The bigger story is that Dropbox is trending down in general. Look at Google Trends[1] for Dropbox searches. I used to have files. But now I don't really have any files. I use Spotify for music. A collection of streaming services for movies and shows. Google Photos for my photos. Google Docs for storing my spreadsheets and "word" documents and Google Drive to dump some useful PDF files. I don't pay for any storage service anymore.
World has changed since Dropbox came out and it has become less relevant. In my case it is completely irrelevant.
"The service hit 100 million users in November 2012, 200 million in November 2013, 300 million in May 2014, and 400 million in June 2015." and 500 million in Mar 16.
So still growing merrily. Also the shared folder connections have gone from 1.3bn end 2014 to 3.3 billion recently.
They are changing focus from personal file storage to enterprise collaboration stuff which may be why there is less on google trends, perhaps.
>That’s one of the big evolutions in terms of what people are doing when they have a platform like ours, going from access into connections and a huge collaboration network.
>The second big evolution has been the evolution from being an end-user tool into an enterprise tool
What I really want is a Dropbox for all that structured data. I understand I can't really 'capture' Spotify, but I want some where I can actually put this stuff to work. IFTTT soft of captures this sentiment, but it's not nearly as powerful as the filesystem. It's like pipes with out a hard drive.
It's interesting to consider whether you could apply part of the Dropbox approach to streams of data. Having them singularly controlled by the service you get them from strikes me as sort of limiting and underpowered. But hey, I'm in the minority. I like building stuff and feeling in control of the content I create — even that which gets created passively or implicitly.
We should really stop looking to Google Trends to infer the popularity of a subject (something I've been guilty of as well!). The number of searches can't be completely correlated to the popularity, because as word-of-mouth and general knowledge of a service builds, the more likely people are to go directly to that service and not perform a Google search.
Additionally, Google trend numbers are relative to all historic search activity. As Google's market share changes over time, that's likely to impact what Trends shows as well, skewing the correlation with subject popularity even further.
Dropbox's recent gamble and failure with Carousel has to be a big blow. Especially considering how successful Google Photos has been so far.
When they launched Carousel I had hopes that they'd really capture the market [1]. But nearly 2 years later I think Google ended up out Carouseling Dropbox [2].
Google Photos is so far and away technically superior that Carousel just got out-competed. I was a Carousel user (after Adobe Revel and a bunch of other "store them all here for one price" services) and none had caused the fundamental shift in photo storage thinking (for me) that Google Photos does.
I just wish they'd charge me something. Free services scare me (yes I know they're data mining my photos).
As others have noted, you could attribute the entire 34% "discount" to the fact that these are common shares, not preferred. A few months ago when I looked into investing in Palantir via EquityZen/Sharespost, the share price being offered valued Palantir at between 25-30% less than their most recent funding round valuation of $20B.
If anyone's interested in acquiring pvt company shares in the secondary market, here's what I learned:
* You have to be an accredited investor (i.e., net worth of over $1M excluding residence; or income of >$200K individual/>$300K married for the last 2 years and reasonable expectation that this income level will be sustained this year).
* You don't actually own common stock of the company (e.g. Palantir). It actually works like a mutual fund. You invest in an LLC that owns the stock. You get shares in this fund/LLC that correspond 1:1 to common shares in Palantir.
* There is usually a minimum investment amount e.g. $50K or $20K.
* EquityZen/Sharespost charge a commission (of about 5% iirc; 1 of them charged more than the other but had a lower minimum investment amount). They are managers of the LLC and investors have virtually no rights even though they are members of the LLC.
* When the company IPOs, your LLC shares are converted to the same number of company shares. This is common stock, and subject to the same lockup restrictions that employee shares are. That means you can't sell until 6 months after the IPO.
* There is no liquidity. EquityZen and Sharespost differ in this a little bit. But basically you can't sell your shares in the LLC without approval from EZ/SP; they can veto it and they can also require a holding period of 1 year.
