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Dropbox's quest to win your heart, and Wall Street's too

Apple's Steve Jobs said the Silicon Valley darling had no future. Now, with a splashy rebranding campaign, Dropbox hopes to prove him wrong.

Ian Sherr Contributor and Former Editor at Large / News
Ian Sherr (he/him/his) grew up in the San Francisco Bay Area, so he's always had a connection to the tech world. As an editor at large at CNET, he wrote about Apple, Microsoft, VR, video games and internet troubles. Aside from writing, he tinkers with tech at home, is a longtime fencer -- the kind with swords -- and began woodworking during the pandemic.
Ian Sherr
9 min read

Dropbox's logo is changing. Kinda.


What do you do when Steve Jobs says you're destined to fail?

That's what Dropbox co-founder Drew Houston had to answer after meeting Apple 's co-founder seven years ago.

Houston's startup made waves when he unveiled his storage service in 2008, offering a dead-simple way to upload and save your files in the cloud and then synchronize them between your computers. At 27, he was talking to the most influential name in tech -- and his own personal hero.

"It was an interesting conversation because he said he liked our products," Houston (pronounced "how-stun") later recounted to Forbes. "I can't think of much higher praise than that."

But Apple's co-founder wasn't convinced Dropbox was destined for success. Jobs wanted to buy the company, likely to integrate it with Apple's own forthcoming file-syncing service.

Jobs declared Dropbox to be a "feature, not a product." Or, put another way, Jobs believed Dropbox didn't have a future as a standalone company. Houston said no thanks.

Since then, Houston and his team have been trying to prove Jobs wrong.

They've added more than a dozen features, including specialized photo storage and document editing. They've made it so apps can connect with Dropbox to store and sync files across devices. And they've worked to become even more attractive to businesses by making it easier for teams of people to share files.

Watch this: Why Dropbox is trying to look hip

So far, Dropbox has convinced more than 500 million people and 200,000 businesses to sign up. The question is, how many people are paying for its service? A privately held company, Dropbox won't say how many people pay. And unless it tells us, it's nearly impossible to know.

Dropbox, like most web companies, gives away a limited free version of its service when you just sign up. Over time, the company hopes you'll come to rely on its offerings, at which point you may decide to pay more (starting at $10 per month for individuals and $25 per person per month for teams) to store additional files.

Even so, all those people using Dropbox helped turn it into one of the first and largest Silicon Valley unicorns, or companies valued at more than $1 billion -- on paper, at least. For Dropbox, that happened in 2011, when investors valued it at $4 billion, according to CrunchBase.

Dropbox seemed on its way to becoming one of the great tech success stories, complete with a future that included a high-profile initial public offering beneath the ringing bell of Wall Street.

"They had the market cornered," said Brian Blau, an analyst at Gartner.

But it hasn't happened. All those years after meeting Jobs, Dropbox is still a private company. Its value, which zoomed up to $10 billion in 2014, hasn't changed. Bloomberg reported in August that Dropbox's financials may not justify that value when the company eventually begins selling public shares, something that could happen in the not-too-distant future. According to Bloomberg, Houston was preparing to file paperwork to begin that process.

Dropbox said in January that it's on track to tally $1 billion in sales this year, more than the nearly $400 million its already-public competitor Box tallied last year.

Houston, now 34, hopes that data point, among others, will make Dropbox a compelling buy for Wall Street. "Warren Buffett better be able to look at our business and say, 'This lemonade stand makes money,'" Houston told Bloomberg.

As for getting you and me to use Dropbox and pay for it? Houston has a plan for that, sort of. After years of working to come up with new and innovative ideas, Dropbox is now trying something else: an artsy rebranding campaign.

Starting Tuesday the San Francisco company freshened its look with new colors, different fonts and a flattened version of its storage box-like logo. Ultimately, the company is hoping to help remind people there's more to it than the free syncing service they signed up for and maybe rely on for work. It's also to remind them that Dropbox is more than just an always-there "feature," as Jobs put it so dismissively.

