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How the founder of Dropbox reinvented viral marketing

The story, narrated by Houston itself, tells how the founding team came up with the formula of large-scale viral marketing to rise among its competitors at the beginning of the century. A lesson for anyone who wants to increase their audience (and fast).

It was then that Drew Houston, co-founder and current CEO of the company appeared. The businessman, today billionaire, revealed to Reid Hoffman, founder of LinkedIn, in his Masters of Scale podcast the story of how the tech giant that today you know as Dropbox was born.

But it wasn’t always all pink. In the beginning, Dropbox was a small startup without money in a terribly competitive market.

Quarter to quarter, the company earns more than 428.2 million in benefits, has 500 million active users and employs a total of 2,300 people worldwide.

Today, Dropbox is a giant of more than 7.9 billion dollars.

In order to improve his product, the founder of Dropbox came to reject a millionaire offer from Steve Jobs himself.

According to Houston himself in the Masters of Scale program, the company suffered several setbacks before succeeding in the business.

They differed from the competition for the purification of their product, perfected from their own frustration for not finding solutions in the market.

The co-founders of Dropbox, Drew Houston and Arash Ferdowsi, were the big winners in the battle to capitalize on cloud storage.

The Dropbox Foundation

In 2006 the online storage was El Dorado. The route to success in that universe to discover (and explode) was full of all the tombs of startups that at one time or another had tried to reach what was going to be the future market. It was not even known if it was possible to conquer it.

The idea was not too novel, but Houston and its partner Arash Fedowsi came up with the solution from the failures of their predecessors. Then there were a multitude of options for storing files in the cloud, but none to which the two entrepreneurs were willing to trust their data.

That was when the idea of Dropbox was born. Today, the company has a market share of 24.10% (only surpassed by Google Drive), more than 500 million users worldwide and about 14 million dollars earned only in payment services during the last trimester.

“Actually half of the work was not conceived with a market perspective. I was just thinking ‘God, I need to get my stuff somewhere from several computers’,” says Houston in the podcast.

The first step was clear. He knew he could get rid of smaller competitors because he knew first-hand the shortcomings of the sector: “I had an idea how to do it. I could overcome the little ones,” says the CEO. It is easy to say now, in 2019, but 12 years ago success was not guaranteed.

After being accepted into the Silicon Valley sandbox, Houston and Ferdowsi faced the flower and cream of the tech industry giants. Apple, Microsoft, Google and others also had their sights on the cloud storage market, which was a cause for suspicion for investors, who said that Dropbox “would be demolished by the ‘big guys’ of the business.”

“It’s likely – it was Houston’s answer – but at least I won’t have to carry a USB everywhere”.

Eventually, the Sequoia venture capital fund gave entrepreneurs the boost they needed and drove Dropbox up to a $ 1.25 million contribution. According to the PitchBook-NVCA Venture Monitor Report, the fund realized that the investment had been worth nearly 2,000 million from its initial departure until Dropbox went on the stock market in March 2018.

Hoffman defines Houston as a man sickly obsessed with his product, with little or nothing to lose. The entrepreneur decided not to partner with any large company even after receiving a face-to-face offer from Steve Jobs. Getting together would slow down the Dropbox launch, and Houston was not willing.

They had internal speed, only users were needed. And Houston and Ferdowsi came up with the method that their competitors had failed to exploit before: references.


Also published on Medium.

Published inStartups

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