DROP BOX: “ IT JUST WORKS ” Case Analysis
Dropbox is a venture-backed Silicon Valley startup, founded in April 2007 by Drew Houston and Arash Ferdowsi, officially launched in September 2008. Should it change its strategy or not ?
Dropbox is a venture-backed Silicon Valley startup, founded in April 2007 by
Drew Houston and Arash Ferdowsi, officially launched in September 2008.
It provides online storage and backup services to millions of customers using a
"freemium" (free + premium offers) business model. The case recounts
Dropbox's history from conception through mid-2010, when founder/CEO
Drew Houston must make strategic decisions about new product features, how
to target enterprise customers, and whether to pursue distribution deals with
Later on they launched BETA version for limited group of users who registered
through a simple landing page. They used guerrilla marketing, online
marketing, viral marketing.
Houston wondered if dropbox should continues its strategy of offering a single
products for all users or whether it should segment its diverse and growing
user base, perhaps by creating a “professional” version that targeted the
“power” user or a separate product for small/medium- sized business.
DROP BOX: “ IT JUST WORKS ”
April 2007 by
By 2010 a total capital of
$257.2 million is raised
Dropbox hires 6
but not any
An analytics engineer was
hired to improve analytics
and optimize customer
PROBLEMS / KEY ISSUES
1: Houston’s dilemma was to whether continue Dropbox’s strategy of offering
a single product for all users or whether it should segment its diverse and
growing user base.
2: Customers wanted a service which enables the synching of files outside
the Dropbox folder i.e. My Documents which Dropbox were deliberately
avoiding to implement.
3: The other challenge was to find whether or not the users shared files with
others, and whether or not the users used the application for business.
4: Hiring problem: getting the good employee is not a easy task, getting a
wrong one might kill your business, Dropbox hires 6 MIT computer science
majors, but not much luck with product or business manager hires.
5: Analytics and developers problem: An Analytics Engineer was hired to
improve analytics and optimize customer acquisition efforts.
6: Problem in partnership: Partnering with a PC security software is discussed
and an SVP disappoints Houston when he wants to bury the brand.
They decide they need a VP of business development soon.
Dropbox synchronizes files across your computers and your team’s computers.
It’s better than email, uploading or a Windows file share.
It’s seamlessly integrated into Windows, but there’s also a web interface. It
also stores past versions of documents, handles huge files gracefully, and
works both through firewall and offline.
For dropbox it was vey challenging to penetrate in the market as it already had
so many competitors, and few of them are the leader such as Mozy, carbonite.
But dropbox had have its unique features which none of them have, i.e it was
somehow easy to enter in the market.
Launching the votebox and apple and android apps was successful and
performing very nicely.
From their balance sheet which is provide in the case itself they are performing
in a decent way getting the gross profit of $7,000 within one year, and they are
80% successful in retention rate.
It implies a $ 10-15
million revenue run
by mid 2010, which
Dropbox had 4
million users in
April 2010 with
2.8 million direct
It is commendable
that they have a
revenue with only
70 staff members
1: Dropbox have a sign-up driven home page, free storage for
referrals and free storage for connecting with social media so,
drop box should offer a small –medium business version.
2: They should survive their current users and request feedback
to see if this service is useful to their companies, Except this they
should try to tie up with bigger data based companies and online
3: A dedicated Google analytics team can solve the problem of
finding whether or not the users shared files with others, and
whether or not the users used the application for business.
4: Dropbox should segment its diverse and growing user base as
per usage rate.
5: Houston’s idea of partnering with large manufacturers of tablets
and smartphone by pre installing the Dropbox service in their devices
should be implemented as it can help Dropbox to capture the whole of
smartphone and tablet market.
6: They should try to tie up with bigger data based companies and
online portals too.
7: To compete with rivals like Carbonite and Mozy, Dropbox have to
rethink on their pricing and their freemium business model and offer
suitable and flexible service to cater the demands of the customers.
8: Overall this has great future after having so many challenges
dropbox is doing very well, there are some requirement of internal
change and like employees and strategies.