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Startup Lessons Learned 
Drew Houston 
@drewhouston
Background 
• Cofounder & CEO, Dropbox 
• Earlier: MIT comp sci (‘05), started 
online SAT prep co, engineer @ startups 
• Easiest way to share files across 
computers & with other people 
• Founded in ‘07, launched Sep ’08 
• Sequoia & Accel-backed startup in SF 
• Millions of users, rapidly growing
Some context 
• 100,000  many millions of users in 18 
months since launch 
• No advertising spend 
• Hostile environment: lots of competitors, 
software download 
•Mostly done by engineers w/ some guidance 
but no prior marketing experience
How we applied lean startup 
principles at Dropbox 
(sometimes on purpose, sometimes by accident)
When to Launch? 
Paul Graham: 
Early and often 
Joel Spolsky: 
When it doesn’t 
completely suck 
(avoid “Marimba Phenomenon”)
2006: Dozens and dozens of 
cloud storage companies 
2006: Dozens and dozens of 
cloud storage companies
VC: “There are a million 
cloud storage startups!” 
Drew: “Do you use any of them?” 
VC: “No” 
Drew: “…”
Building a bulletproof, scalable, 
cross-platform cloud storage 
architecture is hard
From competitor’s support forum: 
"[product] ended up turning all my Word 
docs and half my Excel Spreadsheets 
into 0 byte files. Needless to say, I am 
not happy."
Learn early, learn often
Dropbox’s minimum viable product: 
Dropbox’s minimum viable product: 
3 min screencast on Hacker News (Apr 07): 
Lots of immediate, high-quality feedback 
3 min screencast on Hacker News (Apr 07): 
Lots of immediate, high-quality feedback
Simple landing page: capture interest/email 
Simple landing page: capture interest/email 
address 
address
Private beta launch video  12,000 diggs; 
beta waiting list jumps from 5,000 to 75,000 in 
Private beta launch video  12,000 diggs; 
beta waiting list jumps from 5,000 to 75,000 in 
one day (Mar 2008) 
one day (Mar 2008)
What we learned 
• Biggest risk: making something no one 
wants 
• Not launching  painful, but not learning  
fatal 
• Put something in users hands (doesn’t have 
to be code) and get real feedback ASAP 
• Know where your target audience hangs out 
& speak to them in an authentic way
When “best practices” aren’t best
Public launch (Public launch (SSeepp 22000088)):: TTiimmee ttoo ggeett rreeaall
Public launch (Public launch (SSeepp 22000088)):: TTiimmee ttoo ggeett rreeaall 
Our Web 2.0 Marketing Plan 
• Big launch at TechCrunch50 
• Buy some AdWords 
• Hire, um, a PR firm, or a VP of Marketing, or 
something 
• Big launch at TechCrunch50 
• Buy some AdWords 
• Hire, um, a PR firm, or a VP of Marketing, or 
something
Experiment: Paid search 
• Hired experienced SEM & affiliate marketing 
guy ($$) 
• Picked out keywords, made landing pages 
• Hid the free account option for people 
arriving via paid search, replace with free 
time-limited trial 
•Went live in early 2009
Cost per acquisition: $233-$388 
Cost per acquisition: $233-$388
Cost per acquisition: $233-$388 
Cost per acquisition: $233-$388 
For a $99 product. Fail. 
For a $99 product. Fail.
Experiments failing left and right 
• Problem: Most obvious keywords bidded 
way up 
– Probably by other venture-backed startups 
• Problem: Long tail had little volume 
• Problem: Hiding free option was shady, 
confusing, buggy 
• Affiliate program, display ads, etc sucked too 
• Economics totally broken
But we were still doing well…? 
• Reached 1mm users 7 months after launch 
• Beloved by our community
What we learned 
• Lots of pressure (or guilt) to do things the 
traditional way. But think first principles 
• Fortunately, we spent almost all our effort on 
making an elegant, simple product that “just 
works” and making users happy 
• And we worked our asses off 
• And hired the smartest people we knew 
• “Keep the main thing the main thing”
What we learned 
•Mostly ignored (or woefully mishandled): 
– hiring non-engineers 
– mainstream PR 
– traditional messaging/positioning 
– deadlines, process, “best practices” 
– having a “real” website 
– partnerships/bizdev 
– having lots of features 
• Product-market fit cures many sins of 
management
Fourteen Months to the Epiphany
Why were conventional 
techniques failing, 
yet we were still succeeding?
