Tweet This
Dropbox held its first Open conference last week to showcase the advancements the company has made and reveal the direction it’s moving in. This comes at a contentious time in the market, with some questioning the $10 billion valuation of the company. But CEO, Drew Houston dismisses such talk as nonsense and only speculative since Dropbox is still a private company. “This speculation is like playing fantasy football without statistics,” said Houston . Instead, the key message is to understand the fundamentals of the company and see the future potential.
After raising $1.1 billion in six rounds, Dropbox’s “gas tank is full” according to Houston, so there is no pressure to go public. Instead the executive leadership and investors are squarely focused on positioning the company to keep delighting users by making the best set of products they can. To do that, the company is undoubtedly undergoing an evolutionary phase of its business definition and who its customers are.
Becoming a collaboration platform
For much of its initial life, the core value proposition of the product was a swift and seamless storage and sync of files across all devices. As the network of users expanded, sharing files become a common behavior. Now with a user base of 400 million users, the company can now justify itself as a platform for collaboration.
In many ways, Dropbox has to move in this direction because the traditional cloud sync and storage market has already become cheap and therefore commoditized. Of course they face major competition from Google Drive and Box at the enterprise level. Rather than totally compete with Microsoft OneDrive, Dropbox and Microsoft have formed a partnership where any Microsoft Office file stored on Dropbox can be collaborated on with the new Dropbox badge feature. A similar partnership has been struck with Adobe for PDF files.
To extend its collaboration offering, Dropbox is experimenting with a new product called Paper. Still in beta, Paper is a clean and lightweight tool that helps people easily work together on a document. The premise is that online teamwork is fragmented, messy and information is hard to find. It’s designed to be a home for team ideas with lighting fast search. It handles media types like high fidelity images, sound files and code blocks. It will compete with Google Drive Docs and Atlassian’s Confluence by being more fun and distraction-free.
Dropbox views the online collaboration market as still wide open and big enough for them to carve a substantial chunk out of. MarketsandMarkets forecasts the Enterprise Collaboration market to grow from $47.30 billion in 2014 to $70.61 billion in 2019.
Serving the enterprise bottom-up
Dropbox first amassed a huge consumer use base and has only recently taken advantage of it to expand into the enterprise space. This bottom-up approach is becoming a large driver behind the ‘Consumerization of IT’ phenomenon that is sweeping across the tech industry. Meaning, when enough people use technology in their personal lives, it’s only a matter of time until it infiltrates their work lives and permeates throughout the company. This was especially the case for Dropbox for Business (DfB) customers, Under Armour and News Corp, who already had a substantial amount of employees using their personal Dropbox accounts at work.
Taking a step beyond DfB, the company announced the launch of Dropbox for Enterprise at the conference. With an existing base of 8 million businesses and 150,000 paying DfB customers, the company is ramping up the battle for large company budgets. In the opening keynote speech, CEO Drew Houston, made a jab at Box, by stating Dropbox added 50,000 business customers in the last ten months, compared to Box, who have the same amount over its lifetime. Currently, 75% of business customers come from outside the U.S. with the likes of large corporates like advertising giant, Dentsu in Japan and real estate portal, Viva Real in Brazil
On top of the core DfB product, the new Enterprise tier provides domain management, collaboration insights, premium API support and user training with a dedicated Success Manager. For CIOs who want more control, oversight and security over the systems used internally, Enterprise will be a welcome solution.
Dom Shine, Global CIO of NewsCorp shared that collaboration at scale is crucial for the success of pumping out quality content at speed. From the Wall Street Journal team creating videos or executives making board papers together, the combination of Dropbox’s slick usability and near instant sync speeds makes it the right choice for the company. Over the next 18 months, he expects the vast majority of files to be transferred to Dropbox and much of the existing on-premise file servers to be retired, saving millions of dollars.
Managing the organizational transformation to get the company thinking both consumer and enterprise at the same time is complex. For COO, Dennis Woodside, ensuring the company remembers it is foremost a tech company that builds products for people is important. Alongside his experience as Google’s President of Americas, new leadership has been brought in to assists its growth journey such as new CFO, Vanessa Whitman, formerly Motorola Mobility and VP of Product, Todd Jackson, formerly at Twitter, Facebook and Google.
Growth through partnership networks
To accelerate its global reach to business and enterprise customers, Dropbox is harnessing the power of channel partners to resell its products. Distribution is split into two tiers: Ingram Micrco and Synnex will be charged with leading Business sales; and 45 technology partners will be given Premier status for greater reach. Dell, Softbank, Vodafone, Microsoft are among the existing partners. At the conference, Houston on stage with HP Inc. Chairwoman, Meg Whitman announced that HP Enterprise would be added as a premium reseller.
Like other hyper growth platform businesses, Dropbox has developed an ecosystem of interconnected applications that users rely on. To further this agenda, the company has released the next generation of its API to make it easier for developers to build on top of Dropbox capability. Third party application usage has more than doubled in the last year, mainly related to apps from Microsoft, Salesforce and Adobe. The platform now takes over 40 billion calls per month. It’s easy to see these calls escalating with the rise of communication apps like Slack, on top of workflow connectors like IFTTT and Zapier. Now more than 60% of DfB and enterprise customers use at least one partner integration.
Although many companies are becoming more comfortable with cloud storage, security remains a natural barrier, especially for company or personally sensitive information. Another major announcement made at the conference is the company’s new HIPAA compliance. This means that customers are now allowed to store Protected Health Information (PHI) like medical conditions, provision and payments of medical services on Dropbox. This win will open the gates to organizations like hospitals, doctor’s offices and dental practices.
Making hard things simple – it all adds up
Todd Jackson, VP of Product at Dropbox asked the crowd to imagine what people could do if ideas were freed from devices and different operating systems. The journey to unifying everything together, so people can work together is the mission Dropbox is on. “I’m shocked by how much has stayed the same,” said Houston of how old and new tools are being ‘duck-taped’ together.
On the surface to most people who don’t notice, much of what Dropbox is doing seems fairly incremental: five times faster sync than its nearest competitor, in-line comments, higher fidelity previews. But Houston argues, “These incremental changes add up.” It is likely that this is what keeps Dropbox being sticky.
In a talk with Aditya Agarwal, VP of Engineering at Dropbox and who was apart of the first 10 employees at Facebook; he admits the thing he is most proud of is building the best engineering team in Silicon Valley. “Sync at scale is remarkably challenging,” said Agarwal.
Disclaimer: I was invited to attend and cover the DropboxOpen conference
