Drew Houston on How Dropbox Bounced Back

An interview with the CEO of the pioneering cloud computing unicorn.

Houston.

Photo Illustration by 731; Photographer: David Paul Morris/Bloomberg

Founded in 2007, Dropbox was one of the first services to make it easy for people to store files in the cloud. Consumers signed up in droves, and private investors valued it at $10 billion in 2014. But rivals such as Google Inc. launched similar services, and in early 2016 the company was forced to reduce its estimated value. Since then, Chief Executive Officer Drew Houston has cut expenses and added features to appeal to corporate IT managers, who now pay for an advanced version that gives them more storage and greater control over data. Earlier this year, Houston announced that Dropbox Inc. is profitable and will book $1 billion in revenue in 2017—a likely prelude to an initial public offering filing that could come later this year.
 
Dropbox started as a consumer product, then shifted to one that makes most of its money from companies. How’d that happen?
 
We have a sales force, but the way we get into enterprises is through the consumer. Our customers start using Dropbox at home, then they bring it into work and sign up using their corporate credit card. What starts as a little team becomes a big team and then becomes the entire company. All our big 10,000-seat deals—like News Corp. and Expedia—started as little 10- or 100-seat deployments that were totally self-serve.
 
There are dozens of cloud-based tools aimed at business users. Can all these apps coexist?
 
It’s a mess. You have all these new tools like Slack, but they’re totally disconnected from the old ones, so people are constantly toggling back and forth. This fragmented experience wastes a lot of time, and it makes it really hard to focus.
 
Dropbox recently launched its own collaboration app, Paper, a stripped-down word processor that offers few formatting options and only one font. Why?
 
Most business software was designed when the most important thing you did was print something out. And that’s still how they’re designed today, whether it’s Microsoft Office or Google Docs. There are a million buttons on formatting. But now the most important thing is keeping a team on the same page.
 
Last year, Dropbox announced it would leave Amazon Web Services, its longtime cloud host, to run its own data centers, cutting against a long-running trend. Why the switch?
 
The public cloud has been amazing, and it’s one of the reasons that Dropbox is able to exist. And for 99.99 percent of companies, that’s the right answer. But we operate one of the largest cloud services in the world. People save a billion files a day in Dropbox. So the math is very different for us than for others. Building our own infrastructure makes sense financially, it gives us a lot of flexibility, and it improves the experience for customers.
 
As more and more data is stored in the cloud, how much do you worry about the U.S. government—or any government—asking you to turn over private data that in the past would have been stored on personal devices?
 
We’re in the U.S., and like every company in the U.S., we operate under the law. That said, privacy is our focus, and we have whole teams that scrutinize any requests from governments to make sure they’re legitimate. Then we push back to protect our users’ privacy as much as possible. We also work alongside the rest of the tech industry to work with Washington to make sure the country is making the right set of policies.
 
You’ve been particularly vocal on immigration, calling Donald Trump’s proposed travel ban “un-American.” Doesn’t that seem risky for a smaller company like yours?
 
Well, it’s really important—and it hits close to home for us. My co-founder Arash Ferdowsi’s parents immigrated here from Iran. If these policies were in effect back then, there would be no Dropbox.

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