Above the Crowd

Why Dropbox Is A Major Disruption

February 23, 2012:

Back in October, Techcrunch announced that Dropbox had raised $250mm at a seemingly absurd valuation. Many firms, including my firm Benchmark Capital, participated. When this happened, many people asked us why this was a special company that would cause us to break our standard investment paradigm. They didn’t quite understand why this was a company that deserved once-in-a-generation special attention.

The first answer to this question is rather straightforward, but not earth shattering. Drew Houston and his team had taken a hard problem — file synchronization — and made it brain dead simple. Anyone that had used previous file synchronization programs, including Apple’s own iDisk, constantly encountered state problems. Modifications in one location would get out of synch with those in another, ruining the  entire premise of seamless synchronization. It wasn’t that these other companies did not understand the problem, it was just that they could not execute on the solution. The Dropbox team solved this, which was a critical innovation.

Although this was critical, nailing technical synchronization would not necessarily warrant outsized valuations. In order to be worth $40B one day (which is 10X the $4B reported round, the objective return of a VC investment), the company would need to hold a place in the ecosystem that is far more strategic than that of a simple high-tech problem solver. So what is it Dropbox does that is so special?

This evening, TechCrunch reported that Dropbox would automatically synch your Android photos. Once again, someone could suggest “so what, how hard is it to do that?, and why is that worth billions?”

Here is why. Once you begin using Dropbox, you become more and more indifferent to the hardware you are using, as well as the operating system on that device. Dropbox commoditizes your devices and their OS, by being your “state” system in the sky. Storing credentials and configurations of devices, and even applications are natural next steps for this company. And the further they take it, the less dependent any user becomes of the physical machine (HW and SW) that is accessing that data (and state). Imagine the number of companies, as well as the previous paradigms, this threatens.

That is a major, major deal. And it comes at a time where there are many competing platforms on both desktop and mobile. This “unsure” market backdrop ensures the need for a cross-platform solution and plays right into Dropbox’s hand. You can lose your desktop computer, you can lose your smartphone. It doesn’t matter, because all you really care about is in the Dropbox cloud.

171 Comments

  1. wmt February 24, 2012

    So what are the barriers? Is it first mover? Explain why their solution has a moat. I understand a competitor needs to be free of the network service providers and hardware and software firms – completely agnostic to allow customers to arb the various services. It just seems there will be many dropbox comps.

    Reply
    • Drew Meyers February 24, 2012

      WMT-
      Yes, there will be other dropbox comps. But once there are enough users on a platform like this, it becomes exponentially easier to grow the network — and it actually grows on its own naturally. The more users on dropbox, the more useful it becomes (because many people also use it to share large files with their friends). Same reason you essentially have to have a paypal account, you now “have” to have a dropbox account (esp for those who do freelance web work).

    • chrisczubChris February 24, 2012

      Yeah, this. Dropbox is about to have a ton of competitors in their space, some of which that can do the same thing for much cheaper, some of which will offer more features for power-users/corporations to integrate it with their IT setup, etc.

      Dropbox is going to have its lunch eaten soon and a lot of investors that gave them that ridiculous evaluation are going to be feeling pretty silly.

  2. yannick February 24, 2012

    When you say, “many competing platforms on both desktop and mobile”, that isn’t really true.

    On mobile, there are basically just two: iOS and Android.

    And on desktops, there are essentially just two as well: Windows and Mac.

    I think to argue that the value of dropbox is to help consumers forget about which platform they’re using is then not of much value because consumers will really only need to choose between two.

    Rather, the value of dropbox is to help consumers forget about which hardware they’re using. And that only makes sense in the Android and Windows world, where there are many choices of hardware for the given platform. This value doesn’t apply for iOS/Mac users because there’s no variety in hardware- it all belongs to Apple, and with iCloud, people inside the “apple” world won’t care for or need dropbox.

    Isn’t then dropbox really just a must-have element for Google or Microsoft if they are to have any hope in competing with Apple in the medium term?

    Reply
    • stardream February 24, 2012

      Dropbox is also available in Linux – I use it on my Linux Mint 12 laptop as well as on a thumbdrive, windows 7 and android phone. All I don’t have is an iOS/Mac machine.

    • Araam Vafai Borhanian February 24, 2012

      http://www.dropbox.com/install?os=lnx

      Linux is definitely supported as well, so it also applies to the Linux.

      And I would argue that most people are not solely Apple or solely Windows, so this is necessary for all users.

      My issue with your last statement is that right now, there are so many solutions to this problem that exist out there already. Dropbox has existed for a long time, and in the article you can see that others have tried (and some succeeded) at solving this problem. Microsoft has already set up a sync solution called Live Mesh that is similar in vein to dropbox (even working with Macs), and Google is already including sync in their products by default. Bookmarks, contacts, and other items sync to your google ID and can be accessible on all your devices.

      Dropbox isn’t a must have element, because it ruins what each of the companies are trying to achieve, which is everything being tied to them. Dropbox ruins that by allowing everything to sync together through their product.

