DROPBOXCASE E-471DATE 051513This doc.docx

DROPBOX
CASE: E-471
DATE: 05/15/13
This document is authorized for use only by Andres Suarez in
ENT 6006 Fall 2019 taught by Alexander Settles, University of
Florida from Aug 2019 to Dec 2019.
There is something about this product which is not in your face
and that has made people feel like it’s magic. And it’s all the
little details. It’s the details of how you treat people from the
time they join from the time they move on. It’s the rate at which
you send them e-mail. It’s how you deliver customer service.
It’s the 50 little things that you do really well, and when you
add it all up, you get love – the kind of love that gets people
energized and gets them to pick up the phone and call their mom
to chat about it. And if you screw any of those components up,
or you start compromising on certain ones, that’s when you start
losing the magic, and the magic is really what makes the whole
thing tick.
—Sujay Jaswa, Vice President of Business, Dropbox
INTRODUCTION

It was the fall of 2012, and Sujay Jaswa—Dropbox’s Vice
President of Business Development and Sales—surveyed the
company’s 87,000 square foot San Francisco headquarters from
its brand- new, in-house cafeteria. Dropbox—the ‘freemium’
data storage and data sharing SaaS startup that enables
consumers and businesses to conveniently retrieve data stored
in the cloud from anywhere and on any device they choose—
was the tech darling of the moment. Its facilities and $250
million in venture financing to date, at a rumored $4 billion
valuation, emphasized such.
Drew Houston and Arash Ferdowsi—Dropbox’s CEO and CTO
respectively—founded the company in 2007 and formally
launched its first product offering in 2008. Even in an industry
marked by rapid growth, Dropbox’s progress had been
remarkable. Over the past two years, Dropbox had grown from 4
million users to over 100 million users, and was now adding
customers at a rate of one per second and saving over 1 billion
files daily on the service (see Exhibit 1).
After receiving an MBA from Harvard in 2008, followed by two
years at the prominent Silicon Valley venture capital firm New
Enterprise Associates, Jaswa joined Dropbox in 2010 as its first
formal business hire, tasked with creating and leading the
company’s business development,
Justin Randolph (MBA ’12) and Professors Jim Lattin and Peter
Levine prepared this case as the basis for class discussion rather
than to illustrate either effective or ineffective handling of an
administrative situation.
This case was made possible by the generous support of Bruce
and Elizabeth Dunlevie.
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operations, finance and sales activities (see Exhibit 2). While
Jaswa took great pride in the tremendous growth of the company
since his arrival, the company had impressive growth plans,
leading Jaswa’s ambitions, expectations, and gaze to all
remained fixed sternly ahead, into the future. Jaswa had
repeatedly emphasized that the focus of the business should be
on the long term—building and nurturing a product and a
company culture capable of constructing and disseminating the
Internet’s underlying file system—rather than on past successes
and accomplishments or on short-term opportunities.1
While the growth of Dropbox’s user base had burgeoned, the
company’s sales efforts were still nascent. Though Jaswa was
adamant about keeping headcount from growing at an
unsustainable pace, he nonetheless wondered whether the
company had reached a new inflection point that justified the
need for a more formal sales organization. The company’s
“Dropbox for Teams” business product was gaining significant
traction with commercial accounts, and Jaswa pondered
potential changes to the sales model in response to an added
focus on such business customers.

It was late in the evening, yet Jaswa prepped feverishly in the
company’s cafeteria for an upcoming meeting with Houston and
Ferdowsi in which he was expected to discuss the potential
evolution of the Dropbox sales organization. As his thoughts
swirled, one thing was clearly evident—the distinctive nature of
the Dropbox product would require a sales organization that was
similarly unique.
ABOUT DROPBOX
The Market
As of 2012, data storage and data sharing represented a large,
lucrative, and fast-growing market that appealed to the needs of
both consumer and enterprise users. In the US alone, the
personal cloud storage market was estimated to be $1.4 billion
and was projected to grow to $5.8 billion by 2016 (see Exhibit
3).2
Moreover, the “consumerization of the enterprise” trend that
had characterized a number of technology segments—in which
consumers using technology products, services, and applications
increasingly were using such applications in their work
functions and environments—was of notable relevance to the
data storage and sharing market. The proliferation of mobile
devices had increased the need for and value of cloud-based
data providers for users in nearly every aspect of their lives.
Forecasts estimated that 90 percent of corporate America would
use cloud storage technology by 2015, and according to
Dropbox, 95 percent of Fortune 500 companies already had
some use of the Dropbox product linked to their companies’ e-
mail addresses.
While Dropbox commanded a significant lead in the industry in
terms of the size of its user base, the data storage and data
sharing market had become fiercely competitive. Competitors

