Dropbox has been hammered by Wall Street ever since it went public. On the surface it should be trading well enough given it's revenue growth from when it went public to now, however, the narrative of competing with both Microsoft and Google was a tough one to play down.
Revenue growth will slow down to below 20% in 2021 which basically starts to take DBX out of the high growth tech stock focus and it is trading at less than 5x 2021 revenue when the median is somewhere closer to the 12-14x range and that's for companies below 30% growth.
The same was seen with Slack. Though they had great revenue growth, the narrative was that they couldn't compete with Microsoft and so their stock never really traded at a comparable revenue multiple compared to others.
It could be said that they have a heavy spend on Sales and Marketing but the same could be said of plenty of other Enterprise tech focused companies like MongoDB that still commands a very high forward looking multiple.
Unfortunately from the end-user side the experience has suffered somewhat and I've personally switched away from Dropbox so I can't really say they are doing great on the product side and the amount of "Growth Hacking for Revenue" that is now part of the product experience is a bit off-putting.
Also shows the potential for issues if you end up solely dependent on one product and don't diversity, especially if it's seen as a commodity.
The work force reduction is purely to turn the company profitable on a net basis and the trailing twelve months they've already gotten into the black. That's down from a $400MM loss just a couple of years ago.
But the belief is that there isn't a tremendous amount of profitability internally, because the expenditures are just too high, and cutting further into that theoretically will reduce revenue growth further.
It's dismaying that even the best, most shining examples of unicorns that took off on the backs of good products and have stood toe-to-toe with the mega-corps, are now losing value simply because they're competing with the mega-corps, and being forced to look for acquisitions just like all the other startups.
If that doesn't plainly show that big tech has gotten too big, I don't know what will.
I disagree, mega-corps aren't the problem. As Steve Jobs famously said: they're a feature, not a product.
Even if you eliminate Microsoft, Google, AND Amazon from the discussion, the list of alternatives is endless.
Synology and QNAP both have a "free" sync and share client. WD, Seagate, Samsung, Apple, not to mention the open-source options out there. Do the big 3 put MORE pressure on Dropbox, sure. But they never pivoted. Just look at a company like Druva - we used them forever ago as a file sync and share, and now they look very, very different.
Dropbox's problem isn't mega-corps or "big tech getting too big", it's that they didn't or couldn't innovate beyond their core product.
The thing is that I (and many people) still want exactly the core product that Dropbox offers (and does better than anyone else), even if that's a smaller market than it was ten years ago. It makes sense that businesses would want to get all of their IT solutions from a single integrated company for simplicity's sake, and it makes sense that consumers don't mess with actual files as much as they used to. But for my own purposes I actually wish Dropbox would stop trying to move beyond their core product. And even though the market of people like me has shrunk, I don't think it will ever go away completely.
Perhaps your storage needs are low, but I feel like at this point once you're past 4-5TB, a Synology or QNAP NAS is a no-brainer for anyone even remotely technical.
I need quite a lot of storage for my projects and am up to a 42TB Enterprise NAS at home w/ Fujitsu helium-filled drives. Probably more than Dropbox customers would ever want to spend, but well worth it for me. Even if I didn't need as much storage, I'm pretty sure I would use the same product.
Access from all of my devices is easy as they're all on one VPN, including my phones.
I only use about 70GB right now; 2TB is as much as I could imagine ever needing.
That 70GB includes a modest collection of music from before the streaming era, a few videos, backups of old documents, Blender projects, Unity projects, a backup of all my photos from my phone (from the past few years), a couple archives of family photos (from the past few decades). I also back up product licenses and shell profiles there, for easy setup of new machines (which I highly recommend). The only important files that don't go in my Dropbox are my actual code projects, since those live on GitHub.
I use a whole lot more space than that when it comes to software, of course - Steam games, in particular - but there's no reason to put any of that on Dropbox because it can be trivially re-downloaded. I have 4TB of disk space on my desktop, but nearly everything outside of that 70GB is a glorified cache.
I honestly can't fathom how I would utilize 42TB of backed-up data storage, unless I decided to start torrenting. And anyway, a local NAS won't do me much good if the house burns down or gets broken-into. A cloud storage solution that presumably gets replicated across multiple data centers, and also mirrors local copies on all of my devices, is the most durable data storage solution I can imagine.
One reason is that there's friction with purchasing. If a company already buys Active Directory and O365, it's much easier to get OneDrive added on than it is to set up a new vendor like Dropbox.
I think features are often products for other companies, not for end-users.
E.g., digital displays are a "feature, not a product". End-users get value out of digital displays on their thermostats, microwaves, etc., but no end-user buys a digital display themselves, thermostat and microwave manufactures buy them.
I think the problem with Dropbox is that it's become too easy for product companies to build data syncing themselves.
That's certainly one perspective, the other is that in the consumer segment churn is high but also the are a tremendous amount of people.
Dropbox had a head start but over time other companies like Google where able to build out competing services and because the total population of potential consumers continued to increase, a lead today, doesn't guarantee a lead tomorrow.