AdWords wasn’t the problem 
• Nobody wakes up in the morning wishing 
they didn’t have to carry a USB drive, email 
themselves, etc. 
• Similar things existed, but people weren’t 
actively looking for what we were making 
• Display ads, landing pages ineffective 
• Search is a way to harvest demand, 
not create it
Typical Dropbox User
Steve Blank & Market Type 
•Existing Market 
•Resegmented 
Market 
•New Market 
•Marketing tactics for one market 
type fail horribly in others
New strategy: encourage WOM, viral 
• Give users better tools to spread the love 
• Referral program w/ 2-sided incentive 
permanently increased signups by 60% (!!) 
– Inspired by PayPal $5 signup bonus 
• Help from Sean Ellis: Surveys, split tests, 
landing page/signup flow 
optimizations, encourage 
sharing  big wins 
• Big investment in analytics
Trailing 30 days (Apr 2010) : users sent 
Trailing 30 days (Apr 2010) : users sent 
2.8 million direct referral invites 
2.8 million direct referral invites
Results 
• September 2008: 100,000 registered users 
• January 2010 (15 mos later): 4,000,000 
•Mostly from word-of-mouth and viral: 
– 35% of daily signups from referral program 
– 20% from shared folders, other viral features 
• Sustained 15-20%+ month-over-month 
growth since launch
Wrapping up 
• Learn early, learn often 
• Best practices aren’t always best 
• Know your market type & how 
your product fits into your user’s 
life
Thank you! 
Questions? 
@drewhouston

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Dropbox startuplessonslearned

  • 1. Startup Lessons Learned Drew Houston @drewhouston
  • 2. Background • Cofounder & CEO, Dropbox • Earlier: MIT comp sci (‘05), started online SAT prep co, engineer @ startups • Easiest way to share files across computers & with other people • Founded in ‘07, launched Sep ’08 • Sequoia & Accel-backed startup in SF • Millions of users, rapidly growing
  • 3. Some context • 100,000  many millions of users in 18 months since launch • No advertising spend • Hostile environment: lots of competitors, software download •Mostly done by engineers w/ some guidance but no prior marketing experience
  • 4. How we applied lean startup principles at Dropbox (sometimes on purpose, sometimes by accident)
  • 5. When to Launch? Paul Graham: Early and often Joel Spolsky: When it doesn’t completely suck (avoid “Marimba Phenomenon”)
  • 6. 2006: Dozens and dozens of cloud storage companies 2006: Dozens and dozens of cloud storage companies
  • 7. VC: “There are a million cloud storage startups!” Drew: “Do you use any of them?” VC: “No” Drew: “…”
  • 8. Building a bulletproof, scalable, cross-platform cloud storage architecture is hard
  • 9. From competitor’s support forum: "[product] ended up turning all my Word docs and half my Excel Spreadsheets into 0 byte files. Needless to say, I am not happy."
  • 11. Dropbox’s minimum viable product: Dropbox’s minimum viable product: 3 min screencast on Hacker News (Apr 07): Lots of immediate, high-quality feedback 3 min screencast on Hacker News (Apr 07): Lots of immediate, high-quality feedback
  • 12. Simple landing page: capture interest/email Simple landing page: capture interest/email address address
  • 13. Private beta launch video  12,000 diggs; beta waiting list jumps from 5,000 to 75,000 in Private beta launch video  12,000 diggs; beta waiting list jumps from 5,000 to 75,000 in one day (Mar 2008) one day (Mar 2008)
  • 14. What we learned • Biggest risk: making something no one wants • Not launching  painful, but not learning  fatal • Put something in users hands (doesn’t have to be code) and get real feedback ASAP • Know where your target audience hangs out & speak to them in an authentic way
  • 15. When “best practices” aren’t best
  • 16. Public launch (Public launch (SSeepp 22000088)):: TTiimmee ttoo ggeett rreeaall
  • 17. Public launch (Public launch (SSeepp 22000088)):: TTiimmee ttoo ggeett rreeaall Our Web 2.0 Marketing Plan • Big launch at TechCrunch50 • Buy some AdWords • Hire, um, a PR firm, or a VP of Marketing, or something • Big launch at TechCrunch50 • Buy some AdWords • Hire, um, a PR firm, or a VP of Marketing, or something
  • 18. Experiment: Paid search • Hired experienced SEM & affiliate marketing guy ($$) • Picked out keywords, made landing pages • Hid the free account option for people arriving via paid search, replace with free time-limited trial •Went live in early 2009
  • 19. Cost per acquisition: $233-$388 Cost per acquisition: $233-$388
  • 20. Cost per acquisition: $233-$388 Cost per acquisition: $233-$388 For a $99 product. Fail. For a $99 product. Fail.
