10 Reasons why Dropbox Succeeded in a Market Full of Fierce Competitors

In a field where Microsoft, Apple and Google are involved, Dropbox dared to dream. They immersed themselves into a market that almost spelt death for any startup; a market that was full of the tech giants we know today. Yet they built a product that was accepted by several, adopted by millions and made themselves a company worth the $10 billion valuation they have today. How did they do it? What were the reasons behind their success in the field where most new startups had failed?

1. Think Small. Scale Fast.

Dropbox accepted itself as the small company it was. They accepted that they were not worth the mentions from the start. That way, the company acknowledged itself as the small startup it was. It remained so, for a long while. Dropbox kept its team very small. Before their first funding, they bootstrapped every function of the business. The cofounder and CEO Drew Houston grew the company with very few employees. Before 2014, the company had employed 500 people since inception in 2007. Due to the increased competition and need to scale into other markets in enterprise, they have added 700 more employees in the last one year giving them a current team of 1,200 employees. The current number is befitting of a company that has 300 million users and with revenues upwards of $400 million in 2014 alone.

Despite the few employees at Dropbox, they scaled very fast. Between their launch dates in 2007 to their stable zone in 2011 they had grown to 100 million worldwide users. Between 2011 and 2015 they have grown to 300 million users. While the first phase wasn’t as remarkable as the second phase, it was still a very fast scaling pace for a new company in the cloud department with founders that had no experience and had never done this before. Their first phase was a core foundation for their second phase indicating that they were in the right direction. It’s very clear that their think-small-scale-fast mentality learnt from the principles of the Lean Startup was a very important part of the strategy.

2. Minimum Viable Product

Many companies and founders think they need the final product to make their ideas worth the attention from potential customers. In the spirit of the Lean Startup, Dropbox proved that you don’t need the final product. In fact, you never should need the final product at all. Why? Because if you build the final product before the customers use the initial product, you could build something the customers don’t want. That’s money and time spent building the wrong thing, leading to wasted resources and opportunities for a startup.

When Dropbox launched in 2007-2008 they had the Minimum Viable Product (MVP). That’s a very skinny product without enough meat on it, but just good enough to show you the idea behind the product. And people loved it. The most important part was that the early Dropbox users were able to provide a lot of customer and external feedback to the founders who would take this feedback into consideration when tuning the product further. When the better part of the meat was added through continuous addition of features it was as a result of customer feedback in conjunction with the team’s genius additions to the product.

3. Marketing

When Dropbox was marketing its company, most companies within the same space didn’t see any need to market their cloud platforms. Dropbox hit it first and that was their making. When I personally heard of Dropbox I was so happy because I thought it was a new idea and I was very young by then (15 years old in 2008). I was able to resonate with it long before I ever heard of Google’s Drive platform or Microsoft’s OneDrive. The marketing was early, and it was done right, albeit mostly by word of mouth.

4. Free Stuff

Dropbox was offering 2GB storage space when it launched. 2GB was a lot of space to get on a cloud platform for free. Free stuff always wins people over. They made the platform free for users like me who didn’t need to store a lot of things online at the time. I embraced Dropbox because I had access to all the features on the platform even with this storage. Dropbox didn’t bother that the several million users who were using the 2GB free space were on a freemium because they knew the end game would be having as many users as possible. They didn’t worry for as long as these free users were using Dropbox. It sent a clear message to the users that even those freemium customers were important to the company. To get more space you had to become a paying subscriber but at least Dropbox managed to get millions of free users on the platform first.

5. To get more space Invite your friend

One of the reasons why Dropbox didn’t spend a fortune on marketing was because the paid marketing wasn’t their most resourceful investment. What made Dropbox to grow into a viral trend was the word of mouth involved in the marketing. The users spread the word about Dropbox. Friends sent invitation links to their friends who also sent the same to their friends just to get more storage space on the platform. It was a very nice way of marketing. This scheme of increasing the user base was the best thing to have happened to Dropbox because they grew to 100 million users in the first 4 years, yet a good percentage of that came from the “Invite your friend to Dropbox to earn more storage space on top of the 2GB you already have” strategy.

6. Integration across Platforms

The integration across all existing platforms was done so well it just worked and felt right. People are great fans of ‘difficult processes made easy’. Dropbox gave them exactly that. If you had Dropbox on your Linux machine you could get these same files on your MacBook synced up-to date. If you are at home working on files on your Windows PC then leave the house and you end up needing to check these files on transit in a bus or train you just check them out on your Android phone synced up-to date. Dropbox made integration across devices and operating systems so easy that people got so used to it and made Dropbox a part of their work, education, life and everything else that comes with it.

7. Quality Brand Ambassadors

Early seed funders of Dropbox were well renowned venture capital firms Sequoia Capital and Accel Partners. These were very solid names to have on your startup portfolio as a company. They have all the connections you need including media and press names they could call upon if you need a little publicity. Or a lot of it. Their experience with startups made them very strong partners for Dropbox because they brought something more than funding on the table and that is ideas and pieces of advice that went a long way in making Dropbox the giant it is today.

8. Collaboration

The whole system with which Dropbox was founded on involved these:

  • There is a folder.
  • You put things in that folder.
  • The folder syncs across all platforms and devices.
  • The folder is shareable either as a whole or specific files in it.

This is just what customers and businesses needed. Dropbox made it very easy for teams in a company to work and collaborate together. It was just a matter of putting files in a folder and sharing that folder with members of the team. This level of collaboration made businesses get attached to Dropbox because it was just too simple.

9. Prioritizing Employees just as much as Customers

The hiring system at Dropbox according to an article on Business Insider puts a lot of emphasis on the team mentality of candidates than anything else. Dropbox’s COO, Dennis Woodside, says that they expect two things in potential hires: a team oriented mindset (We, not, I), and a very detailed answer on the role the candidate played in a specific project.

They also understand that employees cannot produce 100% of the objectives assigned to them due to various reasons and so expect people to hit about 70% of their goals. That’s coupled with frequent goal reviews which involves 6 weeks of serious sprinting to meet set objectives before the break when these goals are reviewed.

10. Execution was deadly from the start

It is good to point out that Dropbox never had a new idea. The cloud platform was already an existing field of competition in the market meaning people were already sharing and storing files in the cloud and there were companies already making this possible. Ideally, this point should have been the first point but I made it the last one because everything from the first point to the previous one was all a summation of deadly execution.

Dropbox made a folder we could put stuff in. This folder would sync. Then we would share its contents. All the market really needed was a folder that did this. None of the companies at the time did it and if they did, it wasn’t executed as well as Dropbox executed it. OmniDrive is one example of a company that was doing it before. It was launched in 2004. It died by 2008. It simply executed the same script poorly.

What other reasons do you think led to the domination of Dropbox today? Let us know in the comments section.


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