Not sure why this is on the front page but anyway...
> But a lesson from this story is twofold: when Steve Jobs tries to buy you, take it. Economically, the return from a capital efficiency standpoint would be much better. Second, public companies that are truly just a feature never give you great returns.
Dropbox was a private company when Jobs offered to buy it for $800 million in 2009. Drew Houston (the founder) has collected hundreds of millions of dollars in compensation since then and is today worth over $2 billion. He's also on the board of Meta.
So the point about investing in companies that are features might be a decent (if obvious) one for retail investors looking at public equities, but the lesson here isn't "when Steve Jobs tries to buy you, take it".
I was referring to multiples on invested capital. Plus, it's a bit hurtful when you IPO your company, the stock stays flat if not down, and you step down; I think an Apple acquisition like that is much more of a happy ending IMO.
I would have taken the 800 million and retired. Would easily be worth 1.5 billion with simple investment. And you would not have needed to work those 17 years.
> But a lesson from this story is twofold: when Steve Jobs tries to buy you, take it.
Not quite sure how the author reached that conclusion, considering – by their own calculations – Dropbox is profitable, rich on cash flow and worth at minimum 10x what Steve Jobs offered for it.
Right, but you have to consider how early on this was, with little venture raised; multiples are way better. My point was bundling wins in the long term.
Yeah, if he had sold and taken his money and invested it all in BTC or FB or Nvidia he would have been one of the richest people in the world.
What you're missing is that he was able to build his company, run it for years, get paid well and step down from the CEO position with a stake worth a couple of billion dollars.
You can't always reduce everything to money. Lots of entrepreneurs, perhaps the majority, would consider Drew's outcome to be the ideal one: you get to do what you love, raise your baby and earn a fortune.
Not everyone wants to sell out, start a family office and spend their days on a boat pondering what the purpose of life is and what they should do next.
Not spending time with 10/100/1000 millions people very much I appreciate there may be a boundary between 10 amd 100 but between 100 and 1000 I remain unsure there is a functionally useful distinction which would motivate me, per the money. Maybe it's about the zero as a rei-ified thing in itself but if somebody decides to stop at 100 and you argue they should have driven to 1000 what axiomatically makes you "right"?
This feels like a judgement purely in financial numerology. Is bigger of necessity "better" for every founder?
I used to use Dropbox at work and also personally.
Work didn’t like it as Dropbox was new/unknown and eventually banned us from using it. This was about 15 years ago and the only way to share files between colleagues was to manually upload a file to their shared drive (through a browser) and then ask your colleague to go download it.
Works Dropbox was replaced by Microsoft. My personal Dropbox was replaced by Google Drive, and then by iCloud.
Nice to know Dropbox is still make lots of cash really. They started it all.
I mean if we're going to get pedantic like that, then here is the classic Dropbox evaluation:
BrandonM on April 5, 2007 | parent | context | favorite | on: My YC app: Dropbox - Throw away your USB drive
I have a few qualms with this app:
1. For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software.
2. It doesn't actually replace a USB drive. Most people I know e-mail files to themselves or host them somewhere online to be able to perform presentations, but they still carry a USB drive in case there are connectivity problems. This does not solve the connectivity issue.
3. It does not seem very "viral" or income-generating. I know this is premature at this point, but without charging users for the service, is it reasonable to expect to make money off of this?
Bending Spoons must be watching Dropbox closely. Like the other companies that have been acquired by them, Dropbox has reached its final stage of stability.
I recall I was using Dropbox on Windows 2003 and Mac OS X 10.4. I was student and actively writing Office documents, AutoCAD, NanoCAD, LabVIEW, plenty of cryptic formats. Eventually Dropbox stopped working on Mac OS X 10.4. And I was not student anymore, I was not dealing with folders. As developer I worked with TortoiseHg and BitBucket, Mercurial repositories and reStructured Text wikis. And returned to neither Dropbox nor similar alternatives. By inertia I synchronized with Dropbox, but when Dropbox stopped working on Mac OS X 10.4, it stopped at all. Eventually I've got OS upgrade, but Dropbox already gone and never returned.