* While the transaction is blessed by the underlying company, they don't reveal any information about financials or risks like they would in an IPO prospectus. You are investing blind.
In my opinion the biggest problems with such investments are (1) illiquidity, and (2) the fact that shares are subject to 6-month lockup post IPO.
You've got some misinformation here, this was my experience two years ago but on the seller side as an employee leaving a startup.
>"you could attribute the entire 34% "discount" to the fact that these are common shares, not preferred."
I sold common shares via the secondary market and I got exactly what they were valued at. This was a very well-known startup. So that's incorrect. In fact I managed to get just north of that price given the scarcity of obtaining them.
> "You don't actually own common stock of the company (e.g. Palantir). It actually works like a mutual fund."
This is something specific to just EquityZen and this is a technique that is used in instances where the company's employee option agreements forbids such a sale. This is a loophole of sorts used only in those instances.
One other interesting point is that once I had a buyer lined up the company exercised their right of first refusal which means they then had to buy the shares for the same amount as the buyer agreed to purchase them from me for. The company themselves of course didn't actually buy them but they put me in touch with a well-known Hollywood celebrity's wealth manager who then bought them.
This last point irked me a bit when I thought about all the other engineers toiling away to build a good product who were bound by all these options restrictions yet some Hollywood celebrity with no connection to the company was on a shortlist of preferred buyers should some options come available. Sigh.
To be fair, the common vs. preferred share distinction depends on the company.
It could be that in your case they were valued the same. You actually mention that you sold at above the company's last fundraising valuation - it could be the case that the preferred stock was valued even higher.
This isn't surprising to me at all. Investors that previously valued the stock at $19 per share likely have a 1X liquidation preference. The employees' shares sold on the secondary market won't have this liquidation preference. So VCs are paying a 34% premium to basically guarantee a 1X return. Makes total sense.
When the company's raised a ton of money, the common's behind a ton of preferences, and in a time when there's no IPO window in sight, a 34% discount to the preferred doesn't sound particularly terrible or notable to me.
If I'm an employee at [HIGHLY VALUED PRIVATE COMPANY] - this looks REALLY appealing to me, to dump my shares for at least a nice guaranteed cash out now.
So many VC rounds protected with liquidation preferences at a valuation that the market probably ends up shredding if there's an IPO or a buyer comes along to acquire the company. These latest devaluations certainly wouldn't help with morale and I'd get nervous thinking about my shares eventually being worthless if the company just sort of tinkers in the private market much longer.
I also tend to be relatively risk averse though, so I'm curious what others here would do.
Most employees would be in a situation where right of first refusal means their employer would have to approve this -- and in a lot of places, the employer's going to take it as a red flag that you want to sell and it could create problems.
Could someone (perhaps with a throwaway or a 'wink') corroborate or elaborate on this? I'm very curious to know (anecdotally) how the politics of these sales work.
This is a copy/paste from a prior HN discussion that I had:
[it's definitely true] that employees are discouraged from seeking buyers because there is an unspoken implication that this means the employee is "losing faith" or "believes less" in the company, or is getting ready to leave.
If the party line is: "hey, we are going to be a billion dollar company!" and then one employee says "hey, I want to sell at this $100M valuation", even if the $100M is a solid upside from the employees strike price the next natural question for the founder is: "hey, why would you sell at this valuation if we all know we are going to unicorn?"
Lots of people are reasonable and could understand many good reasons to sell at that point, but in high-growth culture those are not always appreciated. Sure, employee can/should suck it up, but it still makes it more challenging.
Generally, I think this is why company's should more regularly organize secondaries, it removes this dynamic to a certain extent.
And with each round of financing your equity is likely getting diluted. If you are a good employee and sell some shares on the secondary market and continue to do a good job and remain at the company I don't think anyone can equate that with losing faith or imminent departure.
See my comment above. There are no politics of it, just an irrational fear, call up one of these companies that specialize in it and ask. I found Sharespost to be very knowledgeable and helpful in this regard.
