Dropbox (growing business) analysis

   Dropbox is a file hosting service, based in San Francisco, California. It offers cloud storage, file synchronization, personal cloud, and client software. Dropbox was founded in 2007 by MIT students Drew Houston and Arash Ferdowsi as a startup company.

Dropbox is based on a freemium model: customers can get the basic service for free, and they can upgrade for a fee.

• The Pro plan comes with 100 GB of space for $9.99 a month
• The Business plan comes with unlimited space, unlimited version history, and allows up to five people to use the account and costs $15 per month per user.

Growth of Dropbox

Dropbox growth has been fast and exponential. It can be shown by the increase by its user growth. It went from 1 million registered users in April 2009 from 45 million users in October 2011. Then between November 2012 and November 2013, the number of users increase from 100 million to 200 million. In March 2016, Dropbox reach the impressive number of 500 million users.

Dropbox is believed to have generated over $200 million in 2013, up 20-fold from the $12 million it was generating in 2010.

In 2012, an estimated 4% of Dropbox’s users were paying users. But in 2014 it’s said that only 1% of Dropbox’s users are paid customers.

The Dropbox main key strengths which can explain its growth are:

- Dropbox is free of charge

- Very user-friendly service

- Referral system for users: users are making the promotion of Dropbox. It increases the company’s signups by 60% in its early days, and is still a major growth factor.

Growth slowing down

In 2017, the CEO of Dropbox Drew Houston announced that his company’s revenue for a year was estimated at $1 billion. But with the company going for an initial public offering (IPO), it now faces a challenge of producing a big growth to maintain current investors and to keep them.

Dropbox choose to get into a niche market, which is very hostile and very competitive; considered as a hostile one. Dropbox is facing difficulties regarding the size and the power of its competitors: Google Drive, Amazon Cloud and Box have caused many changes to the market. These big companies are willing to invest much money in their products, and there keep cut prices so they can compete in the marketplace.

Now, Dropbox doesn’t have any leverage and its growth keeps slowing down. It hasn’t a durable competitive advantage and competitor offers more services (such as Google).

Culture and employee management

It's usually many hours several meetings, people in charge of hiring new employees meet a lot of people.

If the CEO of Dropbox is recruiting someone to run sales, he wants to meet the best people out there to calibrate himself on the right profile for Dropbox.

“The most important thing when we were in the first years, was to learn how to recruit senior executives: what motivates them, what are the kind of hang-ups in the closing process and you know how you get people who have these great jobs excited.”

Why do people get excited by the job? Dropbox represent millions of users and a lot of opportunities for engineers; “you have a much bigger scope than even if you start your own company”.

Evolution of Dropbox’ Growth

Wide cost-cutting campaign: As a start-up, Dropbox get people attracted not only by the interesting opportunities for job, put also by employee perks which have been costing Dropbox at least $25,000 a year for each employee.

Now, as a big company, Dropbox had to show investors that its business is strong enough to get into an going for an initial public offering (IPO)(Mar-2018).

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