[jlittel]

Not necessarily. Excluding interest, taxes, depreciation and amortization (EBITDA) is a common financial metric. It can demonstrate a business model is working, before taking in to account capital structure or other semi-external factors.

[maxxxxx]

This is a ten year old billion dollar company. How can they not have figured out a viable business model?

[rpearl]

EBITA is a common way of demonstrating that a company has figured out a viable business model: it tries to show that, given the assets it has acquired and the expenditures it has made and is in the process of paying off, the company makes money.

[Roedou]

Ask Twitter?

[goialoq]

Amazon was a 20 year old company before it was reliably profitable by accounting metrics. Is their business model viable? That's how a growth company works.

[JumpCrisscross]

> Amazon was a 20 year old company before it was reliably profitable

Amazon’s decision was quite obviously a choice. Snap and Twitter are more natural comparisons for Dropbox if it’s still unprofitable.

[Brendinooo]

I don't think that's true. Snap's and Twitter's consumer-facing product is free, while Dropbox charges for theirs.

They played the long game here. I'm still not a paying customer after almost ten years (partially because I got a lot of free space via referrals and trying out their apps). But if I ever max it out and decide to start paying someone for space, it'll be them unless there's something out there that does what they do at a price that's low enough to make the effort to switch worthwhile.

And, more notably, the freemium model means that they're able to invade the business world in the same way that the iPhone did with BYOD. And there's a lot more money there.

I'd be stunned if Dropbox wasn't very successful already, and I'm happy that someone outside of the Big 5 is doing what Dropbox is doing. It's a fantastic and indispensable product for me.

[eldavido]

Capital structure is _not_ external. You seem sophisticated to know this, but for everyone else, it's all about CASHFLOW. How much the business has coming in the door, how much is going out, etc.

Warren Buffet goes on periodic rants about these accounting gimmicks in Berkshire's annual letters. Metrics like EBITDA pretend things like massive capital investment don't exist. Guess what, if you own datacenters, or railroads, or anything else, you absolutely have to factor the costs of acquisition and holding those assets into your business model, metrics, and financing needs.

Amazon seems to have this figured out. Look at their financial statements, they always put the statement of cashflows first, right at the top, #1. Everything else is secondary. I'm not surprised their founder is worth 12 figures.

[tim333]

For what it's worth Buffett doesn't go on about cashflow much either, he focuses on profits in the traditional sense of the owners getting richer.

[eldavido]

Says or does?

He might talk about profits a lot, but Berkshire is very much a cashflow-optimized machine. The entire thesis of the company was a hack, noticing that insurance collects cash upfront (premium payments) in trade for future liabilities, giving smart insurers a huge amount of cheap, investable cash.

Within Berkshire, they have operating businesses (Marmon, Fruit of the Loom, Dairy Queen) that throw off operating profits, which then get plowed into high-return but illiquid assets like BNSF (the railroad) which are great long-term investments, but require deploying mountainous, almost government-sized piles of cash.

This isn't my own thinking either; it's a bit of an infection of American businesses that we're so margin-obsessed. This is the thinking that got IBM out of PC manufacturing. "You can't take a profit margin to the bank", as they say. And given the current rate climate, we're anything but capital constrained.

Cashflow is everything.