Is Dropbox worth $8 Billion?

Brian Hicks

Written By Brian Hicks

Posted November 19, 2013

If you’ve never used Dropbox, it’s a very easy concept to grasp: it lets you store digital files online.

For example, you can upload all of your files related to a work project, and then give your work colleagues access to those files. You can also upload music, movies, and photographs so you can download them on a different device. The applications for this sort of cloud storage service are incredibly broad.

As a result, Dropbox has a ton of competitors in the space, most notably Google Drive, Microsoft Skydrive, Box Inc, and Sugarsync. The market is extremely healthy.

With such a vibrant market, and services in steady demand, it should come as little surprise that Dropbox is situated in the so-called “unicorn” class of web services I wrote about earlier this month. Unicorns are the rare breed of web services that are valued at more than a billion dollars, and their ranks include Facebook, Twitter, Groupon, Linkedin, and about 35 others.

According to unidentified sources that spoke to Bloomberg this week, Dropbox is looking to raise another $250 million in capital, and it’s seeking a valuation of $8 Billion, or double its valuation in 2011.

This valuation would bump Dropbox to the position of fourth most valuable of the unicorns. Personally, I think it’s more important than Pinterest, Twitter, Snapchat, Zulily, or any of the other multi-billion dollar valuations that we’ve seen at 2013’s tail end.


Well, for one thing…

It’s all about where Dropbox is already being used

Dropbox already claims it’s being used by more than 4 million businesses, including a staggering 97 percent of the Fortune 500. This is without a specific enterprise-facing product.

Over the last five years, consumer devices have crept their way into the enterprise space as employees began using their own personal devices for work. This trend is sometimes called the “consumerization of IT.”

Consumer software and services, as a result, have also crept into the enterprise space, and Dropbox is a shining example.

The company has revised its software so users can separate work content from personal, and so that enterprise IT can manage Dropbox security and visibility. In short, Dropbox is finally going to become enterprise software in 2014.

Tech company valuations are consistently raising the overall investment ceiling in the tech sector. Generally speaking, the most-valuable companies are carrying a valuation between 30 and 50 times their annual revenue.

The LA Times today said we’re reaching “nosebleed” levels in the sector and that some of these companies are bound to crash and burn. I thought the $3.4 billion valuation for Snapchat was unwarranted, but I don’t see this $8 billion valuation as a problem for Dropbox. 

Dropbox is already present in the lucrative enterprise software space,  it’s already a household name, and it has a simple interface that doesn’t need outward revision for improved security and IT control.  

Dropbox has “enterprise licensing” written all over it, and that’s the business that’s kept tech giants like Microsoft and Oracle at the top of the industry for so long.

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