![]() It was also able to hire a team that had the technical chops to implement and operate low-cost storage at a scale most companies never get to. It essentially duplicated the data first, and then began deleting it from AWS S3. ![]() This is also an impressive feat of execution, because it was able to migrate one exabyte of data off AWS without users noticing, and without losing a single bit. ![]() If the company was still using S3, we would have expected its storage costs (cost of revenue) to have risen in line with the growth of its usage - but in fact, it was able to spend less on storage in 2017 than it did in 2016. For most companies, this would be a mistake - but for Dropbox with an exabyte (one quintillion bytes) of data to store, it is the source of the company’s doubling of gross margins in the last 2 years and impressive resulting unit economics. Crucially, it completed a move off Amazon’s Simple Storage Service (S3) in December 2016, choosing to lease colocation space (data centers) and build out its own storage infrastructure. ![]() Strategically, the company is also impressive in its technical decision-making. Losing money on a GAAP basis is just fine when your net margin is 33% and you’re rapidly growing cash reserves. Remember: cash is fact and profit is a matter of opinion. On the face of it, this is a very healthy business that it throwing off meaningful cash and growing well at 30%, which is very good for a $1.1Bn business.
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