“A billion dollars in valuation isn’t cool.”

You know what’s cool?

“A billion dollars in revenue.”

A Unicorn…by revenue…not by valuation.

Dropbox. A Revenue Unicorn.

Earlier, this week, Dropbox announced its intention to go public and released an S-1 document—a filing containing detailed financial and operational information about the company. The key metric that Dropbox revealed was that it had crossed $1 billion in revenue. A Unicorn by revenue. This is a staggering achievement. Of late, becoming a unicorn by achieving the milestone of a billion dollars in valuation has become rather passé. One reason for this is that it is now commonly accepted that valuation is a matter of perception, and it’s dependent primarily on the whims and fancies of one or a small group of investors. But revenue is a fact.

What makes this achievement even more impressive is that Dropbox is a SaaS (software-as-a-service) company. The topline is, therefore, “real“ revenue rather than based on murky flow-through metrics like GMV (gross merchandise volume).

The other key metrics are encapsulated below.

While the numbers are interesting in themselves, there is a story behind each of these that illustrates several non-obvious facets of building a SaaS business.

Let us attempt to unpack these takeaways.

The long hard road to an IPO

Dropbox started in 2007. Right then, it was clear that Dropbox was a breakout company. If one had a checklist of the “desirables” for a startup in terms of both product and business model, Dropbox ticked all the boxes. It had a file-sharing product offering that was effortlessly useful for a large number of people, each of whom was a de facto salesperson for the product, because every time she used the application to share files, it would expose it to other people in her network, who would, in turn, adopt and further evangelise the product. This viral aspect not only resulted in low customer acquisition costs and strong network effects, it made for a great business model with predictable and recurring revenue.

Despite having pretty much everything going for it, it took Dropbox all of 11 years to get to a point where it can go public through an IPO. The fact that it is also the first company from the famed Y Combinator incubator to go public further shows how tough and rare this is. The fact that Dropbox is likely to be valued at around $8 billion when it goes public, against the $10 billion valuation it got in its last private funding round, is a stark reminder that public markets are far more demanding than private investors.


Sumanth Raghavendra

Sumanth is a serial entrepreneur with more than eighteen years experience in running startups. He is currently the founder of Deck App Technologies, a Bangalore-based startup attempting to re-imagine productivity software for the Post-PC era. Sumanth’s columns appear regularly in leading publications. He holds MBA degrees from the Indian Institute of Management, Bangalore and Thunderbird, The American Graduate School of International Management, USA.

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