Like two strangers set up Dropbox and made billions

Dropbox

The BBC weekly The Boss series of different profiles, business leaders around the world. This week we spoke with Drew Houston, founder and chief executive of US cloud storage company Dropbox.

Drew Houston says that she felt as if she had just two weeks to find a complete stranger to marry.

In 2007, the 24-year-old was desperate to get funding to get her idea for a cloud storage service business up and running.

One of Silicon Valley’s most prestigious supporters of the new start-up – Y Combinator – they were ready to take a bet on Mr. Houston and Dropbox, but there was a catch – they have asked that the possibility of having a business partner.

Their argument is that the new companies are much more likely to be successful if you have more than one founder, more than one person to make decisions and deal with the work load.

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Mr. Houston’s problem was that it was a one-man band, at the time, and for various reasons, none of his friends have been able to get into the business. So he had only two weeks to find a complete stranger to become his co-founder.

“It was like receiving an email from the dean of admissions for your preferred colleges, but the deadline was in the next couple of weeks, and you need to get married in that time, not only finding a date,” she says.

Moving very quickly, Mr. Houston managed – after a nice chat, lasting only two hours to convince a 22-year-old student named Arash Ferdowski to leave the university and join him. Mr. Ferdowski was a friend of a friend, but he and Mr. Houston had never met before.

That was 11 years ago. Fast forward to today and San Francisco-based Dropbox is valued at more than $12 billion (£9bn). while Mr. Houston net worth is calculated at $3 billion, and Mr. Ferdowski $1.3 billion.

Not bad for a company that many have said would never have happened, and one that Apple’s Steve Jobs is widely reported to have said that he would destroy.

Martin Klimek

Inspiration for a new business can come from anywhere, and for Mr. Houston was on a bus between Boston and New York at the end of 2006.

As a recent computer science graduate from the Massachusetts Institute of Technology [MIT) intends to use the six or hour-long business trip in the previous business ideas. But as he sat down in his place, Mr Houston realised that he had forgotten the memory stick that contained all the files.

“I was so frustrated because I felt like this kept happening,” she says. “I never wanted to have the problem again, and then, having nothing else to do… I have started to write the code to [find a solution], having no idea what it would become.”

What Mr Houston came up with the idea for Dropbox remote storage that users can access online from wherever they are. Within two weeks he had created a prototype, and come up with the name.

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Only a few months later, Y Combinator expressed an interest, and Mr. Houston returned to MIT to meet Mr. Ferdowski, who was studying electrical engineering and computer science at his old university.

Mr Houston, who is now 35 years old, says: “We met in the student centre for an hour or two, then Arash dropped out of school the next week.

“In retrospect, this was pretty crazy… I’m sure his parents had a different plan for him, one that involved finishing college.

“But she was really excited to do it. And I don’t know if one of us knew exactly what was expected.”

The displacement in Y-Combinator in Silicon Valley, Dropbox, launched in 2008.

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To attract the first customers, Dropbox promotional video that put in discussion sites like Reddit and Slashdot. The goal was to get the technology industry influencers to start using the service, in the hope that they would speak positively about the product, and the number of users would grow thanks to this word of mouth.

This, in fact, proved to be a success, and from 5,000 users on the waiting list, in a few days, Dropbox had over 75,000 sign up. Then it went from 100,000 users to 200,000 users “in something like 10 days”.

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Numbers and went up even more, and faster, when Mr Houston and his team came up with an incentivized referral program. This offering existing Dropbox customers more storage space if you could get a friend to sign up. The other person would also get more free space, and so on.

It attracted millions of new customers, and has captured the attention of Steve Jobs who has made an offer for the business in 2011.

While Mr Houston has refused to talk about this, in many previous interviews he inferred that the Work does not take it well when he rejected the offer. The website Business Insider last year, mentioned Mr Houston saying that Jobs had threatened to “kill” Dropbox following the rejection.

Apple launched its cloud storage service later, in 2011, iCloud, but this does not hold me Dropbox and growth.

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Today, Dropbox has more than 500 million registered users, of which 11.5 million euros to pay an annual subscription fee for more storage space that you get for free. This includes more than 3,000 paying business customers.

The company listed on the New York Stock exchange at the beginning of this year, and its market capitalization the total value of all the shares – which amounts to more than $12 billion. Its annual turnover in excess of $1 billion, and has a global workforce of more than 1,000 people.

Technology analyst Ben Wood of research group CCS Insight says that there are several reasons for Dropbox’s success, such as its ease-of-use, and “very important is the fact that it lets you save and share photos, videos and other large files that the mail server they are still able to deal with.”

Mr. Houston said that he and Mr. Ferdowski, who remains on the management team, continue to work well together.

As for his specific role as ceo, Mr Houston says that her current main objective is to make sure that the staff ignore the success of the recent share flotation, and instead “stay focused on why we are here – to make the customers happy”.