    • walter February 24, 2012

      Yea but MS has Skybox which is really good, cheap and has the ability to sync office 2010..If the windows phone takes off then so will Skybox.

      BTW I think keeping any type of sensitive information on Dropbox is insane. Dropbox has already been caught misleading the public on its security practices in the past and who the fu#k knows if it actually mines the massive pile of really personal information millions have given it. Cloud storage is very risky and expensive considering terabyte usb’s are under $100 and all governments are unpredictable. The Megaupload incident really lowers the value of cloud storage considerably and that’s not even taking into account throttling, quotas and shi%y internet connections.

    • MacCruiskeen April 22, 2013

      And of course, that ignores the fact that regardless of how you transfer files, you still need software and Oses to actually use them, and people are going to continue to care more about that than the transfer process, particularly if the transfer process is platform independent. Now, there’s certainly a convenience there–if I can sync a file between my work PC and my home Mac, that’s great. But I know which one I still prefer to actually work on.

  3. Brent Weber February 24, 2012

    You are exactly right.

    I live in Texas and my home was threatened by wildfires this past summer. We were evacuated several times. While all of our neighbors were grabbing filing cabinets, computers, paperwork, etc. My wife and I simply grabbed our laptops. We keep all of our photos, filing, etc in our dropbox account. I was kind of panicking thinking it couldn’t be that easy, but before we left, I double checked our files with my phone and verified everything was there.

    Dropbox indirectly saved us probably 15-30 minutes in our evacuation process.

    Reply
  4. Zach February 24, 2012

    I use SyncDocs which turns my Google Docs account into a DropBox like solution. I pay Google $5 a year per 20 gigabytes of storage and I think SyncDocs costs $10 a year. By comparison, DropBox would charge me $120 per year for the entry level plan.

    What advantage does DropBox have that justifies the much much higher cost? I’m not being sarcastic, I honestly would like to know.

    Thanks,

    Zach

    Reply
  5. Chris0909 February 24, 2012

    I saw that Appsense introduced free Datalocker security encryption for Dropbox. Ecosystem starting to develop.

    Any comments on if Dropbox is trying to go into enterprise — where it will need to drastically improve in security — or is the low-hanging fruit to dominate consumber applications?

    (I am a small business adopter of Dropbox and it is incredible innovation).

    Also, rumor is that Google will introduce a Dropbox cloud file service soon. Comments?

    Reply
  6. Chris February 24, 2012

    Try the Dropbox service for yourself. The first 2Gb are free.

    250Mb more here http://db.tt/TofbAJVl

    Reply
  7. josh February 24, 2012

    Why would connecting and replacing one component of mobile and home systems(the hard drive) dismantle the rest of its function? Just because dropbox was the most shiny apple in the bunch doesn’t make it bad or “disruptive”, it just makes it easy and is just another innovation in a huge business, which is why they are flooded with capital now. I use google drive which makes use of the ~7.7 gb of free storage included in any gmail account for free and stores it there, accessible anywhere. Get with the times, writer.

    Reply
  8. York Zucchi February 24, 2012

    Very interesting perspective Bill. As an investor and entrepreneur in Africa I appreciate you giving us an insight into your investment rationale (I confess that I do not find myself completely agreeing with your rationale, but my lack of experience probably means you’ll end up being right :-) ).

    Very interesting also the observation reg commoditization of hardware… I found myself nodding in agreement.

    From the continued expansion the one thing that Dropbox (and for that matter almost no-one, including google and microsoft) have really cracked is how to price their products for the emerging markets, especially if one considers that BRICS (and Africa) account for 51% and more of the world’s GDP. What seems really good value in the US and Europe is only a premium product in emerging markets. Can’t the brain-tank of dropbox apply their ability to simplify to the problem of pricing for the emerging markets? That would make me happy and consider deploying dropbox to our 1.850 people we employ in 24 countries in Africa.

    Until then, I continue being an avid user.

    All the best from South Africa
    York
    Twitter: yzp
    Linkedin http://za.linkedin.com/in/yorkzucchi

    Reply
  9. gregorylent February 24, 2012

    only limit is electricity and server farms

    Reply
  10. Michael Bleigh February 24, 2012

    File sync is only a problem until we get truly high-speed bandwidth available to the majority of people. Then we won’t bother keeping files in sync, we will just stream and save them directly to the ether to begin with.

    Reply
  11. Brandon February 24, 2012

    This isn’t a huge deal. Dropbox doesn’t have anything that someone else with more resources (Google, Amazon, Apple) couldn’t do. Those folks just haven’t done it yet.

    Call me when they do something that has a higher barrier to entry than a couple hundred thousand lines of code.

    Reply
  12. Chris Lee (@startupeconomy) February 24, 2012

    I nod my head most of the time whenever I read your blog…. just not this time….

    Big fan of Dropbox, and I really hope the company grows much bigger (just not sure if they’ll be 40b company. Separate discussion)

    It’s an gross generalization that Dropbox commoditizes hardware. At the most, it’s commoditizing Android hardware. On the iOS, Apple still owns the platform and the user experience at large. The photo sync on iOS is not as smooth as Android. You still have to plug in your iPhone/iPad/iPod to move those photos. Apple owns the platform, so they can just force people to use iCloud… a much more elegant way that Dropbox can’t easily commoditize.

