Can Dropbox Win Against the Titans of Tech?
In six years, Dropbox has shot to fame as a Silicon Valley darling. Now, with nearly 200 million users and an estimated value of $4 billion, the company is on a collision coarse with the biggest tech companies on the planet. Can it survive?
By now, you’ve probably heard the legend.
Drew Houston is a MIT student waiting for a bus at South Station in Boston. He’s looking forward to four solid hours of getting work done on his laptop when he realizes he’s forgotten his USB drive. Instead of freaking out, he whips up a few lines of code, and, maybe without realizing what he’d just done, ends up building the framework of what would become a billion dollar idea.
Months later, those lines of code evolved into a scorching hot business that had investors clamoring, and the whiz kid is on his way to becoming a Silicon Valley superstar and the next billionaire under 30.
Who said founding a tech business was hard?
It’s a great story. But the problem with it is —like practically any startup origin story — there’s much more to it than the part we like to focus on (the get-rich-quick epiphany).
Yes, Houston did write the first few lines of his company’s code on a bus ride. But Dropbox didn’t magically turn into a billion dollar business from there. In fact, according to Houston, the process of building Dropbox was, at times, arduous, uncertain, and incredibly stressful. “We started like most tech companies begin,” Houston told Inc. in 2011. “Just a couple of guys in their boxers coding in a dark room. We just kept our heads down and built.”
And despite all of Dropbox’s success over the last half decade, Houston says the company is nowhere near where he thinks it can go.
The Next Step: Waging War Against an Army of Goliaths
With nearly 200 million users and an estimated value north of $4 billion, Houston and his team are probably coasting to an IPO — ready to cash their check and live the luxurious lives of other Internet wunderkinds, right?
Well, not exactly.
As Houston and Dropbox co-founder Arash Ferdowsi recently revealed in a profile for Wired magazine, the last six years have simply set the stage for a more ambitious vision: to become the portal to the digital world. According to the Wired post, Dropbox plans to evolve into a “virtual infrastructure” that lets users access their digital content on any device with a screen.
There’s just one relatively major problem with that goal. Standing in Dropbox’s way are some of the biggest companies on the planet.
Over the course of the last few years, Google (Drive), Apple (iCloud), and Microsoft (SkyDrive) have all rolled out competing cloud storage solutions, while Box — a well-funded Dropbox rival — recently announced a product integration partnership with Intel.
And while Dropbox appears to have the resources, aptitude, and performance history to wage a war against that kind of competition, it’s a hindrance nonetheless. After all, with a combined market cap of nearly $1 trillion, Apple, Google, and Microsoft possess the collective resources, user bases, and brand name to squash Dropbox’s dreams of data storage domination.
The Key to Taking Down Goliath: Identify a Distinct Competitive Advantage
Then again, Dropbox wouldn’t exactly be the first David to win against a seemingly unbeatable Goliath opponent.
As businesses like cleaning products company Method and business networking platform Yammer have shown, true competitive advantage and product differentiation can often make up for the economic advantages that larger businesses have. And Dropbox appears ready to leverage those advantages by competing on service and ease of use.
As early Dropbox investor Hadi Partovi outlines in this post on Quora, Dropbox is distinct from Google, Apple, and Microsoft in its ability to provide operating system interoperability. Why is that important? Because, as Partovi writes, modern customers understand the risks of having all of their data hosted on one restrictive ecosystem (i.e., Apple), and see the value in Dropbox’s agnostic platform.
Competing on Simplicity: “It Just Works”
That value is clearly communicated in the company’s mantra — “It Just Works.”
As Houston told the MIT Technology Review, every big company — namely, Apple, Google, and Microsoft — is jockeying for position to be at the center of the data universe, and, in the process, user experience is suffering.
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“(Apple has) demonstrated that they fundamentally care about making the Apple experience really good, but they don’t pay nearly the same attention to other platforms,” Houston says. “Even if you’re an Apple user, what happens when you need to share with someone who has an Android phone or you have to work with someone who has a Windows PC?”
That’s where Houston thinks Dropbox stands out.
As users create more and more data — files, photos, to-do lists, etc. — across a variety of platforms, Houston says there will be a need for a solution that weaves everything together across every device, service, and app. He believes that Dropbox meets that need.
Time will tell if Houston is right, but given the company’s ability to overcome big competitors and rival solutions in the past, who’s really going to bet against him?
Where do you see the cloud storage market going? Do you like Dropbox’s chances of emerging as the leading solution?