I recently migrated to a new phone and one of the apps I had to re-login was Dropbox. A feeling of nostalgia washed over me. It was absolutely essential many years ago but now the competition is huge. I'm not a fan of Private Equity but if it can keep the business alive, then it's worth exploring by the leadership.
Exactly ... PE's wants shorterm return, just numbers in a sheetbook, and they special execs for such jobs. Their only "strategy" (my dog can figure out better) is aggresive monetization, layoffs pushing remaining employees to limits.
Profits goes up ... so the strategy must work, lets increase monetization more and do more layoffs.
Prices goes up, quality of service goes down.
After few years, everything goes down the drain, PE and their execs can't figure out what went wrong.
And despite their patterns giving not that great returns they keep doing it. Mostly it's an income play vs capital appreciation anyway. If you wanted the capital gains pre-seed and seed are doing well. ACA had a report which I think also got mentioned in Bloomberg.
That's an oversimplification. Private Equity's goal is to take control of the business and change it so that it has higher resell value.
Often they do sell it for parts, or they enshitify the hell out of it to squeeze revenue from loyal customers. Not necessarily because it's the optimal strategy, but because truly fixing a business is hard and these are decent shortcuts from their perspective.
But that's not a given, sometimes they do truly turn it around for the better.
I understand why it is a reasonable acquisition target for PE and worthy of exploration, but I’m not sure I understand how being acquired by PE would keep Dropbox alive longer other than shaking up the leadership and shifting priorities. Perhaps aggressively targeting enterprise customers currently using Box after rolling out the necessary features?
No, definitely agree. One of the great SaaS companies, strategy matters, though, and the early success distracted them from building a defensible business.
I was at Dropbox from 2016-2020. We were certainly trying to build a sustainable business, but there was a major identity crisis. Were we consumer web? Buy Mailbox and build Carousel, then shut them both down.
Maybe we’re Notion/Evernote? Buy Hackpad, plow a ton of money into Paper (which was legitimately good), then quietly deprioritize it.
Maybe we’re actually some kind of enterprise document productivity suite? Buy HelloSign. Plow a bunch of money into a desktop app. Pull more plugs.
A lot of smart people were trying. We made a lot of bets (too many?). None of them proved to be a second act, and the competitors eventually caught up.
I intend to write a piece going deeper into the failures; I would love to chat if you're open to it. Also, not to say Dropbox sucked or anything, it is just that the broader strategy and industry structure make it hard; if anything, the success of the first product made it difficult to evolve the business.
Sad. I still use Dropbox personally and really like their use experience, but I just don't find enough use for it to pay for a service like that. The technology proved to be far too easy to replicate and they failed to build anything that would make users stick around, I guess. Maybe moving to workspace collaboration solution like Google docs was the play?
As much as I hate it, capturing users and building a walled garden seems to be the only way to make it really big.
I'm surprised Dropbox is still around, was it 15 years ago when I used? It was something new, but after they started pushing limitations I stopped using it.
The premise of the article that "Dropbox was .. a feature, not a Product" is complete nonsense. Remember the infamous FTP guy's top comment during their launch? I have spent almost 10 years working on making that vision a reality [1], and there are entire industries built around some variation of it: digital asset management, managed file transfer, digital preservation software, electronic document management systems, ...
Call me crazy, but I think we need more Dropboxes and fewer Metas or whatever.
Make a product that solves a sufficiently common problem, and make it extremely high quality. Want more growth? Find another problem to solve and launch a product in that space.
As for Steve Jobs and selling out, Apple bought FingerWorks. That's how they ended up with excellent, multi-touch touchpads while the rest of the computing world suffered. Make great products (or "features") and never sell out to soulless megacorps.
Not sure why this is on the front page but anyway...
> But a lesson from this story is twofold: when Steve Jobs tries to buy you, take it. Economically, the return from a capital efficiency standpoint would be much better. Second, public companies that are truly just a feature never give you great returns.
Dropbox was a private company when Jobs offered to buy it for $800 million in 2009. Drew Houston (the founder) has collected hundreds of millions of dollars in compensation since then and is today worth over $2 billion. He's also on the board of Meta.
So the point about investing in companies that are features might be a decent (if obvious) one for retail investors looking at public equities, but the lesson here isn't "when Steve Jobs tries to buy you, take it".