Dropbox now wants to be known as a place for creativity as well. Whether it will or not remains to be seen.


Drew Houston in 2015.

Toshifumi Kitamura/AFP/Getty Images

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The reasons why Dropbox's efforts have only whelmed us so far are hard to pinpoint. One answer may be that Houston and co-founder Arash Ferdowsi caught lightning in a bottle with their original file-syncing service. The result is that stuff they've done to expand beyond the core Dropbox service since seems just OK by comparison.

Meanwhile, companies including Google , Apple and Amazon are treading on Dropbox's turf, offering file-syncing services of their own. Google has Google Drive , Apple has iCloud, Microsoft has OneDrive and Amazon has Amazon Drive. "The strategy today is for tech companies to be strategically diverse," Blau said. It's "been kind of a one-product company."

Dropbox declined to make executives available for comment.

Bring up Dropbox in Silicon Valley and you'll hear that almost everyone has used it. But the next thing tech followers -- and rivals -- will call out is that Steve Jobs quote. I asked Aaron Levie, CEO of business-focused rival Box, what he thought about it.

"Steve was 100 percent right when referring to the idea of accessing files on multiple devices," says Levie.

What's kept these companies from being eaten up by larger competitors has been their ability to offer better features, like increased security, while providing an easy-as-pie service.

"To Dropbox's credit on the consumer side, what they've done really well is great product execution," Levie acknowledges.

That excellent experience is what helped Dropbox make a splash when it was announced. 

Back then, there were other apps out there including SugarSync and Box (which started two years before Dropbox). But Houston sold Dropbox as a simple way to access your files from whatever computer you were working on.

"It just works," he said in a YouTube video introducing the service. In the video tour lasting less than five minutes, he showed how, after installing his app, any file placed in a folder called "My Dropbox" on one computer could be quickly synchronized over the internet with the same folder on another computer.

"They've come up with an online storage product that I might actually use regularly," TechCrunch said at the time. Ars Technica declared, "Dropbox ended my search for seamless sync." Michael Lopp, a popular webcomic author and software development blogger, asked "Is it magic?" (Yes, he concluded.)

I started using Dropbox as soon as I heard it was available. Over the years, it's served as the lifeboat Houston was thinking of when he came up with the idea after forgetting a thumb-drive filled with important files while on a trip.

I've used it to ferry files back and forth from work, to share pictures with friends, and to synchronize edits for my Status Update podcast about how tech is changing how new parents think about raising our kids.

Silicon Valley's money makers were quick to see its potential. Just two months after Dropbox launched its service, it got a stamp of approval from one of tech's best-known venture firms, Sequoia Capital, which led an early investment round of $6 million in November 2008.

A year later, Houston, known for his calm and quiet demeanor, was invited to Apple's headquarters for that meeting with Jobs -- where he turned down an acquisition offer (for an undisclosed amount) from one of the industry's most revered leaders.

Proving Jobs wrong

For the next few years, Houston and his team tried to turn Dropbox into something more. People in Houston's orbit at the time said he was determined to create features that would attract even more people, even as Microsoft and Google began nipping at his company's heels.


Mailbox's innovative swiping feature made it an instant hit among the technorati.

Screenshot by Jason Cipriani/CNET

For three years starting in 2012, Dropbox bought or released products that were tangentially connected to its syncing service. First, it began offering to automatically backup photos and videos from tablets , camera cards and phones for free. Then, it spent a rumored $100 million to buy a popular email program for phones called Mailbox, further pushing itself into the consumer tech world.

In 2014, its photo storage service morphed into a free new offering called Carousel, which synchronized photos and videos from tablets, camera storage cards and phones.

But by 2015, Dropbox was throwing in the towel on both Carousel and Mailbox. By way of explanation for ditching them, Houston wrote in a blog post at the time that "over the past few months, we've increased our team's focus on collaboration and simplifying the way people work together." Translation: It's no longer worth the investment, and we're going to focus on more lucrative business customers and other projects.

