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`16 July 2018
`How two strangers set up Dropbox and made billions
`By Will Smale
`Business reporter, BBC News
`The BBC's weekly The Boss series profiles a different business leader from around the
`world. This week we spoke to Drew Houston, founder and chief executive of US cloud
`storage company Dropbox.
`Drew Houston says it felt as if he had just two weeks to find a complete stranger to marry.
`Back in 2007 the then 24-year-old was desperate to secure funding to get his idea for a cloud
`storage business up and running.
`One of Silicon Valley's most prestigious backers of new start-ups - Y Combinator - were
`prepared to take a gamble on Mr Houston and Dropbox, but there was one catch - they
`demanded that he get a business partner.
`Their argument is that new companies are far more likely to succeed if they have more than
`one founder, more than one person to make decisions and cope with the workload.
`DROPBOX
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`How two strangers set up Dropbox and made billions - BBC News
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`16 July 2018
`How two strangers set up Dropbox and made billions
`By Will Smale
`Business reporter, BBC News
`The BBC's weekly The Boss series profiles a different business leader from around the
`world. This week we spoke to Drew Houston, founder and chief executive of US cloud
`storage company Dropbox.
`Drew Houston says it felt as if he had just two weeks to find a complete stranger to marry.
`Back in 2007 the then 24-year-old was desperate to secure funding to get his idea for a cloud
`storage business up and running.
`One of Silicon Valley's most prestigious backers of new start-ups - Y Combinator - were
`prepared to take a gamble on Mr Houston and Dropbox, but there was one catch - they
`demanded that he get a business partner.
`Their argument is that new companies are far more likely to succeed if they have more than
`one founder, more than one person to make decisions and cope with the workload.
`DROPBOX
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`2/15
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`Mr Houston's problem was that he was a one man band at the time, and for various reasons
`none of his friends were able to join the business. So he had just two weeks to find a
`complete stranger to become his co-founder.
`"It was like getting an email from the dean of admissions to your favourite college, but the
`application deadline was in the next couple of weeks, and you need to get married in that
`time, not just find a date," he says.
`Moving very quickly Mr Houston managed - after a chat lasting just two hours - to persuade a
`22-year-old student called Arash Ferdowsi to quit university and join him. Mr Ferdowsi 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 $12bn (£9bn). while Mr Houston's net worth is calculated at $3bn, and Mr
`Ferdowsi's at $1.3bn.
`Not bad at all for a company that many said would never be successful, and one that Apple's
`late Steve Jobs is widely reported to have said he would destroy.
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`Inspiration for a new business can come from anywhere, and for Mr Houston it was on a bus
`between Boston and New York in late 2006.
`As a recent computer science graduate from the Massachusetts Institute of Technology [MIT)
`he was intending to use the six or so hours long journey to work on some earlier business
`ideas. But as he sat down in his seat, 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," he says. "I never wanted to have
`the problem again, so having nothing else to do... I started writing some code [to find a
`solution], having no idea what it would become."
`What Mr Houston came up with was the idea for Dropbox - remote storage that users can
`access online wherever they may be. Within two weeks he had created the prototype, and
`come up with the name.
`MARTIN KLIMEK
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`Just a few months later Y Combinator expressed an interest, and Mr Houston went back to
`MIT to meet Mr Ferdowsi, who was studying electrical engineering and computer science at
`his old university.
`Mr Houston, who is now 35, 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 he was really excited to do it. And I don't know if either of us knew quite what we were
`getting into."
`Moving into Y Combinator's base in Silicon Valley, Dropbox launched in 2008.
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`To attract its first customers Dropbox made promotional videos that it put up on discussion
`websites such as Reddit and Slashdot. The aim was to get technology sector influencers to
`start using the service in the hope that they would speak positively about the product, and
`user numbers would then grow thanks to this word of mouth.
`This indeed proved successful, and from 5,000 users on a waiting list, within a few days
`Dropbox had 75,000 sign ups. Then it went from 100,000 users to 200,000 users "in
`something like 10 days".
`More The Boss features, which every week profile a different business leader from around
`the world:
`The polio survivor who says she ‘was one of the lucky ones’
`The man who created a $2bn ice cream firm in his kitchen
`The $5bn tech boss who grew up without electricity
`'The day I was diagnosed was the worst of my life'
`The jewellery boss who turned $500 into a $1bn business
`User numbers rocketed even further and faster when Mr Houston and his team came up with
`an incentivised referral scheme. This offered existing Dropbox customers more free storage
`space if they 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 caught the attention of the late Steve Jobs who
`made an offer for the business in 2011.
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`While Mr Houston declined to talk about this, in numerous previous interviews he has said
`that Jobs didn't take it well when he turned down the offer. Website Business Insider last year
`quoted Mr Houston saying that Jobs had threatened to "kill" Dropbox following the
`rejection.
`Apple launched its own cloud storage service later in 2011, iCloud, but this didn't hold back
`Dropbox's growth.
`Today Dropbox has more than 500 million registered users, of whom 11.5 million pay an
`annual subscription fee for more storage than you get for free. This includes more than
`300,000 paying business customers.
`The company floated on the Nasdaq index earlier this year, and its market capitalisation - the
`total value of all its shares - currently stands at more than $12bn. Its annual revenues exceed
`$1bn, and it has a global workforce of more than 2,000 people.
`Technology analyst Ben Wood of research group CCS Insight says there are numerous
`reasons for Dropbox's success, such as its overall ease of use and "very importantly the fact it
`allows people to easily save and share photos, videos, and other big files that email servers
`are still unable to cope with".
`Mr Houston says that he and Mr Ferdowsi, who remains on the senior management team,
`continue to work well together.
`Regarding his specific role as chief executive, Mr Houston says his current main focus is
`making sure that staff ignore the success of the recent share flotation, and instead "stay
`focused on why we are here - making customers happy".
`Follow The Boss series editor Will Smale on Twitter.
`Related Topics
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