    Yes, Dropbox is cross-platform and I can go from desktop, laptop, phones, to tablets. But again, the company still needs to play nice with big platform owners.

    Reply
  13. Ian Morris Nieves February 24, 2012

    Bill, great write up. Couldn’t agree more. I am jumping up and down about this company. It is a MAJOR keystone in true user level cloud computing. As you say, it is the state.

    One major oversight made by them and almost every write up that I read… Is that Dropbox limits you to the size of your local hard disk. True cloud state should not be limited in size by such silly things as the size of my SSD.

    I’ve read their discussions on this limitation and their reasoning is weak: it would break their conceptual simplicity.

    Why not use your connections to have them seriously reconsider that ;)

    Why in 2012 am I limited by local hard disk storage?

    Great writeup!

    Reply
  14. Jay February 24, 2012

    Excellent article. I didn’t see it that way. But if Dropbox also takes care of complete phone backups and syncing selected settings between devices (phone tablet for example) I would definitely look into becoming a paying customer.

    Reply
  15. Grognor February 24, 2012

    However, I do not fit into 8 gigabytes.

    Reply
    • Max February 24, 2012

      That’s the whole point, and that’s why their lowest pricing is at 50gb. They want you in for the whole caboodle.

  16. Faisal February 24, 2012

    “Storing credentials and configurations of devices, and even applications are natural next steps for this company”.

    This is the most important line in the post.

    Reply
  17. Pat February 24, 2012

    Zach: Did you even read this page? He underlined the most important sentence for you. Dropbox makes file storage hardware and operating system agnostic. Syncdocs doesn’t do this at all: it’s Windows-only.

    Your prices are off, as well. You say Dropbox is $120 a year for the “entry level plan”, but that’s the entry *paid* plan; up to 2GB, it’s free. You say you think Syncdocs is $10 a year, but a brief look at their webpage reveals it’s actually double that. It’s more expensive, but not as much as you said.

    Finally, and worst of all, the Google Docs terms of service say “You agree not to access (or attempt to access) any of the Services by any means other than through the interface that is provided by Google”. Not only would they be perfectly within their rights to simply shut you off for violating the terms of service, but it would not be at all unlike them to develop a similar service themselves, and if/when they do, you can bet they’re going to come down hard on Syncdocs.

    Why would anyone use Syncdocs? Even if you don’t care much about other platforms, Microsoft’s own Windows solution, “SkyDrive”, offers 25GB for free, has an HTML5 web interface, and you don’t have to violate anybody’s TOS to use it. It’s no Dropbox but it looks better and cheaper than Syncdocs in every way.

    Reply
  18. james February 24, 2012

    sugarsync is way better

    Reply
  19. Mark Mathson February 24, 2012

    So true in many ways.

    Reply
  20. Patrick Dobson February 24, 2012

    I have to believe that Dropbox is the company that will ultimately solve the television problem. A major problem with TV is that there does not exist a solution to buy once and watch anywhere. When I am one day able to buy the Walking Dead from the Dropbox market and play it from my Dropbox equipped TV, phone, tablet, laptop, desktop, and in the browser on devices I don’t own, I will gladly be shelling over what I currently pay for cable to Drew Houston and Co.

    Reply
  21. garylang Lang February 24, 2012

    I will agree that it makes the OS irrelevant for now. Too, it provides the file system that Steve stubbornly left off of his pristine devices.

    But, the minute MSFT ports Mesh to iOS and Android, the game is over. I do this sort of thing just fine with Mac and Windows today, and it works flawlessly – and I have since 2006. I don’t see the “innovation” that Bill refers to here. All that’s required of MSFT is a port of Live Mesh to iOS from the Mac. So it feels like a huge bet on MSFT not doing a trivial port if there’s a business reason to do so.

    Reply
  22. Nishant February 24, 2012

    But there are other companies doing the same – sugarsync is almost better than dropbox, there’s box.net, icloud. Why doesn’t that impact the dropbox valuation? I’ve tried dropbox and keep coming back to sugarsync.

    Reply
  23. OS agnostic insight is truly trailblazing. Perhaps its the simplicity of dropbox that makes it truly valuable. Simple is the new Value

    Reply
  24. Wb1111 February 25, 2012

    Dropbox works as advertised but it needs better security as it allowed a virus to get by my anti-everything software-twice.

    Reply
  25. Peter holstein February 25, 2012

    Two thoughts:

    At least one app, 1Password, has successfully crossed the rubicon, using Dropbox to make its solution device agnostic.

    Secondly, I suspect Steve Jobs saw this outcome when he made his overture to the early Dropbox, much the same way as he recognized that the Internet would become the lingua franca of data interchange, mooting the entire platform compatibility dilemma and opening the gateway for him to focus Apple on form over utility.

    Reply
    • bgurley February 25, 2012

      this is a nice integration.

