sounds like an offer of around 6,000 times what Apple offered to Dropbox. Turning down Google's generous offer may have been a huge blunder.
But the current situation is very different.
$6 B is 6,000 times $100 M +? You're really confused.
You sound very knowledgable about finance and valuation. Perhaps you might be interested in some Collateralized Debt Obligations that I can get you. All the investment bankers will assure you that they're fairly valued.
Hardly. His math skills are no better than his logic skills. But, then, maybe that makes him perfect for your collateralized debt obligations.
People not running OS X 10.7.2.
I beg to differ. The initial download numbers were in the millions and iOS use iCloud also, hell, Apple sold 4 million new 4S (and no telling how many 4's also) copies this weekend.
I would say that if you don't count all those that installed on existing (laptops, iMacs, etc?) machines and just those + future sales you have a pretty good base (i.e., just new sales). At $25/year for Apple's MatchIt ($2.08/month) compared to just less than $120/year (or $9.99/month) the economics don't wash. Most fold I know find the free service more than adequate (and the fact that for getting your mom, sister, gramma, 2 yr old child signed up they keep incrementing the size).
I think they should have walked directly to the cage and cashed in that big ole pile of chips. (especially if the VC was that small).
They are young enough to do something again but hard to count on a 9 figure offer for a feature every time.