But this totally negates your point about "there isn't enough money in an email app". Clearly Dropbox thought there was at least a $100MM opportunity...either talent to produce $100MM+ in value, customers to convert into $100MM+ value, or staving off competition that would result in $100MM in potential loss.
> "Clearly Dropbox thought there was at least a $100MM opportunity"
The opportunity was the team, not the product they were producing.
Say you had a room full of math prodigies, but all they were doing was watching TV all day. You hire these math prodigies for $X and put them to work solving math problems - this doesn't mean that watching TV is worth $X, in fact it likely means the opposite, that their value is underutilized by whatever they're doing right now.
So there isn't enough money in making email apps, but a team capable of producing a great email app can be put to use doing things that do make a lot of money - but it sure isn't making email apps.
And that's unfortunate, because as users we're missing out on a lot of great products. The dark side of the immense growth in software (and immense growth in software salaries) is that entire products and services are no longer economical, even though we'd all love to see them. The VC system that drives these early acquisitions and acquihires is just one more factor among many that limit the field of what can be economically produced.
Yeah but that's ridiculous, they had only 13 employees that's 7.6MM per employee over the span of 2.5 years, some of them I'm sure they left already... You tell me when this starts making sense because it just doesn't right now.
Too much money! I don't care how big of a genius you are you're not worth that as a developer of an email client, and honestly to write an Email client is not genius level shit. The UI was dope, and their invite process was funny, that's all.
Looks like Dropbox fucked up, that's all, bad business decision, trying to copy Google and do better than them in the end they did the same.
The deal was stock and cash, so it is pretty much impossible to judge how good a deal this was for Dropbox[1]. Stock is a very cheap way for a company to acquire another.
Except since it is the company issuing stock in itself you can't really think of it as fungible. If it ends up being worth more than the strike price then literally one of the events that led to that price was the purchase stock being issued. Of course that doesn't mean the is a causal link, but in a very real sense the stock was free for the company itself.
"in a very real sense the stock was free for the company itself"
Stock always has value, especially to management.
Unless the company has poor self-esteem. :)
The reason so many technology companies today make acquisitions using stock is because they (correctly) understand their stock to be inflated, relative to intrinsic value. If that were not the case, if they understood their stock to be undervalued, then they would definitely not be giving it away in transactions. They would be making all-cash offers instead.
> " I don't care how big of a genius you are you're not worth that as a developer of an email client, and honestly to write an Email client is not genius level shit. The UI was dope"
But that's the key isn't it? I think you're looking at this from too narrow a point of view.
Yeah, email clients aren't worth much money, so its development isn't worth much either (when's the last time anyone you know paid for an email client?).
The point isn't to acquire a "developer of email clients" it's to acquire a "developer of top-of-class mobile apps", which is considerably valuable. Think of the average quality of a mobile app you use on your phone, the bar is pretty low. Producing truly amazing mobile apps (like you said, the UI was dope) is hard, and requires the flawless, cohesive operation of a lot of facets from engineering to UX design.
Truly excellent mobile teams are very rare, and worth a lot of money. To the tune of $7.6MM over 2 years? Beats me, but it doesn't seem completely out of the question.
Talented developers are worth a lot of money - teams of talented developers, designers, and product people who have a track record of producing stellar work together are worth a multiple of their individual values.
> " and honestly to write an Email client is not genius level shit."
It's not genius level shit, but it's a surprisingly rare skill, and by that I mean writing very, very good frontends. Most people here can write a functional email client if they had to, but how many of them can write a really fucking good one, so good and so easy to use that people - and not just the technorati - sing its praises from the rooftops and get their friends and family to download it?
The Mailbox team was operating at a level well above nearly all mobile app teams, and the quality of their work was easily an order of magnitude better than the industry norm of its time. This may not justify their acquisition price, but I think you're selling them short a bit. They're a team of people known for exceptional quality work, and command a high price for it.
I'm sure some of them are still there, however. They shutdown the product and put the team members to work elsewhere. So it could be prorated over a longer period depending on the acquisition deal.
Dropbox could have thought that and just been wrong. Even in the normal economy, per The Economist about half of all acquisitions destroy value. In our little hothouse, I'd expect a much larger percentage of value-destroying takeovers.
But there are plenty of other reasons deals get done than a company-wide coherent calculation of economic value. E.g., I've heard of acquisitions happening because a CEO needs to demonstrate to the board that they're doing something. Or incentive structures set up to reward an M&A team based on how many deals they do. Or executives wanting to bring in their old buddies from another company. Or, "gosh, money is so cheap right now we'd better spend it because our competitors are spending."
It's pretty clear that Dropbox valued Mailbox for its potential to be something other than the standalone email app it was. And you might be right - there might well be enough talent on the Mailbox team to produce $100M+ in value - but not making a standalone email app.
If we're being ultimately generous with Dropbox then what they are doing is exactly correct - taking a team that can create a $100M+ product and reassigning them somewhere that they can fulfill that potential. But that's of scant consolation to all the people that want to continue using the email app.
