[UVB-76]

This is how it was always going to go.

Dropbox's core business is unsustainable, and they can't compete long-term with rivals like Google and Apple.

They're flailing in all directions at the moment; pushing for the enterprise/government market with the appointment of Condoleezza Rice, now burning a load of money acquiring businesses offering tangential services, in the hope they can diversify their business model.

It won't work. Acquisitions like this never go to plan, and they are almost always a waste of money.

[rattray]

I agree and disagree; file sharing alone was never going to be "enough". But even Search wasn't enough for Google; it's not wrong for companies to expand their offerings.

In the case of Dropbox, they need to go head-to-head with the Drive/Docs/Apps provision coming from Google. They're not as well-positioned to do that as they could be, and I'm not sure hackpad will be close to sufficient to get them there. But it's certainly a step in the right direction; documents are moving off the hard drive entirely, and there's no reason Dropbox can't help with the move to the cloud by expanding their offerings with moves exactly like this one.

[tomhschmidt]

The difference is that Search was enough to sustain Google and still is its cash cow. They branched out due to interest, not out of necessity. Dropbox's current business will not sustain and they NEED these acquisitions to find viable business models for the long haul.

What I don't understand about these acquisitions is how tangential it is to Dropbox's original value prop of being a "dumb" folder that would magically sync all of your files and stay out of your way. Now, instead of Dropbox passively running in the background and letting me do my thing, they want me to start actively engaging with the software.

I agree that it's necessary and overall a smart move, but still a very large and difficult pivot to make.

[kenjackson]

Advertising I'd their cash cow. Google's original business model was enterprise search. It took them a bit of time to land on their current business model m

[johnward]

I think many people forget that Google wasn't really sure how to make money until they completely changed online advertising with AdWords/AdSense. Everyone else was content with your standard banner ads and rates. Google made those relevant to the search context. Since that time they have made money hand over fist.

[sheetjs]

> They need to go head-to-head with the Drive/Docs/Apps provision coming from Google

If that's really the play, Hackpad isn't the right acquisition. The real value is in the sheets/excel space, and the knowledge of collaborative document editing doesn't naturally translate to spreadsheets (the general nature of edits are not linear)

[rattray]

Smiled when I saw your username. Looks like great work you guys are doing, hope you're able to help them out.

[odl]

Is there anyone seriously pursuing the space? There's ethercalc but they don't seem to have much steam ...

[audreyt]

"They" is just me and our wonderful & kind contributors. :)

EtherCalc was, is, and will remain a F/OSS infrastructure project, not a business enterprise.

[natehark]

I'd consider Smartsheet.com to be playing in that space.

[mathattack]

Your point is very true - plan 1 may not be monetizable, but a large user base with a lot of data can open other doors. Facebook is another example - it was never going to just monetize people poking each other with sheep.

[notastartup]

    But even Search wasn't enough for Google; it's not wrong 
    for companies to expand their offerings.

Google has made billions consistently from it's advertising operation. Their shift to other areas have always driven to expand search.

[bane]

I still don't get why DB hasn't come up with a business model to let people just self-host content out of their accounts. They basically offer an instant web-server experience for non-tech folks, but they cap bandwidth for downloads.

- How awesome would it be if I could dump a bunch of mp3 files and an html page or index file or something, get a URL from the service and suddenly my band has a website. Then if I go to www.dropbox.com under some "music" category see my band listed there next to a bunch of other bands. Voila, instant promotion. Now the entire independent music industry has a promotion venue. Setup some kind of friendly payment processor and now bands can sell their music direct. (and oh yeah, you get automagic copyright protection since they can scan all other user's accounts for illegal copies of your music).

- How about letting my Dad dump some word documents in a folder called Chapter 01.docx Chapter 02.docx etc. get a URL and people can come check out his book's site with automatic conversion to various ebook formats (and a payment processor to handle the transactions)?

- Or in my "podcasts" directory dump an mp3 of my latest podcast and have it automatically publish out to iTunes and various other podcast search engines?

- Completely annihilate flickr and other services by letting me dump a bunch of photos into a folder, get an admin URL so I can type up descriptions and other metadata (and geolocate stuff on a map) and a publish URL to give out to people. Let me do that with with both a personal folder and a "pro" folder. Let people go to my publish URL and buy photos from me (auto watermarked by DB) or partner with a photo print service so people can buy prints at various sizes.

the list goes on and on and on and I'd bet people would pay a little money to be able to do some of this. It seems so obvious and the little bit that DB supports (like photo albums) is so lackluster its almost not worth using. It would get people to start filling their spaces up with stuff further upselling them on the need to buy more space. With a little finagling they could even wrap a social network on top of all this content and back door into Facebook's space.

