[louisphilippe]

IIRC, back in the early 1900's, it was commonly known that tech companies should pay higher dividends than longstanding blue chip companies. Why? Because they were much more likely to have short lifespans. The newer the company, the more active the sector, the more turnover in the sector, the more likely the company will get replaced by something else. Somehow people seem to have forgotten this lesson. We now have tech companies like Sun or Groupon that go their entire lifecyle without paying out profits to investors.

That said, the strategy of not paying out profits makes sense for the investors and the founders. The founders will make more money by talking up how much long-term potential the company has, how it is going to be the next 100-year company. Then when they get the $10 billion valuation, the founder can take some money off the table. That is probably a better deal for the founder than getting a $1 billion valuation and just paying out dividends.

The question is, who will end up holding the bag. As much as I loved Dropbox when it came out, I switched off of it recently. I'm not sure what the future is for it in five, ten years. If you are techie, you want something with end-to-end encryption. If you are a normal user, you'll just go with whatever is bundled with your operating system or bundled with applications you use (iCloud, one drive, google drive).

[w1ntermute]

> The question is, who will end up holding the bag.

The founders and employees (mostly the employees), it seems like. The VCs and growth capital funds have downside protection, and the public markets are no longer receptive to such blatantly unfavorable business models.