I was referring to multiples on invested capital. Plus, it's a bit hurtful when you IPO your company, the stock stays flat if not down, and you step down; I think an Apple acquisition like that is much more of a happy ending IMO.
You're thinking like an investor, not an entrepreneur/founder.
Yes, you're right
I would have taken the 800 million and retired. Would easily be worth 1.5 billion with simple investment. And you would not have needed to work those 17 years.
But you're not Drew Houston.
Correct. At the 26 years old that he was I would take the millions and just have a chill life. Maybe start collecting rare Lamborghinis.
And maybe that's why you didn't start Dropbox.
Still started and sold my own company. Quit working. But no, it wasn’t Dropbox.
> But a lesson from this story is twofold: when Steve Jobs tries to buy you, take it.
Not quite sure how the author reached that conclusion, considering – by their own calculations – Dropbox is profitable, rich on cash flow and worth at minimum 10x what Steve Jobs offered for it.
Right, but you have to consider how early on this was, with little venture raised; multiples are way better. My point was bundling wins in the long term.
Yeah, if he had sold and taken his money and invested it all in BTC or FB or Nvidia he would have been one of the richest people in the world.
What you're missing is that he was able to build his company, run it for years, get paid well and step down from the CEO position with a stake worth a couple of billion dollars.
You can't always reduce everything to money. Lots of entrepreneurs, perhaps the majority, would consider Drew's outcome to be the ideal one: you get to do what you love, raise your baby and earn a fortune.
Not everyone wants to sell out, start a family office and spend their days on a boat pondering what the purpose of life is and what they should do next.
Not spending time with 10/100/1000 millions people very much I appreciate there may be a boundary between 10 amd 100 but between 100 and 1000 I remain unsure there is a functionally useful distinction which would motivate me, per the money. Maybe it's about the zero as a rei-ified thing in itself but if somebody decides to stop at 100 and you argue they should have driven to 1000 what axiomatically makes you "right"?
This feels like a judgement purely in financial numerology. Is bigger of necessity "better" for every founder?
I used to use Dropbox at work and also personally.
Work didn’t like it as Dropbox was new/unknown and eventually banned us from using it. This was about 15 years ago and the only way to share files between colleagues was to manually upload a file to their shared drive (through a browser) and then ask your colleague to go download it.
Works Dropbox was replaced by Microsoft. My personal Dropbox was replaced by Google Drive, and then by iCloud.
Nice to know Dropbox is still make lots of cash really. They started it all.
>They started it all.
Actually box.com was first (launched as box.net in 2005), and Dropbox was founded in 2007.
I mean if we're going to get pedantic like that, then here is the classic Dropbox evaluation:
BrandonM on April 5, 2007 | parent | context | favorite | on: My YC app: Dropbox - Throw away your USB drive
I have a few qualms with this app:
1. For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software.
2. It doesn't actually replace a USB drive. Most people I know e-mail files to themselves or host them somewhere online to be able to perform presentations, but they still carry a USB drive in case there are connectivity problems. This does not solve the connectivity issue.
3. It does not seem very "viral" or income-generating. I know this is premature at this point, but without charging users for the service, is it reasonable to expect to make money off of this?
Yes and quite frankly dropbox should have leverage their consumer brand to move into enterprise.
Bending Spoons must be watching Dropbox closely. Like the other companies that have been acquired by them, Dropbox has reached its final stage of stability.
yes exactly I wrote about bending spoons as well - https://s-1.vercel.app/posts/bending-spoons-a-capital-cycle-...
I recall I was using Dropbox on Windows 2003 and Mac OS X 10.4. I was student and actively writing Office documents, AutoCAD, NanoCAD, LabVIEW, plenty of cryptic formats. Eventually Dropbox stopped working on Mac OS X 10.4. And I was not student anymore, I was not dealing with folders. As developer I worked with TortoiseHg and BitBucket, Mercurial repositories and reStructured Text wikis. And returned to neither Dropbox nor similar alternatives. By inertia I synchronized with Dropbox, but when Dropbox stopped working on Mac OS X 10.4, it stopped at all. Eventually I've got OS upgrade, but Dropbox already gone and never returned.
