Short Story of the Day: Dropbox

Dropbox founders Drew Houston and Arash Ferdowsi

It all started with a frustrating bus ride and the reverse engineering challenge of a lifetime. During a trip between Boston and New York, Drew Houston realized that he had forgotten his flash drive and couldn’t do any of his work. The problem was exacerbated by the fact that it wasn’t the first time, so Drew scraped together some code and made a basic file synchronization software, and the first version of Dropbox was born.

Drew’s first product was premised on the idea that file synchronization would be one of the most important aspects of people’s lives, something that they don’t know how much they need until they actually have it. After pitching his revolutionary idea to Y Combinator though, he was hit with a host of challenges.

Paul Graham, the cofounder of influential incubator Y Combinator, had demanded that he find a good cofounder for his company before he submitted his application. With a cofounder, they explained, he would have a better chance of success. Pressed for time, Drew explained that the offer was like “getting an email from the dean of admissions to your favorite college, but the application deadline was in the next couple of weeks, and you need to get married in that time, not just find a date.”

After talking around, he was connected to a friend of a friend, senior Arash Ferdowsi from his alma mater, MIT. With two hours of talking, he had convinced Arash to drop out of college with only six months left until graduation to join him.

With a minimum viable product and a cofounder, he was accepted into the prestigious incubator and handed $15,000. Arash and Drew rented out an apartment, bought a Mac, and got to work building the product. A few months later, they presented at a Y combinator event and secured their first $1.2 million in seed funding from Sequoia Capital.

Dropbox in its early days

One of the most important aspects of the platform for Drew would be usability, building something so simple that it would work just like magic.

That’s much easier said than done. If you use the service, you’re probably already familiar with the intuitive nature of dropping your files into the Dropbox folder and having them automatically sync to every device that you use. That extremely powerful feature of integrating Dropbox into the native files on a users computer would be the hallmark of the company, but making that “basic” functionality work was much more complex than it appeared.

That difficulty arose from the various operating systems on every computer. Each one had a completely different code base for the respective file storage processes. For instance, you couldn’t just use the same code to get the Dropbox folder to appear on both Windows XP and Macintosh OS.

Reverse engineering each one of those file storage systems would thus prove to be one of the greatest trials for Dropbox in its early history. Staying lean to save money, Drew and Arash would pull 20 hour days to perfect their product, searching for obscure versions of operating systems or the perfect color for the logo so that it would blend in with the native user interface.

Unlike many startups, Dropbox never had to make any major pivots. Their original idea was so good that all they had to do was figure out how to sell it. If they could just convince people that file synchronization was thing they never knew they needed, then it would all work.

As many founders know though, building a product into a whole new market is a beast in and of itself, and Dropbox initially had a difficult time picking up new users. But by using some subtle niche marketing and a freemium model that could quickly generate money, they built momentum up fast.

Drew first made a seemingly ordinary video demonstrating how Dropbox worked, but that video helped propel them into the stratosphere. Inserting numerous references to cultural elements of the tech community like XKCD, Drew appealed to early adopters and showed off the ease-of-use and flexibility of his platform. Overnight, the waitlist grew from 5,000 people to over 75,000.

The Original Dropbox Demo

Moreover, Drew got his initial loyal customer base to work for him by giving them 250 megabytes of extra storage for each referral. Soon, the company began to attract millions of customers. To further grow the amount of paying users, Dropbox enticed them with 2 gigabytes of free storage, enough to get them to love the platform and pay the extra to upgrade to 3 terabytes for only $12.50 a month.

The success of Dropbox soon began to draw eyes as their valuation exploded into the billions and numerous elite investment firms clamored to get a share at the table. In fact, one of the most famous stories is that Steve Jobs offered to buy the company, but upon rejection, proceeded to launch iCloud as a competitor.

Other large companies began swarming into the industry as well with hopes of capitalizing on the file synchronization craze that Dropbox had started. Google released Drive. Microsoft countered with OneDrive.

Nevertheless, Dropbox survived the wave and even thrived under the circumstances. Even though Drew had stumbled upon gold, he never got complacent. Despite sticking true to their core values, Dropbox had branched out to make new offerings. For instance, in 2016, they released Paper, a solution to note taking which has risen in popularity since that time.

Revolutionizing the file syncing industry and leading the initiative on storage solutions, Dropbox has proven to have not only a great product, but a great story to tell as well.

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