Why not? I feel like this is a dirty secret and double standard at high profile tech startups - management and those with preferred stock regularly sell to the secondary market while the common workers are supposed to be wait for some distant pay day that may or may not arrive. Why shouldn't you be able to take money off the table? If the company is really that solid and the IPO is such a "sure" thing as you are lead to believe then it shouldn't matter. What I learned when I sold my options was that I was not the first and in fact the secondary market companies told they sold employee options before so it can and is being done. I don't think its a red flag at all. It means your savvy. I think that most employees aren't aware that this is even an option for them.
Most people probably agree with you, but it doesn't mean founders or start-up execs will see it that way. And there's no way to know why they might cause a problem over it. It could be that they've seen a lot of people selling and view it as a bad signal and they just take it out on you ... or it could be that they are just psycho and see their company like a cult and suddenly you're "not a team player" if you want to sell shares.
I get what you are saying but remember founders and execs need quality people to build and maintain a successful company. Its unlikely that you will be fired for this. I think if you went and told everyone within earshot that you did this it might problematic but if you kept it to yourself and did it discretely I think its unlikely to cause problems. Also like I mentioned ask these companies(and theres on a couple) if they sold options for your company before.
As far as psychos and/or the cult mentality, my view is that I wouldn't want to work there anyway but thats me.
Yes, that's correct. The point is that your employer gets to be alerted to this -- not that they could block you or something.
If you're happy to sell the shares and work somewhere else, then there's no real problem either way. But if you actually like your job and you just simply prefer to realize a cash distribution from the compensation you earned in the form of equity, and your employer would disapprove of you having this preference, it can be a tricky situation.
They can definitely block you. Right of first refusal clauses make no mention of timeliness. You notify your company that you found a buyer and they just ignore it. Supposedly this is very common with Uber. Only the selected cool kids and favorites get to sell.
I work for a YC company and wanted to sell some shares. EquityZen said it would be easier to sell if I didn't work there any longer, because suing your employer isn't fun. A lawsuit was going to be the easiest way forward.
Also take into account that investors only buy the big name hype companies right now. They're not buying anything small but with good fundamentals. Why? Because they don't get to see the books and why should they trust anyone at their word? But hype? Hype sells. This is the last time I work at a small, but slightly profitable startup that just drifts along. It can't go public and we can't sell. Except the founders who sold at series A.
The last raise was two years ago, so if you figure the current valuation based on recent markdowns, then this price is more inline with what you might expect from common equity vs. preferred.
I am curious, will these secondary shares have the same lockup restrictions that employees face after the IPO?
I am also curious how the market will price Box vs. Dropbox. I would expect them to mostly move in tandem, but with Thiel propagating his "myth of the monopoly", maybe people will consider any positive developments at one to be negative for the other?
At any rate, I expect it will be rough roads ahead.
While it think it is great that Dropbox is allowing its employee shareholders the ability to get value for their shares, the real story will be whether or not the shares actually sell. That will depend on a variety of things of course, not the least of which is how many shares are offered, but it will give management a useful way to evaluate the practicality of trying to go public or not.
Buzzfeed news is pretty good. You won't believe how they fund serious journalism. #8 will shock you. But seriously, they do seem to have a commitment to producing quality news. [1] for example.
I strongly disagree. They produce a lot of biased news geared against startups in Silicon Valley. It almost feels like they're anti-startup news feed. And reading them, as an employee of a startup makes me feel pessimistic and depressed.
Media diet is important. IMHO staying aware of local, regional national and global "stuff" is kind of nice, it makes it much easier to be social. Occasionally I encounter stuff I want to know more about. But it takes a light touch. 15 to 30 minutes a day is more than enough.
Yep and ditto for that shit pile known as Gawkwer Media. Techcrunch is another one to be avoided. As far as I can tell the only tech bubble that exists is the one these media companies keep trying to drag into existence.
World has changed since Dropbox came out and it has become less relevant. In my case it is completely irrelevant.
[1]https://www.google.com/trends/explore#q=Dropbox