ranged from other fast-growing file backup and data sharing
companies such as SugarSync, YouSendIt.com, and Box.net, to
services offered by large tech companies such as Microsoft’s
SkyDrive, Google’s Google Drive, Apple’s iCloud, and EMC’s
Mozy. The competitive nature of
1 Interviews with Sujay Jaswa, Kevin Egan, and Oliver Jay,
December 12, 2012, January 27, 2013, and March 11, 2013.
Subsequent quotations are from the author’s interviews unless
otherwise noted.
2 Jon Swartz. “Start-Ups Dropbox and Box Reach for the
Cloud.” USA Today. March 5, 2012.
Dropbox E-471
the industry had been fueled in part by the rapid adoption of
cloud computing, readily-available capital from VCs, and the
fact that no one company has a clearly defensible advantage in
the market among either consumer or business users.
The Product
Much of Dropbox’s acclaim resulted from the service’s
simplicity and user-friendliness, epitomized by the company’s
famed “Simplify your life” motto. From Dropbox’s early days,
the company was adamant about offering a “single product” that
appealed to the company’s entire user base. The founders
explicitly emphasized product ubiquity, ease-of-use, and
versatility, seeking to provide a general-purpose product that
could be used for both personal and business applications by
users ranging from tech neophytes to technophiles. In addition,
the developer- friendly, open-source API that Dropbox
constructed enabled hundreds of thousands of third-party
developers to create apps that utilized the Dropbox platform and
increased its value and functionality to users.

Houston viewed the company, with its multi-platform
application, as well positioned to capitalize on the market need.
As he commented, "Ten years ago, everything was on your PC.
Now, it's spread across your PC, tablet, smartphone, and it will
only get worse in the future. Dropbox stitches it all back
together." 3
GENERAL OVERVIEW OF THE ‘FREEMIUM’ MODEL
The concept of a ‘freemium’ model, in which a version of a
product or service is offered free of charge yet complemented
with a ‘premium’ product version that provides enhanced
features and/or functionality, is not new. Examples of such
business models date back to the 1980s. However, in recent
years there has been a proliferation of ‘freemium’ offerings,
particularly in the software industry (see Exhibit 4).
Software businesses tend to be particularly well suited to the
‘freemium’ model, as the marginal cost of producing and
distributing software product or services is often negligible.
What is more, as consumers have a hard time observing the
quality of software prior to using it, the value and price that
should be paid for a software product is initially uncertain, but
can quickly be ascertained upon consumption. In successful
iterations of the business model, users discover and understand
the value that is offered by the enhanced ‘premium’ product or
service and implicitly recognize that the service has to cost
money.
Further, the free-of-charge nature of the offering largely
removes the psychological barrier and risk of any downside
from trial in a user’s mind, serving as an emotional “hot button”
and source of irrational excitement that can lead to viral uptake.
In a famous experiment, behavioral economist Dan Ariely
illustrated this tendency by asking participants to choose
between a $0.14 Lindt Truffle or a Hershey Kiss for $0.01 (one

penny). The vast majority of participants chose the Lindt,
understanding the utility of the Lindt to be quite high, even at a
higher cost. Yet when the price of both chocolates was reduced
by a nominal 1 cent—making the Hershey Kiss free—nearly
every participant chose the Hershey Kiss.4 As the free version
of a ‘freemium’ product reduces
3 Ibid.
4 Dan Ariely. “When Free Is Dangerous.” Big Think. August 5,
2009. http://bigthink.com/ideas/15775
barriers and accelerates trial and adoption—which can be as
simple as a quick download— ‘freemium’ products are often
associated with a high level of virality.
The commercial success of any ‘freemium’ business model
hinges around its unit economics, which is a function of a
number of important metrics:
· The number of individuals exposed to the ‘freemium’ product
(visitors),
· The percentage of visitors that sign up for the free product,
· The percentage of free-product users that upgrade to the
premium product, and the time it requires such visitors to
convert from the free to the premium product,
· Customer lifetime value of each premium, paying customer,
which is a function of:
· The average revenue generated by the premium product per
period,
· The average number of periods an individual remains a
premium, paying, customer
· The churn (lost revenue) due to users canceling their
subscription,
· The acquisition cost of each visitor,
· The per-period cost of offering the free product to a “free-
riding” customer,

