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Building A Billion Dollar Business From Dropbox - Startup Business Bureau

Building A Billion Dollar Business From Dropbox


Dropbox hit the 20 billion dollar valuation mark in only ten years. Here are a few lessons learned from the Dropbox success story.

DropBox History 

Drew Houston, the founder of Dropbox, had the Lean Startup mentality. They used the validated learning model to get customer feedback quickly and often during development. This prevents problems like launching a product when it isn’t quite in line with customer expectations or continuing to produce when customers are unhappy with the product they’re getting or the services delivering them.

The business used the “Lean Startup Feedback Loop” that systematically studies where the business is relative to customer desires and expectations. Now you never waste time developing features customers don’t care about or cut core features and services that your customers consider the one reason why they use you over the competition. The “build, measure, learn” feedback loop has been adopted by many other startups.

But How Can You Apply This Process To Your Small Business? 

Get out of the office, and get out of your building. You need to spend time seeing customer feedback in product testing, and ideally, out in public during product demos or product tastings in the store so you can see the public’s honest reaction.

dropbox business

You’ll learn a lot of what people think about the product and how they engage with the brand, including the details that may not be captured in sterile reports or side comments that could lead to major innovations. For example, a product offered as a toy could be mentioned as a possible commercial solution.

The demonstrator focused on the kids’ excitement may miss that detail. And the emphasis on selling for the Christmas season could result in them ignoring the business owner who wants to buy ten for a commercial application.

Another way to apply this principle is to replace assumptions with data. Don’t assume you know everything about your customers. Survey customers to learn their true demographics. Data like this has found that more than one company marketed to twenty-somethings when their best customers were teens.

Don’t rely on gut feelings that the toy will be loved by ten-year-olds when it will be best received by 6-year-olds, nor should you assume which TV shows and online video channels they’re watching. Use A/B testing to determine which strategies work instead of investing money into a full venture based on assumptions. A/B testing will give you both proof that the concept works and even the granular data as to which markets it works with.

Lean Startup Model 

The Lean Startup model says to launch early and iterate early. This model says that it is OK to launch something that isn’t quite perfect for the target, but you’re going to test how it lands and change direction immediately if you find that you’re off.

One benefit of this approach is that you don’t spend costly months trying to figure out the right approach but not generate cash flow. Another benefit of this model is that it gives people permission to change, whether it is product design or marketing.

Mistakes are tolerated because they’re caught early and corrected, and it is all seen as part of the process. And instead of developing a costly advanced model, you can get to market with a minimum viable product and work out the bugs on the advanced model, with the bonus of getting cash flow from the MVP (Minimum Viable Product) to pay for improvements in the next generation.

DropBox Approaches

Dropbox used the Lean Canvas model approach instead of the business plan. Instead of a 45-page business plan that acts as a straightjacket to a small business, they used a one-page business model summary – the lean canvas. It is like a business mission statement but incorporating the vision for the firm down to financial and business goals.

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