I just don't get it.

[thruflo]

Their other acquisition today - Loom - is on the annihilate Flickr path.

I must say I do like your auto monetization angle though. If carousel is anything to go by, their 'we build UX ontop of your content' execution is so far a bit meh.

Trouble is, as Twitter showed, there's no long term joy in building a competitor to a service using its API.

[bane]

Well they had/have a huge opportunity to start an entire series of cottage industries like this but have completely failed to grab onto the idea. It seems like a pretty obvious extension of the "put a bunch of files in the cloud and sync" notion to me. After all, what's an app server but a bunch of program files stuck on a server drive?

[grrowl]

Twitter is still free — Dropbox makes money of those who use it the most.

[larrys]

"I just don't get it."

Timing (sometimes) matters. [1]

It is entirely possible that they might actually have offerings like this planned but prefer to offer them either later or in stages in order to keep up some type of growth that investors expect.

Similarly it's common in some types of businesses to hold off booking sales until a later time period if recent revenue is "good enough" for a particular purpose.

That way you can continue to grow and not, for example, "shoot your load" all at one time.

Of course I have no clue as to why what you suggest is not being offered (independent of whether it is actually a good idea or not). But in business there are definitely reasons not to offer all the things you can do just because you can.

(And of course there could be a slew of other reasons as well, I'm just offering one perspective.)

[1] Another example might be (happened frequently in "olden times") rolling out software features not all at once so customers have a reason to buy a later version of the product.

[amirmc]

It's not always about stable growth, either. Sometimes you need to drip feed your customers new tech and possibilities lest you spook them with weird and wonderful things that they were not expecting (with the negative consequence that they no longer understand you and jump ship to 'simpler' options).

[larrys]

"that they no longer understand you and jump ship to 'simpler' options"

Exactly. And both tech people and people with the ability to understand these incremental changes are not in a position to know what amounts to "to much" which can be a problem. Because they might have higher level abilities or they are just processing the incremental features which are relatively easy.

I remember at a company that I owned constantly adding new machinery. I could understand it on delivery same day. Employees who had to operate it couldn't. So I ended up with a bunch of machines that also when new employees were hired were tied together in a very complicated fashion. It caused many problems and complicated the process and offerings.

(Thanks for reminding me of this I had forgotten that point.)

[prostoalex]

They've always viewed themselves as a platform with rich APIs, what you're describing is applications built on top of that platform.

With that said, recent releases (Carousel, Mailbox) point that due to the dearth of applications built on top of Dropbox they're bootstrapping the application layer themselves.

[Blahah]

Dropbox is good at what they do. What you're describing is already served by an ecosystem of sites, which can be connected with, for example, If This Then That (http://ifttt.com) . And you can host static sites from Dropbox in various ways: http://www.maketecheasier.com/4-ways-to-host-your-website-on....

[bane]

Well yeah, of course all this exists somewhere else. And it's making those folks money hosting it, not DB.

The problem is that DB caps your outgoing bandwidth so hosting even moderately large number of users will kill your site dead pretty quick.

It's obvious that people want to use it for these use cases, but DB hasn't been able to execute on that demand.

[evanmoran]

This is true, static hosting is served by the ecosystem -- yet they are buying companies very quickly right now with less obvious user value. Why wouldn't they buy one of these and see if they can grow it into something?

[bdotdub]

I think you just described Drop.io: http://www.crunchbase.com/company/drop-io

[tonyhb]

Loved that service. Completely forgot about it until you mentioned it.

[yoshyosh]

They can easily do a lot of things. I think the challenge is the messaging/marketing. People know dropbox because it does one specific thing well.

If they were to do this, I think it would have to be spun out as its own service. This makes it much easier to market and message. You are seeing similar things in the mobile space with Facebook unbundling its app.

[cdelsolar]

Sounds like a cool idea. Why don't you build it?

[xerophtye]

It has already been built. Bane's point is that why doesn't dropbox buy THOSE services and see if they can expand on it. For example docker.io is a paid service for the above use case. Dropbox might be getting a cut from them, but if docker has successfully demonstrated that there is a market for this, wouldn't it be better form dropbox to aquire them and push in that direction?

[nickstinemates]

What an interesting perspective.

[bane]

I don't own dropbox.