  • 21. Experiments failing left and right • Problem: Most obvious keywords bidded way up – Probably by other venture-backed startups • Problem: Long tail had little volume • Problem: Hiding free option was shady, confusing, buggy • Affiliate program, display ads, etc sucked too • Economics totally broken
  • 22. But we were still doing well…? • Reached 1mm users 7 months after launch • Beloved by our community
  • 23. What we learned • Lots of pressure (or guilt) to do things the traditional way. But think first principles • Fortunately, we spent almost all our effort on making an elegant, simple product that “just works” and making users happy • And we worked our asses off • And hired the smartest people we knew • “Keep the main thing the main thing”
  • 24. What we learned •Mostly ignored (or woefully mishandled): – hiring non-engineers – mainstream PR – traditional messaging/positioning – deadlines, process, “best practices” – having a “real” website – partnerships/bizdev – having lots of features • Product-market fit cures many sins of management
  • 25. Fourteen Months to the Epiphany
  • 26. Why were conventional techniques failing, yet we were still succeeding?
  • 27. AdWords wasn’t the problem • Nobody wakes up in the morning wishing they didn’t have to carry a USB drive, email themselves, etc. • Similar things existed, but people weren’t actively looking for what we were making • Display ads, landing pages ineffective • Search is a way to harvest demand, not create it
  • 29. Steve Blank & Market Type •Existing Market •Resegmented Market •New Market •Marketing tactics for one market type fail horribly in others
  • 30. New strategy: encourage WOM, viral • Give users better tools to spread the love • Referral program w/ 2-sided incentive permanently increased signups by 60% (!!) – Inspired by PayPal $5 signup bonus • Help from Sean Ellis: Surveys, split tests, landing page/signup flow optimizations, encourage sharing  big wins • Big investment in analytics
  • 31. Trailing 30 days (Apr 2010) : users sent Trailing 30 days (Apr 2010) : users sent 2.8 million direct referral invites 2.8 million direct referral invites
  • 32. Results • September 2008: 100,000 registered users • January 2010 (15 mos later): 4,000,000 •Mostly from word-of-mouth and viral: – 35% of daily signups from referral program – 20% from shared folders, other viral features • Sustained 15-20%+ month-over-month growth since launch
  • 33. Wrapping up • Learn early, learn often • Best practices aren’t always best • Know your market type & how your product fits into your user’s life
  • 34. Thank you! Questions? @drewhouston

Editor's Notes

  1. Unusual aspects
  2. A few examples/stories
  3. As a founder lots of questions
  4. Back in 2006 the cloud storage market was insane
  5. Investor meetings had an interesting pattern
  6. (as I spent the bulk of my 20s discovering) This is not your typical rails app that you can bang out in a weekend.
  7. One thing I ran into over and over again was products that half worked. I promise you, if they did, I wouldn’t be here, I would be using that instead. But these were the guys who launched early. And now most of them are dead, not because of Dropbox but largely by self inflicted wounds.
  8. So, launching early and joining the pigpile of halfassed storage products was not terribly appealing
  9. So shipping code was out of the question YC app – ship in 8 wks vs 18 mos Prototype worked; video could show product in best light; get much of the same feedback as if we shipped working code
  10. YC’s motto
  11. As engineers
  12. We ran a bunch of experiments; adwords example -- everybody else is doing it
  13. - SEM is an example, but others – guilt to do what everyone else is doing -- to hire a product person, or a VP of whatever, or make an analytics dashboard, or a PR firm, etc. Often these are great things to do but that’s not a license to blindly do them
  14. To do something well in general you’ll be doing something else poorly