    • NM February 28, 2012

      1Password stores the password file on dropbox. THAT IS IT. How and why is this a big deal? I want to know: how hard is this to do?

      The Steve Jobs point is right on. If the drop box team wanted to create lasting value, they would have gone to apple and built this file sync capability in a multi-platform way over there. But it’s not as much fun as the hype-and-dump approach being taken now by both investors and company executives.

      The result is that in a few years, we will see drop box decline in valuation and usage (as Microsoft, Apple and most of all Google offer this services. You could argue Google already does).

      We use drop box but now are looking at Google docs since it is a very good if not better alternative.

  26. You make some good points, but Microsoft and Apple will continue to put tons of resources into developing how their desktop and mobile OSes work seamlessly with cloud storage, then why do you need a third-party like Dropbox?

    Average users will use cloud storage that’s tied to their core OS down the road.

    Reply
  27. Andrew Denny February 25, 2012

    I tried Dropbox, icloud, & Skydrive, but moved to Sugarsync. I’d love to know what Dropbox does that Sugarsync doesn’t.

    Unless it’s critical mass & market momentum, or perhaps solidity against data loss, something I can’t know. But seems to me that it’s not ‘cracked’ the sync problem as well as Sugarsync.

    Reply
  28. Tip Qos February 25, 2012

    This cloud doesn’t hunt as long as there is such universally poor bandwidth. Not every customer can simply write off high speed broadband connection fees – if the high speeds are even available to begin with.

    Reply
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  30. David Spitz February 25, 2012

    After using the free version for a couple months, I paid for all the storage I need for all my stuff, including music etc. Not only is Dropbox a great backup mechanism (far simpler than any other method I’be tried and abandoned), Bill is right – it has managed to completely and seamlessly decouple me from my hardware. I now use a PC at work, a Mac at home, and an iPad and iPhone, and enjoy the liberty of almost never having to lug my gear around any more. My life is in the cloud and I couldn’t be happier. And as a google docs user, I can tell you for sure that google isn’t even close, nor apple. When I think about it, I’d probably pay 10x and still be satisfied with my investment in Dropbox. Kudos to the team for relentlessly focusing on making it “just work.” -Jealous Entrepreneur

    Reply
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  32. James February 25, 2012

    This company is a “feature” is so true. Dropbox is banned on all the firewalls we operate. It’s worth $10M tops – and has none of the wealth destroying properties you mention. It’s not a major, major deal. It’s a major, major screw up by VC.

    Reply
  33. Other companies have managed to solve this riddle. Minus.com is one and offers more free space to boot.

    I don’t trust the company DropBox with my data since it was shown in the past to have very weak security.

    Reply
  34. Nimish Mehta February 25, 2012

    Synchronizing FILES across devices is the definition of a “MAJOR” disruption? Wow. The service is definitely valuable (I’m a user) but the valuation is a VC-created bubble in its finest form.

    Dropbox is not solving complex supply chain coordination. Or logistics challenges of a retail chain. Or alignment of multiple chart of accounts when Company A buys Company B. I could go on and on. This service simply copies files from one location to another. It definitely does this task very well but please people, get a grip. This is not a “major” disruption but a natural evolution of the Cloud.

    Reply
  35. cyberwar (@cyberwar) February 25, 2012

    This is a glaringly risky investment. DropBox is notorious for lax security. Your files are protected from being viewed by DropBox employees only by a “strict policy” which is tantamount to zero security at all. A public and embarrassing breach of a DropBox account could destroy your vaunted valuation overnight. The real winner in the cloud storage space is going to be the one that solves the privacy and security issue. Synchronization is a minor feature. Security is game changer.

    -Richard Stiennon

    Reply
  36. Matt Cutts February 25, 2012

    Dropbox is nice however I think you will like G-Dropbox, the latest innovation we at Google are working on, even more. We have been testing it internally and I’ve had so many magic AHA! moments already. It just works.

    Reply
  37. Matt Cutts February 25, 2012

    Dropbox is nice however I think you will like G-Dropbox, the latest innovation we at Google are working on, even more. We have been testing it internally and I’ve had so many magic AHA! moments already. It just works so give it some time when it comes out.

    Reply
  38. Cheeky Monkey February 25, 2012

    Has anyone heard when that new offering from VMware dubbed “Project Octopus” is being released? Similar to to Dropbox, but safe and secure inside and outside a corporate organization. It has the ability to apply access and security policies and intelligent management of data that is out of date.