[joeframbach]

OwnCloud's plugin architecture allows for all of these things mentioned. But plugin authoring for OwnCloud is opaque and tedious. There's a Hello World and a few examples, but the environment isn't fun to work around.

[dkroy]

This all could be accomplished with their api and your own web-server. The coding would be the hardest part though from an effort standpoint.

[bane]

I actually think DB should be the webserver in this case.

Why can't I just make a "web-server" folder in my dropbox, drop a bunch of html, js and css and a few image files in there, get a URL and voila, instant website?

You sorta can already in truth, but they don't like it and the bandwidth is pretty severely capped on these kinds of sites. Make it part of the paid account (with x-fer up to 1GB/mo or whatever) and have high bandwidth users pay more?

[dkroy]

Those ideas tempted me to stop what I was working on and try one of those ideas though, it was a great set of ideas.

[joshuak]

Agreed. I'm afraid, the famous quote about Dropbox from Steve Jobs about being a feature not a product is playing out. Dropbox doesn't even own the commodity they sell (as far as I know). They sell you on storage, but you receive a syncing service, not storage.

I like dropbox, don't get me wrong, but they need to recognize the core value they brought to the table (and may still have) is better user experience design, not infrastructure. Simply offering more apps that are bound by the constraints of one's Dropbox account seems profoundly myopic.

[jordanlev]

I agree with you that their core value is a better user experience. In my mind, offering their own apps is actually the natural continuation of this core value -- since the underlying storage is just a commodity, they can differentiate by having really well-designed apps that sit on top of it.

[joshuak]

Or have well designed apps that sit on top of something else, the constraint is unnecessary and I argue a net negative.

[ZenoArrow]

Was that quote from Jobs made before or after Apple's attempt to acquire Dropbox got turned down?

[avalaunch]

It was made to the CEO of Dropbox as he was trying to acquire it.

[ZenoArrow]

So standard negotiation tactics then.

[lotu]

Doesn't make it not true.

[ZenoArrow]

What's the difference between a product and a feature? In my eyes, if people are willing to pay for something, it's a product.

[kogir]

Actually, they're buying good teams with products that compliment or extend their current offerings. Loom on the consumer side; Hackpad on the enterprise side.

I don't know their vision, but both of these make sense to me in many possible contexts other than "floundering."

[encoderer]

"Acquisitions like this never go to plan." That kind of absolutism sounds silly to me.

And my analysis of the situation is different. I see it as dropbox adding a services layer on top of the platform of storage they built. You already see other companies doing this -- using the dropbox platform. If I'm dropbox, I see a lot of opportunity there.

[UVB-76]

The Dropbox 'platform' is razor-thin, and their core offering is fast becoming a commodity.

At the moment, their business model doesn't extend much beyond brokering storage space. They are simply a middle-man between end users and Amazon S3, whose value add is some software that makes the process of storing and sharing files relatively pain-free.

They're good at what they do, and their software is nice, but in the long-run, there isn't much money in what they do.

Diversification is the obvious course of action, but it pits them against major players like Apple, Google, and Microsoft. All of these could probably afford to offer unlimited storage to all their users tomorrow, and if they got the software right, could render Dropbox redundant.

[Retric]

Dropbox works on iOS, Android, Windows, OS X, and Linux. Because it's not just a website they can do things like automatically backup your phones photo's.

They avoid storing duplicate files between users which dramatically reduces storage space on S3 in ways single users can't. But, also allows them to add cheap versioning as there not storing 1 copy per user of each file.

[omarhegazy]

How is Dropbox's core business unsustainable?

The way I see it, Dropbox wants to be the filesystem and personal hard drive of the Internet. Easy enough business, just sell hard drive space. And as always with any software business, with users, you have data, and with data, you have potential advertiser money and a lot of investor interest.

Why can't they rival Google/Apple? Yes, bigger companies have a lot more resources. But that doesn't mean that only big companies can succeed. If small companies have nailed a service that big companies can't wrap their heads around/move quick enough to take over, then they'll outperform big companies in that market. Once upon a time, Apple was a small company, too. But they did personal computer and personal computer software better than competitors long enough to become a large company. Not too long ago, Google was a small company too, competing with large companies. The reason they succeeded to go on to become a big company is their superior product. Yahoo and other search engine competitors just couldn't tap into what Google had, whether it be because they didn't possess the genius/talent/skill/anything-other-than-resources Google employees had that made their product better, or because Yahoo was too large to move strategies fast enough to beat Google to market. Even more recent than Google being a small company, Dropbox was just another Y Combinator application that was shat on by oblivious HNers who thought "Don't people just use rsync and ftp?". But because they could provide a product that people wanted before big companies could catch on in time, they grew in size. Small companies have a chance against big companies. If they didn't, it'd be a pretty fascist society where everyone'd be forced to use the same products and services for all of forever.