The other side of is that what made Dropbox amazing at the beginning, the ability to sync files with direct access on your computer, is actually now a detriment. Many users don't want the files locally, download speeds have increased dramatically (I have 1Gbps fiber at my apartment), so having the files locally is actually annoying and takes up diskspace, so you have a bit of a late mover advantage, especially if the population of available consumers continues to increase.
In this case it isn't simply X couldn't compete with big Tech, the landscape did shift a bit.
It's also important to note that Dropbox is still a very successful company, and if they aren't chasing revenue growth and profit they still provide a great service to consumers. But their growth chasing leads to a degraded user experience, which also pushes people away from their product and has them explore alternatives to really see if it's an apples to apples comparison. And that's where the "cloud" first storage solutions today present a better platform.
What really slows this down is the cost of switching for older customers that have a tremendous amount of data already in Dropbox and have it integrated into their workflows so it really isn't a fun project to migrate off.
This is also where the price increases create revenue growth because customers aren't willing to go through the pain of migration, but you aren't delivering more value to them, instead you are playing off of the cost switching to drive revenue growth and that begins a downward trajectory.
> The other side of is that what made Dropbox amazing at the beginning, the ability to sync files with direct access on your computer, is actually now a detriment
I disagree; file syncing is still exactly what I want. Disk space has gotten exponentially cheaper over the years, and at the same time the amount of bulk media that people store as personal files has been dramatically cut down thanks to streaming services for music and video. I don't mind at all having my entire Dropbox mirrored across my devices; it holds basically every local file I care about, and having a local copy also gives me some peace of mind in case I ever get locked out of my account or something (which Google in particular has become notorious for). You can also, now, select subdirectories that you want to exclude from the current device. At the same time, having it in the cloud means I don't have to worry if my hard drive dies. Any file that I've thoughtlessly kept there while working on it is safe by default.
Maybe the story would be different if I ever created classical "documents" and could benefit from Office 365 or Google Docs, but I don't, and so having a cloud-first storage "drive" that primarily holds things which integrate with that particular cloud service isn't very useful to me.
> But their growth chasing leads to a degraded user experience
You're right that parts of the product have gotten distracted/annoying by trying to build out new differentiators. But the core product (file syncing and backup) still works much better than competitors, and it's not hard to simply ignore the new stuff.
Also, perhaps most importantly: I use products from multiple tech giants, and all three major operating systems, and I specifically don't want my cloud storage to only integrate well with one of them. I want it to work equally well across everything. And Dropbox does, at least compared with the competition.
Yeah I think there is still definitely a segment that want the disk syncing, but for me it was actually becoming a hinderance and having everything online was actually much easier. Plus I started doing more file storage that I was accessing both on desktop and iphone. Certainly the original use case for Dropbox of local sync was amazing and exactly what I needed years ago, but my work/life needs have changed over time and I wouldn't be surprised if a larger amount of people are falling in to the cloud first category today as compared to when Dropbox originally launched.
Back then cloud syncing just made no sense at all because the speeds were pretty bad and inconsistent.
Not saying everyone falls into this category, but just pointing out that the market has evolved somewhat from their original position.
I use Dropbox on my iPhone and it works great. I can see how that particular use-case doesn't benefit as much from the "just syncing local files" paradigm, but it certainly isn't a worse experience. In fact, these days Dropbox is my favored mechanism for transferring files to and from my phone. The auto-sync on the desktop side is much easier than going through a website.
Especially in markets with strong network effects. Barring government action, operating systems / platforms will necessarily either directly subsume their most profitable applications, or capture all the market "rent" from them.
Ultimately "network shared storage" is a feature rather than a product. For much of their history they were value-added resellers of AWS.
I agree completely. I think history (at least, the past 150 years) has shown this clearly. I've come to see an economy of corporations as a stew that tends to "clump up" and needs to be periodically "stirred" as part of the natural course of its development.
For me it was the lack of storage tiers. When the only options is to get 1TB or more, I think you lost a lot of users. Additionally, they should have figured out a way to share storage with a family, if the only profitable storage tiers are 1TB or more then let people share it.
Meh, we're talking a single-digit increase in price to go from the previous-lowest tier to the current-lowest 2TB tier. I only use a tiny fraction of it, but it's still a good value.
The family thing makes sense - I don't have a family I would share with so it's never come up - though couldn't you just sign into the same account on multiple devices?
Signing into the same account on multiple devices creates security and ownership issues, much better to be able to delegate permissions and also keep ownership clearly understood.
An alternative interpretation might be that a company that just makes one thing may not survive as a publicly traded entity considering the scrutiny and industry comparisons that entails.
GSuite and Office 365 do not trade as standalone companies, but even if they did, they'd be far ahead of Dropbox, as they integrate cloud storage with an entire suite of office products.
Company can exist and provide good services even without being overvalued on a stock market. If there's anything dismaying it's to see how investors can kill good products because they want more.
