Name: Dropbox Inc.
Estimated Valuation: $10 billion
Product: Cloud File Hosting service
IPO Timeline: 2017
Date Founded: 2007
Dropbox has grown into one of the world's premier cloud storage companies with 500 million registered users who save an average of 1.2 billion files daily on its service. Its $10 billion valuation makes it one of the biggest technology start-ups. The company has grown by transforming how people save, store and share computer files in the cloud, ushering in a new wave of software and services. Even with this success, Dropbox faces bigger, better financed rivals such as Apple Inc., Google and Microsoft Corp., which may make the start-up equally attractive as a takeover or an initial public offering.
Dropbox's Roots at MIT
The idea for Dropbox began more than a decade ago in an era when consumers often used a flash drive or floppy disk to physically carry files from one computer to another, risking losing them along the way. That happened at the Massachusetts Institute of Technology where Dropox co-founder Drew Houston, an undergraduate student, repeatedly forgot his flash drive with files, according to the company's blog. That spurred Houston and Arash Ferdowsi, an MIT classmate and co-founder, to create the start-up. Ferdowsi ultimately dropped out of MIT to focus on the business, according to Inc., while Houston graduated with a degree in Computer Science in 2005.
The two founded Dropbox in 2007. After receiving $15,000 in seed funding from start-up accelerator Y Combinator that same year, Dropbox was officially launched at the TechCrunch50 conference in June 2008, according to TechCrunch. Houston, 34, is CEO. Ferdowsi, 31, has the title of co-founder.
Dropbox's Cloud Growth
Headquartered in San Francisco, the company has grown from a handful of registered users a decade ago to 300 million users in May of 2014 to over 500 million today, according to its website. A key to Dropbox's growth is not only the service's simple design and ease of use, but its availability on nearly every major computing platform such as Apple MacOS, Apple iOS, Google Android, Microsoft's Windows and Windows Phone, and Linux. In addition to the 1.2 billion files saved daily by users, Dropbox's power is multiplied with 3.3 billion sharing connections, according to its website. It employed around 1,200 people, as of April 2015, according to Business Insider.
Dropbox has faced competitors who wanted to buy the company - or even run it out of business. Apple's legendary co-founder and CEO, the former Steve Jobs, was enthralled with the service and considered buying the company, according to Business Insider. After being rebuffed, Jobs called Dropbox a "feature" and not a product, and vowed to kill the service with Apple's own cloud service, iCloud. While Jobs failed, Dropbox nonetheless faces a plethora of rivals that includes Google Drive, Microsoft OneDrive and Evernote, each of which has experienced success and stumbles.
A key to Dropbox's success is its integration of cloud storage with other services, an area where rivals struggle. The company has achieved that by entering key partnerships with Microsoft, Facebook Inc. and other companies to integrate file-hosting services to make it easier for users to swap and share files.
In total, Dropbox has raised $1.11 billion in funding in 6 separate rounds, according to Crunchbase.
Its initial seed funding was followed by a Series A round, for a total of $6 million in 2008 and was led by Sequoia Capital, which has backed companies like Apple, Airbnb and Google, according to Crunchbase. A Series B round in 2011 valued Dropbox at $4 billion, with Index Ventures as the lead investor. A Series C round, with lead investor BlackRock Inc., raised $350 million for the company, valuing it at $10 billion.
In addition to Dropbox, Index Ventures has invested in companies such as Slack, Blue Bottle Coffee and Robinhood, as well as a host of European companies, according to Crunchbase. BlackRock, the asset management firm, has invested in companies such as Uber, Jawbone and Lending Club, according to Crunchbase.
Dropbox offers users a free account with a set amount of free storage. From there, users can choose to pay for more storage space or additional features, such as advanced sharing controls (passwords and expiration limits to access), remote wipe and the ability to view an extended history of multiple versions of a document. The company also has an enterprise-focused service with more than 200,000 business teams paying for its service, Houston said at a Fortune conference.
Profits and IPO Outlook
Publicly available revenue numbers for Dropbox are scarce. The company was generating $200 million in annual revenue as late as 2013, Business Insider reported, and it was cash-flow positive as of August 2016, according to TechCrunch.
In August 2016, Bloomberg and others reported that Dropbox was speaking with bankers about a potential 2017 offering. CEO Houston has indicated there's still work to do before going public while confirming his interest in an IPO. "To build a great public company, you want to build a great company first, so that's what we're focused on," Houston said in story by Computer World.