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Mulling on this, but I think this is a good take.

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May 30, 2021

Bear in mind that "profit" is always an opinion. It's easy for cloud repatriation to look great margin-wise because labor costs are up to interpretation (COGS vs R&D, etc), whereas third-party API (i.e. cloud) spend is unequivocally COGS. Long term EV is what matters. 5/n

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I think he's usually right, but is overly absolutist. Dropbox's Power (in the Helmer sense) is pretty much entirely switching costs for their existing customers. Given thats the case, they should be willing invest a lot in cost reduction...

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and

Unlike a new startup, they have low uncertainty way to increase cashflows by optimizing. New startups should be focusing on innovating their way to Power, and focusing on compute costs is a distraction. But to ignore cost reductions when you're Dropbox scale is wasteful.

Cedric Chin

@ejames_c

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@JackMastrangelo

I wonder about those switching costs, though. I don't really think they're particularly strong — I've seen multiple companies switch away from Dropbox with a bit of effort.

3:47 PM · Jun 15, 2021Twitter Web App

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Not sure how strong exactly, but given that they're not in a price war with GDrive & Azure, and that people still pay for it, they seem to have some switching costs for some customers. Not a Dropbox expert though, just saying that innovation isn't always your best investment.