    Reply
  39. Fred Wilson (@fredwilson) February 25, 2012

    i think cloud based storage and services are the innovative thing here, not dropbox per se, Bill

    i think dropbox is an amazing team, company, service and i do believe you will get your 10x on it

    but i don’t use dropbox very much unless someone i need to share something with is using it

    i do use google’s cloud services all the time, including on my android phone which is with me all the time

    and other than skype, i have removed all downloaded software from my life. i would get rid of skype too but many peope want to skype with me and i can’t get all of them to move to browwer based videoconferencing services yet

    but my point is that i don’t use dropbox much and yet i have achieved the same state that you describe here

    so while dropbox is a leading company in this revolution, it is not the revolution in and of itself

    Reply
    • Deepak Thomas (@PhoneFare) February 25, 2012

      Piling on. BIll: granted you make an interesting case but pretty much all of the reasons you cite here (and then some) are why GOOG has the ability to take make a serious dent in this space with their rumored cloud storage solution. Unlike Facebook, Dropbox does not yet have defensible critical mass/network effects, so establishing that would be less of a slog for GOOG compared to Google+. Then there is the question of switching costs: a brain-dead simple solution i.e. drag-and-drop would also mean it should be brain-dead simple to switch to an alternative solution (sure, shared folders etc would not be straightforward to migrate). Which brings us to execution, one area where Dropbox might actually have an advantage. Oh and did I mention Apple/iCloud? I truly wish the Dropbox guys well, but I doubt they have anything I would call once-in-a-generation

  40. bZirk February 25, 2012

    I am completely spoiled to DropBox. What a pain before.

    Reply
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  42. Tommy February 25, 2012

    Sorry people, but I honestly don’t understand the hype around Dropbox. I think its model its completely flawed – having one folder that is being synchronized is a major issue when you want to sync all your stuff across your computers. I use SugarSync which is a much superior product in my mind and provide everything (and more) that DB is proving while keeping your files structure as is (photos under photos, music under music, documents under documents, etc.).

    I have used DB for both personal and business use (my current company uses it) and I honestly can’t understand why DB gets so much attention, and why it’s better than say, SugarSync.

    I would love if someone could explain this to me. Otherwise, I guess it’s just pure smart marketing….

    Reply
    • Andrew Demny February 25, 2012

      Looks like there’s a fellow Sugarsync fan :-)

    • Jeff B February 25, 2012

      I agree. I have a Dropbox account for the same reason I have a Facebook account–that’s what just everyone else expects you to use. I’m a paying customer of SugarSync though because I can make it work the way I want it to.

  43. medjuice February 25, 2012

    Great post! This is one of the key aspects in technology, and life, to being successful – see a difficult problem, understand it’s complexities, and then simplify it for everyone. What the Dropbox team has done is amazing, and as you said so well, they become your home service, regardless of what device or OS you have. Really well said.

    If they ever develop a secure version of this, it will revolutionise medicine. If each person had one file that any hospital anywhere could access and contribute to, health will be revolutionised forever.

    Reply
    • Albin February 26, 2012

      Agree about security – DB’s “back office” access to stored online files prevents me using it for confidential material. Using TrueCrypt “containers” is both a nuisance and continually causes “conflicted copy” errors in the sync. I read there is a new service that encrypts and syncs files across local devices without the online storage aspect – it’s clearly not as mature or compatible with so many device formats as DB (yet) but that concept solves the security problem.

  44. Kal February 25, 2012

    I agree about becoming more indifferent to the OS thanks to Dropbox. I’ve been using a 100GB account for a few years now, and the highest praise I can offer is that I never have to think about it. It works in the background, doesn’t require any “tending,” and doesn’t cause problems. I moved all my folders into Dropbox, so my familiar folder structure is available and identical on every system, OS, and device.

    Reading the comments, I noticed some misconceptions. Dropbox does have an enterprise version — check their website. It is not limited by the hard drive size, since you can chose to sync/not sync any folder on any device. And don’t have to use “one folder” — you can build a folder structure in the My Dropbox folder.

    My only frustration is that it allows only 100GB for non-enterprise users.

    Reply
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  48. Andy February 25, 2012

    I love DB, (a) because it’s so simple and straightforward, (b) it works well, quickly and reliably, but also (c) something not mentioned is how terrific their customer service is. Prompt, helpful, friendly, efficient. What a great company to deal with!!

    Reply
  49. Jeff February 25, 2012

    I’m a regular Dropbox user but after hearing Microsoft’s recent announcements around SkyDrive, I think Dropbox is going to have trouble maintaining users. Tight Windows/Office integration + the “fetching” feature, and pricing that beats Dropbox ($50 per _year_ for SkyDrive @ 50GB vs. Dropbox’s $20 per __month__). I’m switching as soon as the new features are available.

    http://reddevnews.com/articles/2012/02/24/windows-8-consumer-preview-to-reveal-skydrive-app.aspx

    Reply
    • John the Scott February 26, 2012

      yes, but will skydrive run on non windows systems? dropbox at our company effectively and organically solved our file sharing problems across the many digital devices we use corporate wide. will skydrive do that?

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  56. Alex Cobb February 25, 2012

    I agree with much of what you say, I love software that “just works”. I love being “hardware agnostic”. But I’m sorry if I read this whole post as being disingenuous. You’re an investor in Dropbox. Their success is fiscally important to you. Bill, you have a popular blog that allows you to influence many people. You are conflicted. Inherently. And that’s the problem with our “society of sharing”. You may very well be extolling the virtues of Dropbox in a very objective light. The problem here is that I only see a subjective viewpoint. Call me old. Call me cynical. But your post only increases the valuation of your firm’s investment in Dropbox. You may be right. And I love Dropbox in my own right. But you’re officially precluded from commenting on it. Sorry but that’s the way it should be. I found your post from a link on Techmeme. That’s influence you can’t buy but indirectly…you have bought it.

