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Dropbox Revisited: Creating Value That’s Recognized

August 15, 2011

Last week I posted on Google Docs and Dropbox as two indispensable tools for bootstrap entrepreneurs in a context that one may beat out the other if we are truly headed to a 100% cloud-based computing world.  In the process of describing Dropbox, I shared a bit on it’s amazing viral growth and valuation.

I wanted to share a piece I just read that makes a compelling argument for why Dropbox has been so successful in attracting investors (during such funky times) at such high a valuation:  In a phrase, it’s because they have achieved massive user-adoption.

Word on the street is that Dropbox is about to raise a major round of financing at a $5 billion+ valuation. While some will cry “Bubble!”, I think there’s a different lesson we can learn: Usage = Value.

The post goes on to summarize three themes I believe are at the heart of creating value in the minds of early-stage investors right now:

In a world in which Apple is the most valuable corporation, and companies like Dropbox earn super-premium multiples, my conclusion is that the most powerful way to build economic value is by developing products that a) deliver an outstanding user experience, b) convince people to pay a premium, and c) generate massive usage.

While they are all interrelated (‘a’ leads to ‘b’ and ‘c’),  these three objectives need to be at the heart of every New-Market-Entrepreneur’s plan.

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