While many things likely led to these projects' demise, some people who worked with Houston say one of the problems was his personality.

But it's hard to get a bead on just how Houston operates. One former employee says the CEO, who cofounded the company in 2007 with fellow MIT student Ferdowsi, often asked for feedback. But others described him as sticking to his guns rather than considering various points of view -- a trait you'd expect to see at times from a headstrong entrepreneurial founder. One of his favorite books is, "Only the Paranoid Survive," by Andy Grove, who co-founded the chipmaking giant Intel.

Compare that to someone like Facebook CEO Mark Zuckerberg . Though he's often portrayed as robotic and emotionally withdrawn, people who've worked for him say his success comes in part from changing his mind after input and debate. (To be sure, Zuckerberg has also chased techno-dead ends, including projects like building a Facebook phone and using unpolished web technologies to build early versions of his mobile app, which made it slow and buggy for years.)

While Dropbox toiled on photos and email, larger competitors were muscling into the syncing game. One of the biggest is Apple, which revamped its iCloud file sync and storage service just before Jobs died in 2011. Google debuted its free Google Drive file service in 2012, complete with a Dropbox-like file sync app for your phone or computer. And there's Microsoft, whose OneDrive is now built into its Windows software that powers hundreds of millions of PCs; Amazon, which offers file storage through its $99 per year Prime subscription; and business-oriented Box, which has focused on features like security.

That's led to an interesting problem. All these companies offer a small amount of storage for free, to get people hooked, just like Dropbox. And while businesses like travel site Expedia, the Sundance Institute and ice cream maker Ben & Jerry's, use Dropbox in their offices, TECHnalysis Research founder Bob O'Donnell said many people switch between the free versions of different services to avoid paying for any of them.

That includes O'Donnell himself, who uses Dropbox to shuttle around files too large to send in an email, but doesn't pay the company a dime.

"That's pretty much what I use it for," he said.

Getting in sync

One of Dropbox's artsy marketing animations for Paper, before Tuesday's new campaign.


Ahead of Dropbox's new marketing efforts Tuesday, it published a couple ads on Facebook to drum up attention. But, like many of Dropbox's non-sync efforts, the ads didn't entirely make sense.

The marketing push was for a product called Paper, which was released in 2015. It's designed to help you easily create and share documents and ideas. If that sounds familiar, it's probably because Google Docs, one of its many competitors, had been available for a decade at that point, doing a similar thing. There's also Google Keep, Microsoft OneNote, Evernote and Box Notes.

"We have a single-minded focus, and that is to simplify the way people work with collaboration," said Tony Ward, Dropbox's manager for Australia and New Zealand, in an interview with The Australian Financial Review Monday.

One of the ads uploaded last month was a series of blue-shaded fractals moving in space. Another was a looping video of a man playing a standing drum set. Both had the tagline, "Dropbox Paper. A new type of doc designed for ideas of all kinds. #CreateTogether."

If that seems a little fuzzy, you're not the only one who thinks so.

"Their ads make no sense. I have no idea what it is," wrote one Facebook user identifying herself as Jennifer Jean, who was among the nearly 900,000 people who saw either ad. "I don't get this," wrote another user, Jonny Sayeth. "So… its [sic] just Google docs?"

Dropbox is hoping its new branding efforts will underscore the idea of people working together. One way is through bringing together colors that seem like they clash, such as violet and mint.

"The overarching [idea of this brand] is by bringing two unexpected things together, and you get an interesting, extraordinary thing together," Dropbox Creative Director Aaron Robbs told Fast Company. "When you get two people working together ... how does that play in the [brand] system?"

I don't really get it either.

Still, the company released a new modern-art-inspired marketing video, asking questions like "What does #CreativeEnergy mean?"

Hopefully for Dropbox, we'll find out soon.

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