    Reply
    • bgurley February 25, 2012

      No question. And it could be considered even worse in that I am not paid to blog. However, also consider this. My investors would like me to put my money behind where my thinking is. So its really just a question of what came first.

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  58. Daya Baran February 25, 2012

    This post is self promotion and a conflict of interest.

    Dropbox is simply a feature that will be available on iCloud, Amazon, Microsoft, Google, Yahoo or Facebook. It’s like email except its providing stoarge. It is not a “once-in-a-generation” technology nor a “major, major deal” as you say. Cure for cancer is a major deal.

    As for the valuation, you must be smoking. It is this type of greedy that creates bubbles. I don’t think this company is worth more than $10 million. You probably realized that now and hence are doing this post to pump up valuation, create hype to exit before things go very bad.

    Reply
    • NM February 28, 2012

      Daya – this is exactly right. Bill Gurley appears to be pumping his investment.

      When someone blogs about a stock that is PUBLICLY held, there is a requirement that they disclose their investment in that stock. I wish there were a similar requirement for private company investors. It would everyone understand the perspective of the writer much more clearly.

      As far as valuation goes, drop box is an example of a VC-created bubble. We have all seen this movie before… 1999. Unfortunately it screws up the market for all startups – even those with good, defensible value propositions.

    • bgurley February 28, 2012

      I did disclose my investment. At the very beginning.

  59. Pingback: Why is Dropbox Successful? It’s the Simplicity (Stupid)

  60. Pingback: See mention of SugarSync as superior to Dropbox (which I’d agree with) « GVS | Global Virtual Studio

  61. Michael February 25, 2012

    Obvious problem: Google could make a Dropbox clone any day they chose — there’s just not much to it.

    When that day comes, Dropbox will be worth a third of its current value. 6 months later it will be worth a tenth.

    It’s a great service, but one that’s too simple to sustain valuation. And unlike other “simple” services (like Twitter) it has no community lock-in.

    Reply
  62. Rod Drury (@roddrury) February 25, 2012

    DropBox is a fantastic cloud solution. Hats off to them for building a great product. But their business risk is their front door is controlled by Microsoft, Apple and Google who I’d be very surprised would let a ‘feature company’ (so far) like DropBox win.

    Reply
  63. Soheil Zaman February 26, 2012

    I have a difficult time understanding the valuation at Dropbox, ever since 6 months ago, when I began using Google docs significantly. I see the future of file sharing having less and less to do with attachments and more and more to do with links. Anybody who has used Google docs extensively understands the vast value proposition it offers, which no matter how great Dropbox file synchronization is, it will simply never be able to compete.

    Reply
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  66. chris February 26, 2012

    I don’t follow this industry closely but I think if someone comes out with a free version(for more than2gb), that works, and monetises it a different way…then dropbox is going to have some serious pricing issues. At the very least they will have to compete on price. The switching costs are so low that I don’t think they will be able to just charge more for the service because they are called dropbox…but who knows.

    For instance, why not serve up relevant ads when you search for your documents on dropbox?

    Reply
  67. Pingback: The Cloud Gets More Awesome with New Offers - My Blog

  68. @sadq70 February 26, 2012

    Thats what jacques mattheij called The Dropbox Endgame.

    Reply
  69. chris February 26, 2012

    Hi Bill, I should have thought a little longer before I spoke…

    Although I think that the fremium model is a threat and that there are relatively low switching costs, I think that Dropbox will be able to build in a sustainable competitive advantage vis a vis it’s developer network and goodwill it develops with its customers. Also, I believe that this space probably isn’t winner take all…ie, like a used goods marketplace like eBay. All in all I think you will probably see a good return on your investment.

    Reply
  70. Brian Broadbent February 26, 2012

    If Dropbox is going to be this platform that is going to make me device agnostic, then why are plans capped at 100GB? That’s not remotely close to my needs to make me device agnostic as I personally have our 100GB in photos and when you add in my wife it is approaching 200GB. Most laptops are shipping with 750+ GB in storage and that number seems to grow every year.

    Furthermore, I find it quite troubling that Dropbox really doesn’t even give you incremental storage from going from a 50GB plan to a 100GB plan. I need a 500GB plan at $15 a month or whatever the price and it needs to be as seamless as the 50GB plan. Dropbox’s pricing model suggests this is easier said than done.

    For now, Dropbox serves as my storage solution for my Excel files and word documents. It has been a lifesaver. I hope you guys can pull off a more ambitious service that works as well as what you have right now.

    Reply
  71. Pingback: Why is Dropbox Successful? It’s the Simplicity (Stupid) « system-ON-key

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  74. frank_13579 February 26, 2012

    It’s great that they got the $250 million, they can hire people to get security right hopefully. Of course thinking the future cash flows of Dropbox the business can support a current $4 billion valuation is obviously a total speculation — but that is offset on the greater fool theory that it can do another round at $10 billion and then go public and hit $20 billion. It’s an odd world we live in but that seems to be the reality of the situation.