· The per-period cost of offering the premium product to a
paying customer.
For example, an online consumer internet company offering a
‘freemium’ product may launch a Google AdWords marketing
campaign that costs $0.05 for each individual that successfully
clicks through each advertisement and initially garners 1
million visitors, along with word of mouth, over the course of a
month (see Exhibit 5). Of those visitors, 5 percent may actually
choose to sign up for the company’s free product—at a monthly
cost of $0.10 per user in server, customer service, and other
operating costs—and 5 percent of those free users may
eventually upgrade to a premium product that provides
additional functionality at a price of $10 per month, and a cost
of
$0.50 per user in added operating costs. On an ongoing basis, if
the premium product continues to satisfy the paying customer,
the customer will continue to pay for the subscription service
and will hence exhibit a high lifetime value. Otherwise, if the
customer becomes dissatisfied with the product, s/he is likely to
cancel the paid subscription.
Because a large part of the initial cost of a ‘freemium’ product
begins with a product’s user acquisition cost, it is important for
a ‘freemium’ product company to be efficient with the
marketing and sales costs necessary to acquire a user.
Irrespective of the number of individuals exposed to a
‘freemium’ product, unless the product offers true, recognizable
value, a company will likely be unable to attract free or paid
users. Thus, the most successful ‘freemium’ business models
begin with a great product, and are thus able to convert a large
proportion of visitors to either free or paid users. Typical
‘freemium’ companies convert between 1 and 10 percent of free
users into eventual paying customers. In successful ‘freemium’
examples, the free product provides true value to users as
opposed to a “gimmicky,” unsatisfactory product offering;

further, the conversion from free to premium is motivated less
by frustration with the free product than by hope and
expectation that the premium product will provide additional
value that exceeds the marginal cost to the user. 5
5 Ibid.
THE INITIAL DROPBOX PRODUCT AND CUSTOMER
ACQUISITION
The core offering of Dropbox—coined Dropbox ‘Basic’—is
free, but is limited to 2GB of data storage space. A ‘Pro 50’
account for individuals costs $9.99 per month and provides
50GB of storage space, and a ‘Pro 100’ costs $19.99 per month
for 100GB in storage (see Exhibit 6).
Houston discovered that the company’s initial attempts at
search marketing, in which the company bid on search keywords
such as “online storage,” were not cost effective. The majority
of users refrained from the paid version of the product, as the
company was offering a product that people didn’t know they
needed until they sampled it. As Houston explained:
Our cost per effective acquisition per paid user was thousands
of dollars for a hundred-dollar product. So the big lesson here is
if you adopt a ‘freemium’ business model your marketing cost is
the free users. Search is great for harvesting demand, not
creating it.6
The company recognized that user referrals were its biggest and
most cost-efficient source of growth, resulting in a shift to a
strategy that encouraged referrals via an incentive program.

Current users were given an additional 250MB of data storage
for each referral that became a Dropbox user. Thus, the
company hoped its ‘freemium’ offering would effectively serve
as its initial outbound sales model as it relied on its users to
deliver referrals in exchange for added functionality. For every
free user that joined Dropbox, a percentage would inevitably
upgrade to the premium service and thus become a paying
Dropbox customer.
Such a shift in acquisition strategy resulted in tremendous
growth—largely viral via word-of- mouth—all without any
spending on advertising. As a portion of people that were
referred to the service inevitably upgraded to the premium
service and/or referred other users to the service, such a
strategy resulted in a multiplier effect.7 Likewise, the use of
viral product features, such as offering ‘shared folders’ for
collaboration and a convenient interface for file management
and sharing, complemented the referral incentive program by
encouraging current users to broadcast the service to others and
effectively transformed the product’s user base into a Dropbox
sales force and marketing engine.
DROPBOX FOR TEAMS
By 2010, after observing customer use, it became increasingly
clear to the company that businesses and workers around the
world were embracing the Dropbox product in corporate
environments. Delighted by the free and addictive nature of the
consumer product in their personal lives, employees began
using the product as a productivity-enhancement tool for work-
related tasks.
In response, at the end of 2010 Dropbox introduced an alpha
version of a business-level subscription service—which it called
“Dropbox for Teams”—to serve the needs of its business users.
As employees began urging their CIOs to either offer or permit