It's never easy to say conclusively why a stock goes up or down. But do we really need this megacorp explanation? Dropbox could be losing value because they've been trying to make money for a loooooong time and still aren't.
I'm a paying customer for Dropbox and I've just had it installed on my computer for when I occasionally had to share files with customers. Never really felt I used it to any extent but I also never canceled my subscription because I'm happy for what it is and I can't bother to find alternatives.
However my computer recently crashed and when "re-installing" Dropbox I discovered that they have many more useful "Apps" included like backup and password-sync and a neat paper scanning app for the phone. All of which I was very happy to discover. So I see myself keeping my subscription for the foreseeable future. :)
> Dropbox has been hammered by Wall Street ever since it went public.
"Hammered" ha SV lives in a dream world. Its barely making a profit and no great product in the future. It still has market cap more than say Wendy's and H&R Block put together.
What do you use as an alternative to Dropbox? I haven't found anything that works as well across multiple platforms. I really hate all the feature bloat in it, which I never use, and weird decisions like dropping non-ext4. But still, for basic file syncing it seems hard to beat.
Sadly Linux users are like 1% of the market, non-ext4 is even less (and I am a full-time Linux user and big ZFS fan). They actually restored support for several non-ext4 filesystems over a year ago[1].
Syncdocs has been working reliably for me for years. They seem to focus on the core file-syncing stuff, which works fast and reliably, rather than blingy features.
I loved Tresorit but it's camera upload feature didn't transfer files correctly from my wife's iPhone - it left them corrupted and unopenable with no warnings or errors whatsoever.
Unfortunately because of that alone I dropped them completely. I'm using Dropbox now because I haven't found a better alternative for syncing between iPhone/Android/Windows/Linux.
The others are generally not supported on Linux. Dropbox has a cli client here that mostly works. At least if we are talking Google/Microsoft. Or the companies are small enough to go under overnight and leave me in a lurch
There is a difference between official and unofficial support. Also, Dropbox is big enough to be around for a while, but this is their product and if it goes south, so do they. I don't trust Google to maintain any product before rebranding, pushing the work to the users, or dropping the product. They have shown otherwise.
Syncthing is solid. Maybe a little too geeky for most, but for tech-minded people it can really work. I've had little issues here and there, but it definitely solves some problems for me.
I generally use Dropbox for personal files and Syncthing for business. It's a great setup to keep those things separate.
It's funny that a lot of their acquisitions were in spaces that had the potential to exceed the market cap of their core product (which is currently stuck at 9B) had they been more successful:
- HelloSign for esignatures, compared to DocuSign which has a 48.29B market cap
- Zulip for chat, compared to Slack which has a 24.30B market cap
- Carousel for photos, compared to Instagram which is estimated at 100B market cap
I think Google Photos would be a closer comparison for Carousel. I think it would've been the smart play for Dropbox to expand on that if they wanted to maintain consumer customers. Photos are kinda the only thing people willingly pay to save/backup and they're a royal pain in the ass to organize.
But then again, it's hard to compete against free for $0.10/user margins. Way easier catching a couple of big enterprise fishes.
It sucks having to pay google and dropbox for storage cuz i have files and photos. Dropbox doesnt do photos well, i dont trust them for it. Dropbox wants to do photos, but doesn’t separate that from storing files, so just searches all my files for images or something. Also, it doesn’t allow searching based on image recognition.
The problem is that revenue growth per se does not make a company valuable - or actually, it does while you can convince someone else to buy under the assumption that said growth will deliver competitive profits.
Selling to Wall Street is the "final sell": once it's done, you need to convince that profits grow, not just revenues.
This scares the shit out of me. Long story short: I work for a company about to go public...this year to be exact. It sounded exciting at first but as I dug deeper I realized some companies start dying slowly after IPO. I guess I’ll have see it to believe it :(
Revenue growth will slow down to below 20% in 2021 which basically starts to take DBX out of the high growth tech stock focus and it is trading at less than 5x 2021 revenue when the median is somewhere closer to the 12-14x range and that's for companies below 30% growth.
The same was seen with Slack. Though they had great revenue growth, the narrative was that they couldn't compete with Microsoft and so their stock never really traded at a comparable revenue multiple compared to others.
It could be said that they have a heavy spend on Sales and Marketing but the same could be said of plenty of other Enterprise tech focused companies like MongoDB that still commands a very high forward looking multiple.
Unfortunately from the end-user side the experience has suffered somewhat and I've personally switched away from Dropbox so I can't really say they are doing great on the product side and the amount of "Growth Hacking for Revenue" that is now part of the product experience is a bit off-putting.
Also shows the potential for issues if you end up solely dependent on one product and don't diversity, especially if it's seen as a commodity.
The work force reduction is purely to turn the company profitable on a net basis and the trailing twelve months they've already gotten into the black. That's down from a $400MM loss just a couple of years ago.
But the belief is that there isn't a tremendous amount of profitability internally, because the expenditures are just too high, and cutting further into that theoretically will reduce revenue growth further.