    Reply
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  77. diane (@dianmcl) February 26, 2012

    Sorry, as someone who has been using computers and the net since the last century I have to say that i think you’re wrong.

    I have used dropbox and left it so long ago i couldn’t tell you my name or password. I think for a lot of us, the cloud has no

    real relevance.

    Reply
  78. Samfriend Sam February 26, 2012

    Dropbox rely on Amazon’s AWS and that’s the No 1 weak point of their business period.

    Like “friendster” stuck and gave away the opened market to copying chasers (MySpace > Facebook)

    Take a look how many Mega Data centers Google is building around the world right now, u think those are just for gmail?

    Reply
  79. Samfriend Sam February 26, 2012

    Dropbox’s raise “was” because of the iPhone, ppl “couldn’t” transfer files from computers to iOS devices “bebfore”, and now… mobile device users doesn’t need this supplementary alternative

    Reply
  80. krabbykazoo February 26, 2012

    Reblogged this on The Hungry Nerd and commented:
    A great statement on the rise of a new company. Think about how such a simple idea has exploded.

    Reply
  81. Pingback: Why Dropbox Is A Major Disruption « abovethecrowd.com | Osuna69's Blog

  82. Pingback: Why is Dropbox Successful? It’s the Simplicity (Stupid) « Xtreamer Magazine

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  84. RobJS February 26, 2012

    DropBox is far from unique and has a clunky interface compared to some, and I promise you I have tried them all. ICloud is not platform agnostic however it is moving to a file-less concept, and is Apple device agnostic. That truly is different. But wait, there’s more! Have a look at SME Storage – a way of accessing any cloud platform from any device – amazing service including the ability to tell one cloud to copy to another without chewing up your network bandwidth. That’s not just agnostic, it’s agnosticism for agnostics! In comparison, DropBox and some others are way behind, so I implore you, do take a look around before choosing a single cloud provider. Enjoy!

    Reply
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  88. MR February 27, 2012

    So let me get this straight. At some point, Dropbox is going to offer storage of credentials and configuration and applications — things it currently doesn’t offer any of. In the meantime, Apple, Microsoft and Google are beginning to offer all of those things and charge no money for them (yes, it’s a limited offering from the “big three”, but it actually exists in part). But, hey, someday Dropbox will offer them.

    This third party, with no OS-level access, will then charge money for the storage of these things which Apple clearly intends to offer for free, Google historically charges nothing for its services, and early indications at least from SkyDrive are that Microsoft will offer for free. But Dropbox — a company that is doing maybe $100-200 million in revenues, is going to be worth $40 billion doing this, when it offers these services, competing with the mobile/desktop OS vendors, who are giving similar or perhaps even better services away for free. And the cool part is that maybe these services will be more cross platform (although they may well not be), but at least they don’t exist at all yet. Not that iCloud isn’t cross platform (it runs on Windows), or Google isn’t (it runs on Mac and Windows as well as Android) or SkyDrive isn’t (it runs on Mac).

    And the sustainable competitive advantage Dropbox here is that a bunch of people use the free product to synchronize a few files currently.

    This post is your most epic reach ever.

    Reply
    • NM February 28, 2012

      Great response!!

  89. Tsais February 27, 2012

    I think the real reason for the high valuation is the excessive printing of dollars. Its only paper, so you might as well…

    Dropbox sure is nice for eternal optimists who trust that the internet will always be there, always on. Remember how previous high cultures collapsed because they had gotten specialized too far into one aspect of life. This age, it could be having everybody glued to little glowing screens. A new golden calf to dance around, all the while we seem to have certain people itching to start a bigger new war than the last.

    Reply
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  95. Samfriend Sam February 27, 2012

    Dropbox is lacking of competitive advantages.. skydrive backed by Microsoft windows OS, iColuld from Apple’s iOS + Mac OS, Gdrive (google’s soon release cloud storage, who know what crazy tech they implemented in this 5 years long lasted project) has Andorid + ChromeOS

    they all know personal storage cloud is the key to trigger and change the game to the sky… the most important battle ground towards cloud computing ears

    Dropbox is good, but he’s fighting against what? Microsoft + Apple + Google ! need another 40B and team of 300 scientists

    Why this late? waited today to begin buy help to move away from Amazon, this critical coming 6 months is not for infrastructure, should go for grabbing as much as marketshares as she can then generate stickiness to keep those shares, before these 3 giants pushed her out to the edges

    Reply
  96. Pingback: DropbBox sera-t-elle la future plateforme universelle de synchronisation dans le cloud ? | CloudZone.fr

  97. Niels February 28, 2012

    I’d use drop box, if the storage space wasn’t so small…

    2GB just doesn’t cut it, when you have 32GB of space on your phone’s micro SD card, with another 16GB internal.

    If I wanted a cloud sync really bad, I’d switch to an iPhone, before I start getting headaches over how to chunk up my data for 2GB backup portions.

