Dropbox Makes a Move Into the Enterprise

Houston Photograph by David Paul Morris/Bloomberg

Over the last six years, Dropbox has emerged as one of Silicon Valley’s most promising startups on the strength of a simple idea—allowing Internet users to store such files as baby photos and Word documents in the cloud and to access them from any computer or mobile device.

Today the company gathered journalists in its swank offices in San Francisco’s China Basin to offer an update on its progress: Dropbox has more than 200 million users and its customers save more than 1 billion files in Dropbox every day. “There are more files saved to Dropbox each day than Tweets on Twitter,” said Drew Houston, Dropbox’s 30-year-old chief executive officer.

Dropbox also unveiled its next target beyond everyday Internet users: businesses. Houston says users are already bringing the service into their companies. More than four million businesses used Dropbox last year, including over 97 percent of Fortune 500 companies. “People love that they can work from anywhere. People love they can have their work stuff and personal stuff together for the first time,” Houston said.

The move into the enterprise market pits Dropbox against a phalanx of rivals, many with more experience catering to companies: Box, VMWare, Salesforce, and such giants as Microsoft, Google, and Amazon, among others. The biggest obstacle may be corporate IT administrators who fear that their company’s private data might leak onto the Internet.

Many companies are already finding, to their surprise, that employees are bringing Dropbox to their offices, in the same way that over the years they imported unapproved technologies such as smartphones. “We found out hundreds and hundreds of [employees] were using Dropbox without us having any idea,” said Nader Karimi, chief information officer of fashion company BCBG Max Aria. “All of our most important information” was on the service.

To address concerns of companies such as BCBG, Dropbox is introducing a service called Dropbox for Business. The service gives company IT administrators new security features such as auditing and compliance tools and the capability to remotely wipe clean certain folders—say, from the account of a departing employee. A user’s folders are all combined within one account for convenience, but they’re divided into two “containers”: a personal folder for private data, and a business folder that gives employers control over their data.

The company also introduced new desktop and mobile applications that clearly specify users’ personal and business folders. Smartphone photos and such feed right into a user’s personal folder. Company administrators also have a broad view of activity on their networks, such as what has been shared—and with whom—and they can move to block access to certain kinds of personal data from office computers.

“If all this looks pretty simple to use, that’s the point. But under the hood, there has been all this crazy stuff we’ve had to do,” said Houston. “No one has done this before. No one has built a product that both users love and IT loves.” The new service is now being tested and will launch more fully early next year.

As it makes its foray into enterprise computing, Dropbox will, in particular, have to contend with the awkwardness of Amazon’s expansion into the cloud. Dropbox uses Amazon Web Services for at least part of its storage. At the same time, the online retailer unveiled a new service called WorkSpaces, which has Dropbox-like features.

Houston said that competing with a crucial supplier did not pose a problem and that Dropbox has been “a happy AWS customer from the beginning.” Ilya Fushman, Dropbox’s product chief, added that “the space is growing like crazy. A lot of businesses haven’t made their decision yet. What we see from the market is that business try everything, but people still prefer Dropbox.”

Before it's here, it's on the Bloomberg Terminal.