Dropbox Amendment to Form S-1
sec.gov
sec.gov
- "Salesforce Ventures LLC has entered into an agreement with us pursuant to which it has agreed to purchase $100,000,000 of our Class A common stock in a private placement at a price per share equal to the initial offering price."
- "Following this offering, outstanding shares of Class B common stock will represent approximately 98.0% of the voting power of our outstanding capital stock."
Class B shares get 10 votes per share, so presumably reserved for the founders. This seems to be a very high fraction.
https://en.wikipedia.org/wiki/The_New_York_Times#Ochs-Sulzbe...
News Corp, Sinclair, WaPo, NYT
Other media companies in general.
Less than 1% of public stocks in the US have that arrangement. It's extremely uncommon.
Among public companies with market caps above $5 billion, there are extraordinarily few stocks in which founders/families have almost all of the voting power. You can count them on one hand.
And, as it happens, so many people own equities passively (through a managed mutual fund, or an index fund, retirement account and the like) and ownership of a company is so diffuse, these provisions have little impact in practice except against another large entity.
I'm not defending the practice -- I think it is a bad management practice myself and don't buy stocks with such provisions -- I'm simply responding to your comment.
[1] https://www.ft.com/content/993e4c11-8729-3168-a280-69e1d400b...
So we have:
- 36M class A shares @ $18/share = $745m
- $100m of class A shares at the IPO price in a private placement. This is roughly 5.55m shares and how the figure gets to 41m shares and change
- I don't know how many unissued class A shares there are but given that there are 41.5m being issued, this implies there are AT LEAST 245m class B shares outstanding, which seems... kinda high.
- Additionally, Dropbox has raised >$1.7b in VC [1] over the last decade. What class of shares have these investors gotten? B or A? If it's A then there are a whole lot more B shares outstanding. If it's B then that too is curious.
Unless we're misunderstanding what 98% of the voting power means here?
EDIT: Oh there's a table ("THE OFFERING").
- 26.8m class A shares being issued it looks like?
- 9.2m class A shares being offered by existing stockholders.
- It's unclear to me if the Salesforce private placement is from existing stockholders or a new issuance.
- 53.7m outstanding class A shares after this offering;
- 339.3m (!) outstanding class B shares
- 5.4m outstanding options to purchase class A shares
- No outstanding class C shares after this offer. One wonders what class C was. Stapled shares to class B that converted to A?
So it looks like this would value Dropbox at close to $8b (393m outstanding shares plus the options plus 30-35m shares IPOed).
For a gross profit for 2017 of $737m (from $1.1b in revenue; that's one hell of a profit margin) that all looks pretty healthy. In fact, i wonder why the price is as low as it is? Although they are spending that on R&D and the like.
EDIT2: Ya know, I realize commenting on downvoting is not a thing here but I have to ask: why on earth is this getting downvoted??
[1]: https://www.crunchbase.com/organization/dropbox#section-lock...
[edit] yep, you're right...
- "Shares of our Class A common stock are entitled to one vote per share."
- "Shares of our Class B common stock are entitled to ten votes per share."
From MarketWatch...
As is the norm for tech companies going public these days, Dropbox has multiple classes of shares with different voting rights. Class A shares have 1 vote, Class B shares have 10 votes, and Class C shares are nonvoting. MarketWatch pointed out last week that Dropbox's structure still gives heavy voting power to the founders and key investors, but it's "slightly" better than the one rolled out by Snap a year ago, in which ordinary investors don't get any voting rights.
- Cofounder and Chief Executive Drew Houston owns 38.3% of the class A shares and 24.3% of the Class B shares, for 24.4% of the total voting power.
- Venture-capital firm Sequoia Capital actually has more power than Houston, with 25% of the Class B shares and 24.8% of total voting power.
- Cofounder Arash Ferdowski has 9.9% total voting power, mainly consisting of Class B shares.
It's likely this will immediately dissolve as these shares are distributed to the investing fund's LPs.
https://i.imgur.com/Ix9rYDR.png
Didn't realize Condi was on the Dropbox board of directors.
That was a very realpolitik like hire.
Well that's a bummer, I guess that rules out Dropbox from my consideration of places to invest. (Which, given current prices, is pretty small.) I can't invest in a company that wants investors money but won't give them anything in exchange for it.
Other than financial returns, you mean?
Stocks typically provide real value in up to 3 different ways. First is paying dividends. Second is voting power. Third is liquidation preference.
Many new tech stocks provide none of those. All they provide is a hope that some fool in the future will pay more for them than you did.
As long as we're in a bubble, those greater fool stocks will keep going up. Sooner or later, the bubble will end. Some people consider it financially unwise to depend on the continued existence of a bubble for their financial positions.
> As of December 31, 2017, we served over 500 million registered users but only 11 million paying users.
> We have incurred net losses on an annual basis since our inception. We incurred net losses of $325.9 million, $210.2 million, and $111.7 million in 2015, 2016, and 2017, respectively, and we had an accumulated deficit of $1,049.7 million as of December 31, 2017.
> However, our rates of revenue growth are slowing and may continue to slow in the future.
I thought they were better off. Or is it usual for startups when they go into IPO?
https://news.crunchbase.com/news/dropbox-sets-reasonable-ipo...
It's 1999 again
However, I was under the understanding this process takes 2-3 months.