    Am I just using too much data? Is taking pictures on my phone asking too much? Occasionally taking a few videos of my kid takes even more. Those are things I do like to upload somewhere, just in case I loose my phone.

    I play music and audio books on my phone, ePub books, movies, documents, and if I need to worry about synching everything to the phone before I leave the house, then why have dropbox?

    I’magine I’d want to backup pictures from my Nex-5 using my phone while underway, would be useful, but a trip’s worth of pictures would be impossible with 2GB.

    No matter how slick your software is, if there’s not enough room, its like putting marble floors and golden door handles in a trailer…

    Reply
    • eban March 4, 2012

      So pay for the 50GB plan.

  98. Pingback: Dropbox es el mejor en sincronización, ¿puede llegar a valer 40000 millones? « BlackBerry Warez | Blog

  99. Pingback: Dropbox 是一個功能,一個產品,還是一家公司? » MR JAMIE

  100. Ian Goh February 28, 2012

    I can relate to this personally because I lost most of my stuff in a fire (including my laptop) and transitioning to a new laptop was made that so much easier because all my documents were in dropbox

    Reply
  101. Pingback: The Cloud Gets More Awesome with New Offers - My Blog

  102. Pingback: (转)Dropbox 是一個功能,一個產品,還是一家公司? « Ddk's Blog

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  105. Of course Dropbox is disruptive, so long as you are dependent on downloading files and working on them locally. Given the trend to author and store documents in the cloud, with media being stored in the cloud (iTunes Match removes the need to download your audio everywhere you go), to what degree will document synching even be necessary in the near future? Dropbox is a great near-term product that will take advantage of the long tail of people who still want to open Word to edit something, but disruptive and worthy of that valuation? I don’t think so.

    Reply
  106. Mark March 3, 2012

    But I guess the storage size is way too small

    Reply
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  109. Sales Chat Sean March 5, 2012

    I have so many good things in my life associated with DropBox that all I can say “Thank you DropBox.” I would personally think that criticizing this valuable service only for the sake of criticizing is not a good thing. You receive a decent storage space free of cost where you can rely upon the service is worth putting on risk your hardware.

    Reply
    • NM March 5, 2012

      We are not criticizing the service. Read the comments. The discussion for the most part is about a) how a VC is hyping his own investment via a blog and b) how the VC’s – including the author of this article – have already valued this investment beyond what anyone would call reasonable.

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  112. timandnonie March 5, 2012

    I find dropbox pretty good for sharing files with co-workers in my nation-wide virtual-team. However, the security of the data in the dropbox is something I still struggle with. The failure of Amazon in April 2011 highlights that any one of these cloud systems can fail, for unexpected reasons, with permanent consequences. http://articles.businessinsider.com/2011-04-28/tech/29958976_1_amazon-customer-customers-data-data-loss
    So, for me Dropbox is okay for a sharing platform, including sharing between my own various appearances on the net (mobile, iPad and Desktop) as your blog discusses, and sharing with my co-workers, but I require to maintain control of my permanent data storage. Now, provided I don’t lose my own data storage….

    Reply
  113. Paul Ridden March 10, 2012

    I totally disagree. I think DropBox is in a hole. Box is killing it on the business front (have you ever tried Teams – horrible) and the forthcoming SkyDrive built into Windows 8 and the fact that Microsoft is gettng it’s act together on mobile Apps, and iCloud is essentially DropBox (should have took that deal…) leaves DropBox looking over funded and over valued.

    Reply
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  117. Sinjin Lee March 12, 2012

    Boy I can remember when a friend first suggested Dropbox to me a couple years back – crazy to see how far they have come. I still want to see them become more of a social experience. To this day, it still feels too utilitarian – almost like a trip to Dropbox is a trip to the “web garage”.

    Reply
  118. Sterling Jackson March 12, 2012

    It seems like there are already a lot of services that do what Dropbox does, so I’ve never been particularly amazed by their service. I do with with on-demand business applications so they usually have something like this built in and are already platform agnostic and able to sync their data to their phones.

    True, being able to connect from any device, anywhere and the security of storing your data in the cloud is great and I think more businesses and consumers are realizing this. I guess the big advantage is Dropbox makes the cloud more available in a simpler environment, to consumers.

    I think the only companies and paradigms truly threatened by cloud services are the inflexible ones. It’s a direction that almost all information has been moving in anyway, for quite so time and it’s not going away. :)

    Reply
  119. Bob March 15, 2012

    Make more posts!

    Reply
  120. Pingback: DropBox is just a frontend to Amazon S3 with a killer sync feature | Cloudiquity

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  125. jackF May 17, 2012

    Google Drive will do to Dropbox what it is currently doing to Groupon, destroying their dreams.

    Reply
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  135. Keith May 6, 2013

    Thru has an enterprise dropbox that can replace unsecure consumer Dropbox accounts with something that the end users will love and find very convenient.

    My company uses it and it’s great.

    http://www.thruinc.com/solutions/secure-dropbox/

    Reply
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