Dropbox: Going From Storage To Collaboration and Profits
September 7, 2017

Dropbox: Going From Storage To Collaboration and Profits

Executive Summary

Dropbox has successfully ridden the wave of growing interest in cloud storage. However, it risks being crowded out by large providers of personal cloud services. Dropbox needs to create differentiation and become the de facto engine for online content storing and sharing on all devices and platforms. Although Dropbox has been known as a provider of consumer-facing online storage solutions, the company has recently transitioned to a public cloud-based enterprise file synchronization and sharing (EFSS) solution. Our investment thesis is driven by the company’s execution and proliferation of an overall next-generation enterprise content collaboration (ECC) platform. We feel optimistic about Dropbox’s execution and track record to date, as validated by the continued growth in number of consumers and businesses adopting the service. As services and products continue their relentless “march to the cloud,” Dropbox is well positioned to both capture and accelerate this move, from individual consumers to entire enterprises. Dropbox is disrupting the file-storage space by providing a best-in-class solution for users to easily share, edit, store, and access files from any device at any time. The company’s freemium model has proven to be a powerful driver of user growth, ultimately creating a massive barrier to entry for competitors.

What are people forced to do now because what you plan to make doesn’t exist yet? Email themselves attachments. Upload stuff to online storage sites. Carry around USB drives.

Dropbox Y-Combinator application,
Summer 2007

Investment Positives and Upside Catalysts to Track

Dropbox faces a large and growing market opportunity. Computing, networking, and storage are the three pillars of cloud computing. Industry experts believe that storage is undergoing a renaissance, which will likely change the way computing and networking inter-operate. Dropbox’s market opportunity remains subject to debate, as it is difficult to estimate the growth in both customer adoption and pricing. Our analysis indicates that Dropbox’s serviceable market could grow to more than $75 billion in annual spend over the next five years, implying a fairly robust and sustainable growth trajectory for key players in the space.

Global Public Cloud Services – Gartner Predicts $383 Billion Spend in 2020
Global Public Cloud Services – Gartner Predicts $383 Billion Spend in 2020
Source: SharesPost Research; $ in billions; Gartner report published in February 2017
PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

This article does not constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.

Securities referenced in this article may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright SharesPost, Inc. 2020. All rights reserved.

PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

This article does not constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.

Securities referenced in this article may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright SharesPost, Inc. 2020. All rights reserved.