Since attaining a $10 billion valuation from investors in 2014, Dropbox Inc. has become a symbol of unicorn startup exuberance. But several shareholders have recently written down the value of their investments in the cloud storage company while it cut costs and focused on generating more revenue.
Drew Houston, Dropbox's chief executive officer, now declares that we're "entering the post-unicorn era." Unicorn startups, those valued at $1 billion or more, will need to focus on creating healthier businesses as venture capital and other sources of private-market funds dry up, he said Tuesday onstage at the Bloomberg Technology Conference in San Francisco.
"In these boom times, you get really disconnected from the fundamentals," he said. "Cash is oxygen, and if you keep having to go to investors to fill up your scuba tank, you can run out."
Houston said Dropbox is free-cash-flow positive but not yet profitable. A spokeswoman for the San Francisco company said it calculates cash flow using generally accepted accounting principles. As competition for funding intensifies, many other private U.S. technology companies are using less conventional or convoluted financial barometers to demonstrate the health of their businesses to the public.
Dropbox has increased sales to businesses and consumers, Houston said. Box Inc., a publicly traded rival to Dropbox, has negative cash flow and lost $38.6 million in the first quarter. Houston said: "We're managing our way toward profitability."
Before the post-unicorn era began, Dropbox purchased a chrome panda bear statue at a cost Business Insider pegged at $100,000. "Every office needs a chrome panda," Houston quipped. He said the panda cost less than reported but declined to disclose the price. While the panda wasn't a "meaningful expense," he said Dropbox needs to "keep an eye" on costs.