Dropbox-logo-LaTeamDropbox, the fast-growing online storage company, is on the verge of raising more venture funding – at an astounding $8 billion valuation, BusinessWeek reports.

Dropbox is only five years old, and its founder and CEO, Drew Houston, just turned 30. So building a company worth $8 billion is quite an achievement.

What makes this even more amazing is one somewhat stunning statistic: Dropbox has only 400 employees.

That’s a lot of bang for the employee headcount buck. It works out to $20 million in valuation for every employee.

To be sure, a lot of companies in the Valley have been getting crazy valuations lately. Snapchat, which has zero revenues, supposedly has turned down acquisition offers of $4 billion. Pinterest has raised money at a valuation of nearly $4 billion. Facebook paid $1 billion for Instagram even though it had 12 employees and no revenues.

In that context, an $8 billion valuation for Dropbox seems almost cheap.

Because unlike those companies, Dropbox has a real product and generates real revenues. Dropbox has 200 million users, including 4 million businesses.

The company won’t discuss revenues, but onstage at the Dreamforce conference this week Houston confirmed that sales are in the “hundreds of millions” of dollars.

And now Dropbox is shifting its focus to enterprise customers, which could be even more lucrative than the consumer market, where it started out.

Houston, We Don’t Have a Problem

Houston was onstage with Salesforce.com CEO Marc Benioff doing a kind of fireside chat. Benioff apparently has been a kind of mentor to Houston. He even managed to get Houston a meeting with Eddie Vedder, the lead vocalist in Pearl Jam, Houston’s favorite band. (When you’re Marc Benioff, billionaire Buddhist, friend of Neil Young, you can make things like that happen.)

Houston said he has big plans for Dropbox. “I think there is an amazing opportunity to build a company that is a home for all of your stuff – secure, reliable and private,” he said. “I think we’re just getting started on what we can do there. By 2020 there will be 5 billion people on the internet. So we’ve only reached a tiny percentage of the people we want to reach.”

Houston talked about the “pay it forward” mentality of Silicon Valley and all the help and advice he’s received from tech veterans, including Benioff.

He also told an interesting story about Apple’s late CEO Steve Jobs, who tried to acquire Dropbox back in 2009, when the company was only a year old. Houston and his co-founder didn’t want to sell their company.

Jobs wasn’t happy about that, but “he was very gracious about respecting the fact that we didn’t want to sell. We had a great conversation. He talked about why he came back to Apple, and why he started the company in Cupertino.”

But at the end of the meeting Jobs showed a different side. “He told us he was going to come after us,” Houston recalled.

Six months later, Jobs introduced Apple’s cloud service, iCloud, and more or less announced that Apple intended to put Dropbox out of business.

“He called us out by name and said he wanted to kill us,” Houston recalled. “So we saw both sides of him.”

Exit Strategy?

Houston would have been foolish to sell his company in 2009. On the other hand, Dropbox has always seemed like something that should be part of a bigger company rather than a standalone business in its own right.

Who would buy it? Microsoft, Google and Apple are all in this space, and might want to roll them up into their own cloud offerings.

But I couldn’t help wondering, sitting there in the audience at Dreamforce, if we were perhaps seeing something else unfolding right before our eyes.

Benioff’s own ambitions are boundless. He wants to build one of the great end-to-end cloud businesses, a platform that can run every part of your business.

Would it make sense for that platform to include the the company that provides “the home for all of your stuff”? Probably. At one point Salesforce.com tried to create a rival to Dropbox, but the product didn't catch on so Salesforce.com changed course and partnered with Dropbox instead.

And now they're friends. Houston is up on stage with Benioff. Benioff keeps mentioning, over and over again, how he arranged for Houston to meet Eddie Vedder. Positioning himself as a mentor. Saying how much he admires Houston.

Of course this is pure speculation. But I'd bet you Steve Jobs isn't the only Buddhist in Silicon Valley that has made Drew Houston a tempting offer.


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Originally published Nov 18, 2013 9:41:02 PM, updated January 18 2023