an alternative to corporate
6 Liz Gannes. “Case Studies in Freemium: Pandora, Dropbox,
Evernote, Automatic, and MailChimp.” GigaOM.
http://gigaom.com/2010/03/26/case-studies-in-freemium-
pandora-dropbox-evernote-automattic-and-mailchimp/
7 Ibid.
shared drives and remote-file access, the Dropbox for Teams
offering sought to facilitate corporate adoption of the Dropbox
product within corporate environments.
The Dropbox for Teams offering sought to simplify the Dropbox
product within business organizations by providing 200GB in
storage space to each member of a work team of up to five
users, for $795 per year. It also offered certain additional
features, such as a single centralized bill, unlimited version
history and deletion recovery, dedicated phone and e-mail
customer support, as well as a “pooled” storage offering of
1,000GB across an entire work team (see Exhibit 7).
Particularly appealing to administrators, the offering also
created an admin console to improve visibility into the file
activity happening across their organization’s teams and to
monitor and control product use. To provide security
assurances, the product offered an AES-256 encrypted standard,
equivalent to that used by banks to secure customer data.
While Houston and Ferdowsi were tempted to augment and
“beef up” the business product, they were hesitant to move too
rapidly. To them, the emphasis of a single, simple product that
exhibited limited complexity was critical to preserving the
“Dropbox magic” that they attributed as fueling the company’s
rapid growth to date. While they were sensitive that the
Dropbox for Teams business product release could be construed
by some as a departure from the simple, convenient, and
intuitive ‘Basic’ product on which Dropbox had built its

reputation, they sought to explicitly abstain from any
significant product changes or from substantially differentiating
Dropbox for Teams from the ‘Basic’ product:
[Dropbox for Teams] is basically an extension of the existing
product, not a new product or a substitute product—a feature
layer on top of the existing product for a different user, for the
IT organization or for some administrator. But its core is
functionally very similar to any other Dropbox feature. It’s just
Dropbox.8
However, Houston and Ferdowsi recognized that such an
approach would require a delicate balance. While it seemed
important to leverage the brand equity, success, and reputation
of the simple, consumer-focused ‘Basic’ product, the company
also sought to signal the introduction of a product that was truly
designed for the particular needs of businesses and
organizations:
What we didn’t want to do was to get to the point where we
became analogous to the Facebooks of the world—those
companies that find it virtually impossible to build an enterprise
product because their brand is so clearly consumer ‘lightweight’
with photos, media, and the activities of our personal lives. We
didn’t want to get trapped in that situation, where people
perceived Dropbox as an inherently ‘lightweight’ product, even
though in reality it’s not.9
SALES AT DROPBOX
At the end of 2010, shortly after the Dropbox for Teams alpha
release and in the midst of ongoing rapid growth, Houston and
Ferdowsi recognized the need for an individual to oversee the
company’s non product-related activities and its nascent
business product segment. Familiar with Jaswa from his efforts
to convince them to take an investment from NEA, the Dropbox
founders

8 Interview with Sujay Jaswa, March 11, 2013.
9 Ibid.
felt confident that he was the right person for the role. While
Jaswa was formally tasked with leading the company’s business
development activities, his responsibilities included designing
all Dropbox-related business functions and constructing the
foundation for a scalable sales organization.
The Dropbox ‘Freemium’ Model
Prior to Jaswa’s arrival, Dropbox had no formal sales activities,
instead relying on the company’s ‘freemium’ model to generate
revenue via an organic upselling process that stemmed from
user conversion to the ‘premium’, paid product. Due to the viral
success of the ‘freemium’ sales model with consumers, in which
the product largely “pulled” customers to the company with
little proactive effort, sales had been largely automated to date
via an online, self-serve platform. According to Jaswa:
While we offered the premium upgrade that would increase
storage capacity for consumers, no sales efforts were placed on
the product. It was all viral, fully automated, and driven by the
capacitated ‘freemium’ product. Simply put, if you were to go
over capacity, you would pay, and you would pay online and
conveniently via a credit card.
Through the creation of a small, “business operations” task
force—comprised primarily of a few highly analytical
individuals within the company who possessed previous venture
capital and private equity experience—Jaswa sought to
“anticipate the user needs of consumers”—from product
education, booking, and ongoing customer service. In doing so,
he hoped to automate as many systems and processes as possible
so as to provide answers and tools to users without having to
provide any human resources. The ultimate goal of such a task

force was, “to spearhead automated processes and systems so as
to enhance the convenience of the user experience and to
improve user engagement.” As Jaswa elaborated:
Business Ops focused almost exclusively on increasing
engagement with the product and building better product flows.
Because the more people that use the product, and the more
convenient the experience, the more likely it is that users will
exceed their free storage capacity. So we strove to identify and
remedy points of friction that would inhibit product use, and
created incentives to get people to use the product in a more
enjoyable and robust way, such as creating Q&A banks and
automated notifications like, ‘Hey, did you know Dropbox can
be used for this?’
As the company continued to enhance the user experience and
install viral tools, such measures contributed to the rapid
growth in the size of the company’s user base. As a sizeable
portion of users upgraded to the premium product, revenues
followed.
The Dropbox ‘Freemium’ Model Matures
As businesses of all sizes began making purchases of the
offering via Dropbox’s automated, online sales platform, they
also began calling into corporate headquarters asking for
additional administrative tools. In spite of the product’s viral
success, Jaswa recognized the need to segment
the sales process so as to offer these corporate users with a
more customer-friendly service and to manage the ongoing
business relationship. According to Jaswa:
The number one thing that we found is that, since users were
putting such important data on Dropbox, what a lot of people
felt like they needed was just a human being on the other line.
Because as a Dropbox user, if my critical business documents