I recently migrated to a new phone and one of the apps I had to re-login was Dropbox. A feeling of nostalgia washed over me. It was absolutely essential many years ago but now the competition is huge. I'm not a fan of Private Equity but if it can keep the business alive, then it's worth exploring by the leadership.
PE's end goal is never the health of the business.
Being bought by PE is a death sentence. Maybe drawn out by years, but a death sentence none the less.
Exactly ... PE's wants shorterm return, just numbers in a sheetbook, and they special execs for such jobs. Their only "strategy" (my dog can figure out better) is aggresive monetization, layoffs pushing remaining employees to limits. Profits goes up ... so the strategy must work, lets increase monetization more and do more layoffs.
Prices goes up, quality of service goes down. After few years, everything goes down the drain, PE and their execs can't figure out what went wrong.
And despite their patterns giving not that great returns they keep doing it. Mostly it's an income play vs capital appreciation anyway. If you wanted the capital gains pre-seed and seed are doing well. ACA had a report which I think also got mentioned in Bloomberg.
It depends on the acquirer; Silver Lake could be a good partner.
That's an oversimplification. Private Equity's goal is to take control of the business and change it so that it has higher resell value.
Often they do sell it for parts, or they enshitify the hell out of it to squeeze revenue from loyal customers. Not necessarily because it's the optimal strategy, but because truly fixing a business is hard and these are decent shortcuts from their perspective.
But that's not a given, sometimes they do truly turn it around for the better.
I understand why it is a reasonable acquisition target for PE and worthy of exploration, but I’m not sure I understand how being acquired by PE would keep Dropbox alive longer other than shaking up the leadership and shifting priorities. Perhaps aggressively targeting enterprise customers currently using Box after rolling out the necessary features?
No, definitely agree. One of the great SaaS companies, strategy matters, though, and the early success distracted them from building a defensible business.
I was at Dropbox from 2016-2020. We were certainly trying to build a sustainable business, but there was a major identity crisis. Were we consumer web? Buy Mailbox and build Carousel, then shut them both down.
Maybe we’re Notion/Evernote? Buy Hackpad, plow a ton of money into Paper (which was legitimately good), then quietly deprioritize it.
Maybe we’re actually some kind of enterprise document productivity suite? Buy HelloSign. Plow a bunch of money into a desktop app. Pull more plugs.
A lot of smart people were trying. We made a lot of bets (too many?). None of them proved to be a second act, and the competitors eventually caught up.
I intend to write a piece going deeper into the failures; I would love to chat if you're open to it. Also, not to say Dropbox sucked or anything, it is just that the broader strategy and industry structure make it hard; if anything, the success of the first product made it difficult to evolve the business.
Dropbox was huge before everything built in sync as SaaS. I still fondly recall the Dropbox backend to 1Password.
Sad. I still use Dropbox personally and really like their use experience, but I just don't find enough use for it to pay for a service like that. The technology proved to be far too easy to replicate and they failed to build anything that would make users stick around, I guess. Maybe moving to workspace collaboration solution like Google docs was the play?
As much as I hate it, capturing users and building a walled garden seems to be the only way to make it really big.
I'm surprised Dropbox is still around, was it 15 years ago when I used? It was something new, but after they started pushing limitations I stopped using it.
I know, right! Switching costs are powerful.
The premise of the article that "Dropbox was .. a feature, not a Product" is complete nonsense. Remember the infamous FTP guy's top comment during their launch? I have spent almost 10 years working on making that vision a reality [1], and there are entire industries built around some variation of it: digital asset management, managed file transfer, digital preservation software, electronic document management systems, ...
[1] https://github.com/mickael-kerjean/fdrive | https://github.com/mickael-kerjean/filestash
Well look at the broader industry, Icloud itself is probably throwing off more cash.
Call me crazy, but I think we need more Dropboxes and fewer Metas or whatever.
Make a product that solves a sufficiently common problem, and make it extremely high quality. Want more growth? Find another problem to solve and launch a product in that space.
As for Steve Jobs and selling out, Apple bought FingerWorks. That's how they ended up with excellent, multi-touch touchpads while the rest of the computing world suffered. Make great products (or "features") and never sell out to soulless megacorps.
Maybe, but the way capital cycles work, there is consolidation. I write about it here - https://s-1.vercel.app/posts/what-stripe-can-become-broader-...