How is this "flailing"? Google integrates cloud editing (Docs) with cloud storage (Drive) pretty well and that great integration is what's allowing Google to enroach on Dropbox's vision of being "the file system and hard drive of the Internet." Google has just shown us that integrating content creation tools with content storage tools isn't "flailing" or feature creep or anything; it's a valid strategy to boost content storage. And Dropbox is catching the hints. That's why this acquisition exists. So they can integrate content creation (HackSpace) with content storage (Dropbox). Now claiming HackSpace is going to put up a good fight against Google Docs is pretty absurd, but 1. now they're being backed by Dropbox, which should aid in the fight, and 2. remember what I said about small companies having a good chance if their product is good enough? With proper leadership (Drew Houston and Condoleezza Rice [moral issues aside, she has business and leadership skills that are completely separate from her political views which wouldn't affect anything about her position at Dropbox] -- check), resources (Dropbox -- check), and product design and development (this is the risk Dropbox is taking by purchasing HackSpace -- will DB be able to produce a better product than Docs?), yes HackSpace can beat Docs.

"Acquisitions like this never go to plan, and they are almost always a waste of money."

Why does HN do this? Toss around bold and interesting rhetoric that is completely baseless and has no substance or logic. Like the Michael Bay of writing.

This is so absurd, I don't even feel like I need to argue against it; it's like saying "The idea of companies never go to plan and are almost always a waste of money." It's just so ridiculous and against the way the real world works that it's more on you to prove your radical theories than it's on me to prove them wrong.

If acquisitions didn't work to produce a net benefit, then successful companies wouldn't do them, period.

[xerophtye]

>And as always with any software business, with users, you have data, and with data, you have potential advertiser money and a lot of investor interest.

If dropbox goes down that path, not only would they lose a huge chunk of their existing customers, they would definitely perma-ban themselves from enterprise market. And that is where the real money is.

[omarhegazy]

They wouldn't lose too much of their existing customers. Are you implying that massive data collection and advertiser interest are bad?

Most people really don't give a shit about massive data collection. I mean, sure, everyone's a Reddit slacktivist nowadays, throwing around words like "spying!" and "privacy!" but no one really cares, or else we'd all be using rsync + ftp and BitMessage and all that idealistic free software stuff that RMS peddles. People just want to seem special and cool and smart and advanced when they post about how EVIL the government is for spying on all of us. The art of saying "I don't use Facebook; they sell my info to advertisers", then turning around to use Google products (which are fucking unavoidable on the Internet, by the way, did you know fucking ReCaptcha is owned by Google? You'd have to completely avoid the Internet to avoid Google at this point) , is the 2014 spin on the 1990s art of saying "I don't own a television".

We use Chrome and Gmail and Facebook and OS X and Amazon and what-not, because the net benefit of having really convenient software developed by teams of hundreds (thousands, even, in huge cases like Google/FB) talented professionals that are putting in $120K / year's worth of effort beats the net cost of having to pay for that $120K by letting Facebook give advertisers all your user data to make up for the costs of developing and operating such convenient software (and whatever profit FB is hoping to make -- people don't start businesses out of the goodness in their hearts). I mean, what's the alternative? Paying for the $6 per user per year that Facebook makes? Would you really rather pay for these services than just aid in letting the advertisers know that 67% of young (18-34) males in New York City prefer Macy's over JC Penney? Is it really that significant, your tiny, indistinguishable contribution to our advertising overlords that isn't even tied to your personal identity? It's not like they know that specifically Omar Hegazy and Xerophyte clicked on this ad over that ad in A/B tests; they don't give a shit about the specific identities and that would be truly creepy. No, they obviously care more about aggregate statistics, like overall click through rate and what-not. And when you're just another brick in the wall of statistical analysis, is it really all that creepy? Do they really know all that much specifically about you?)?

So, people don't really care about privacy, and Dropbox wouldn't lose a huge chunk of their customers. Or else, Facebook and Google and Apple and what-not would've lost a huge chunk of their customers.

