Dropbox "It Just Works" Case
1. When Houston applied to Y Combinator, what hypotheses did he hold about the key elements of Dropbox’s business model?
The first key elements were the simplicity and accessibility of the product. To underline this aspect he asked every VC who interviewed him whether or not they were using any other product of that sort, considering that, by that time, there were some other solutions in the market already. The product worked automatically and dealt with complex operations in a simple way.
Another key element was the high quality of service that DB provided. Quality was defined by Houston in terms of safety of the documents and information and quickness of the process. He had also built the program to operate with some innovative technological concepts that updated only the changes and kept the main file stored locally.
Regarding the target customers and its strategy of customer acquisition, he made the observation at the time, that potential users were technically adept, (e.g. college students downloading music P2P) but that due to the simplicity of the product and expansion of the internet it could rapidly grow. Another key element was the release of a single version for all users, targeted specifically at individuals. This allowed the company to expand by a “Trojan horse” strategy of targeting users to then enter into the B2B market automatically. This strategy could also have been supported by AdWords and partnerships with big distribution channels (to sell the product already installed)
From the revenue generation aspect, the company relied on a Freemium model in which, for example, 1GB was given for free and the other 10GB for 5$ month (team plans from 20$ month)
As of June 2012, which of these hypotheses have been confirmed, and which have been discarded?
Drew Houston had a quite clear and defined idea of the final product when he asked for the first Venture Capital, therefore the business model of Dropbox relied on certain key elements
The first key elements were the simplicity and accessibility of the product. To underline this aspect he asked every VC who interviewed him whether or not they were using any other product of that sort, considering that, by that time, there were some other solutions in the market already. The product worked automatically and dealt with complex operations in a simple way.
Another key element was the high quality of service that DB provided. Quality was defined by Houston in terms of safety of the documents and information and quickness of the process. He had also built the program to operate with some innovative technological concepts that updated only the changes and kept the main file stored locally.
Regarding the target customers and its strategy of customer acquisition, he made the observation at the time, that potential users were technically adept, (e.g. college students downloading music P2P) but that due to the simplicity of the product and expansion of the internet it could rapidly grow. Another key element was the release of a single version for all users, targeted specifically at individuals. This allowed the company to expand by a “Trojan horse” strategy of targeting users to then enter into the B2B market automatically. This strategy could also have been supported by AdWords and partnerships with big distribution channels (to sell the product already installed)
From the revenue generation aspect, the company relied on a Freemium model in which, for example, 1GB was given for free and the other 10GB for 5$ month (team plans from 20$ month)
As of June 2012, which of these hypotheses have been confirmed, and which have been discarded?
Drew Houston had a quite clear and defined idea of the final product when he asked for the first Venture Capital, therefore the business model of Dropbox relied on certain key elements