Dropbox and the post-unicorn era
You may not have heard of Drew Houston, the Chief Executive Officer of Dropbox, a file storage and sharing company. At the Bloomberg Technology Conference last week Mr. Houston said his company was “Entering the post-unicorn era”, adding that “In these boom times, you can really get disconnected from the fundamentals. Cash is oxygen … and you can run out”.
Mr Houston was clearly elated that his company had reached a significant milestone in its development, that of no longer continuing to consume investors’ cash, but instead generating cash from its own activities. That is, after all, what a business is supposed to do. Cash has always been king. However, Dropbox does appear to have a new purpose and drive, accompanied by some pretty traditional values of a focus on customer needs, being good at what you do, and managing cash well.
Recent cost-cutting initiatives at the company, and the tactical decision to move its infrastructure from Amazon Web Services to its own platform will have helped the improvement in cash flow, although the company still appears to be some way from profitability. Undoubtedly the investors pointing out that their pockets were not bottomless will also have helped the company adopt a more bracing approach to cash.
Dropbox has usually had individuals, creatives and small ad-hoc teams as the main users of its services, but this week it has announced new productivity tools to accompany its push into the business market. The company already had a set of services which were much easier and more effective than the cumbersome and clunky OneDrive and Office Upload Centre bundled with Microsoft’s Windows. Making Dropbox’s products even easier to use, and also continuing to make Dropbox an easy company to engage with put it in a very strong position to capitalise on its early successes in the business market.
But the business market for file storage and sharing is very different to the consumer market. Recent competing services from file sharing companies have concentrated on offering larger storage space. More important for the business market, particularly in businesses with mobile workers, are security and synchronisation. Mr Houston clearly understands the challenge, as he says: “There used to be a choice between easy or secure. We’re offering easy and secure”.
So how has Dropbox managed to renew its focus and purpose, despite talk of unicorns and the very expensive chrome panda statue in its headquarters building? By a simple focus on some timeless business fundamentals: do what you say you will, do it simply and well, and look after the cash.