I agree, though, about the enterprise market. Enterprise is smaller than consumer-facing, because the set of all professionals in a certain vertical is much smaller the set of everyone. That means that spying on the enterprise market is much more personal and tied to identity than spying on everyone as a whole. So it really does lose you customers in enterprise. Also it's much easier just to charge people directly for money in enterprise; usually verticals have a greater demand for a proper solution than horizontals, cause they're a much more specific market to target and so their biggest pain points are easier to solve. People really would pay $6 a year, and even more, for a product that truly understands what their specific problem is.

But I disagree that enterprise is where all the moolah is. I just think that it's much, much harder to make moolah in consumer-facing software, and all the moolah in consumer-facing software goes to a select few very well-known winners. But if you become one of those winners, then you have much more money and historical recognition than any boring old enterprise company will get you.

It's really very hard to nail down "What's a problem that everyone is having but no one has solved?" -- but when you do nail it down, oh boy, you just solved everybody's problem, and it gets you the quickest company to reach $150bn valuation in ever and the founder becomes the youngest billionaire in the world. I think, if Drew Houston and Co. went down the consumer-facing route, they'd be playing their chips on the assumption that they really struck gold with answering that seemingly unanswerable question. And given how far Dropbox has gone in the consumer market, I wouldn't hold it against them for taking that risk.

That being said, they do seem like they're saving some of their chips for the enterprise route. So if they really were worried about ruining enterprise trust by being yet another consumer-facing company that gobbles all your data and feeds it back to advertisers, they'd just do the other thing I suggested - sell hard drive space. But something tells me Dropbox is trying to be more.

[xerophtye]

But i agree, it's not necessarily unsustainable. They just need to focus on PAYING customers more, and they'd find most of them in the enterprise market. So yes, tying content-creation with content-storage is an EPIC move, but they need to keep in mind that this needs to be done with the focus on the enterprise user.

[nrao123]

I think the OP may have been referring to the massive expected price declines in the storage market. Price cuts like this: http://readwrite.com/2014/03/17/google-drive-pricing-plans-d...

Dropbox would ultimately have to start matching them & then slowly starts a downward spiral. However, if they move into the applications layer, the pricing pressure is less intense.

[omarhegazy]

Eh. If price declines become a problem, Dropbox will be just like every other seemingly free consumer-facing service.

Sell data to advertisers.

It's making Facebook $6 per user per year, and as company databases get more and more massive (Did you know Facebook has 300 fucking petabytes of user data? And 5 years ago, Google was processing 24 petabytes per day.) and machine learning / data statistical analysis gets more and more advanced and software companies have more and more cultural capital and industry reliance (Software is eating the world, etc. etc.) that number can only go up higher. Mix $6 per user per year revenue with the massive increase in users you'd get from consumer-facing vs enterprise (everyone vs. a single business vertical) and you got yourself a consumer-facing company that makes so much more moolah than the equivalent enterprise company.

But I agree there's more pressure. There are much fewer winners in consumer-facing than enterprise. But Dropbox is just betting they'll be one of those winners.

[nhangen]

True in part, but we haven't seen people flocking to Google Drive in droves, despite the fact that their offering is now bigger and better than Dropbox's. There's something to be said for getting even the little things right.

[Goopplesoft]

And I'm sure something to be said for transitional friction.

To me dropbox is very simple: a folder you stick your things in and it syncs. I'm sure Google/SugarSync/Box/Drive etc do that just fine. I rarely if ever go on the dropbox site.

Why haven't I switched to a cheaper option? Too much friction to move things over.

[d0m]

Real-time editing of documents might very well be in their vision.. and if they can get an incredible team, what's the problem?

[UVB-76]

The problem is monetizing real-time editing of documents. Ideas welcome.

[peterwoo]

Charge money for it?

[notastartup]

This almost sounds like Facebook.

Buying virtual reality was the final smoke signal of danger.

Microsoft has a tough time competing with Google and Apple. It has decades of experience and loads of cash to burn and still be standing.

[m3rc]

How exactly does a "final smoke signal of danger" work? What happens if there's another smoke signal?

[Goopplesoft]

I think in his usage final = definitive. As in there may be more, but that signal was the 'were in danger' moment. Not that I agree, just clarifying for him.

[shadbs]

Countdown to ad-supported free accounts starts...now.

[ivv]

This idea will likely be appalling to many here, but it's an interesting and novel concept -- a promo DB folder with trial versions of, say, five products you can install if you wish, and the contents of the folder refreshes with new stuff every so often. If Dropbox is selective about the stuff it lets into the folder, I'd be up for it. It's kind of like all those subscribe-to-a-box-of-stuff services that are springing up.