go missing, or if I no longer can find my treasured photos that I
placed somewhere on Dropbox, I need to be able to know that
there’s a human I can call. That assurance makes me feel better
and makes me more willing to continue to use the service.
At the time, the company merely had two full-time employees
focused on supporting efforts for Dropbox for Teams—one
representative to handle and book incoming orders via e-mail,
chat, or phone, and one account manager who would inherit that
customer relationship after booking. It became clear to Jaswa
that the capacity of such an arrangement wouldn’t be sufficient
to handle the growing corporate demand for Dropbox for Teams.
Yet, he also felt it would still be vital to design an arrangement
that matched the simplicity of the Dropbox product, which
maximized the percentage of “inbound” purchases, and
abstained from directly involving a member of the team.
What we really sought was to build off our efforts to maximize
self-serve and build as light and low-friction of a sales model as
possible. And having an inside sales process is extremely low-
touch. We merely focused on the components of touch required
in order to get people excited and comfortable with the product.
As such, Jaswa decided to effectively maintain the
straightforward structure of the original two- rep model, but to
scale the arrangement via added resources so as to meet
customer demand. Headcount would remain evenly split
between representatives—effectively booking agents, charged
with responding to inbound requests—and account managers,
responsible for overseeing customer relationships and
responding to product questions and concerns. Far from a
traditional sales force, the arrangement appeared more like a
split telesales / customer service operation that sought to serve
the core needs of the business customer in as automated a
fashion as possible. To Jaswa, it was as simple as “clipping
coupons and providing customer service.”

For those customers and interactions that required a human
touch, systems, processes and skill building were put in place so
as to maximize the efficiency and scalability of the inside sales
team and ‘freemium’ model. Representatives responding to
inbounds requests were trained to ask the right questions in
order to increase the conversion rate to the paid product, and
booking systems were automated so as to maximize the amount
of time account managers spent talking to customers rather than
invoicing and inputting information. Activities were targeted to
enhance three metrics: 1) increasing the number of customer
product adoptions per representative, 2) boosting the overall
conversion rate to the paid product, and 3) enhancing the speed
of conversion.
Though having a sales function for the Dropbox business
product would depart from the company’s fully-automated,
online sales model (which would still serve the company’s
consumer segment), the arrangement was far from a dramatic
departure and continued to embrace the ‘freemium’ nature of
the product.
As Jaswa explained:
What we found was that for a pretty large percentage of our
transactions, the product had actually done the sales for us, and
we simply needed to hold users’ hands throughout the process,
educate them along the way, and merely take orders and
maintain that relationship. Such a sales process was very much
‘You use Dropbox, let’s help you get more control over it,’ and
‘Let’s get you more engaged with the product.’ It’s not
‘Consider us versus the competition,’ and isn’t RFP- driven.
Instead, it’s entirely driven by existing utilization, which is
where the ‘freemium’ segmentation really kicks in in an
amazing way, because the more people who are using the
product on a regular basis, the more likely those people are
going to hit the free capacity cap. So the free product provided

us with the sales opportunity—it created the lead for us. And as
a result, the sales cycle to date has been incredibly short and
has resulted in a great ROI per representative.
Jaswa sought to ramp up headcount as quickly as possible to
meet inbound demand, while still meeting the company’s
notoriously-strict hiring norms that, from the company’s earliest
days, mandated cultural fit for all new hires. Over the next year
and a half, Jaswa oversaw the growth of Dropbox for Teams to a
group of thirty individuals. While sizeable relative to the
company’s previous sales efforts, the organization was still
considerably lean and undeveloped with respect to the market
size and compared to other technology companies of an
analogous stage.
A Unique Philosophy
To Jaswa, the type of business customer that Dropbox was
responding to largely drove the nature of the organizational
design. The vast majority of inbound requests the team serviced
came from small and medium-sized companies, or individual
work teams and business unit managers within larger
organizations. Ramping up a structure that responded to
inbound requests not only represented one that the company was
already familiar with, but to Jaswa, it also appeared to be the
most efficient and scalable arrangement. At such a stage, and
given the rapid growth of the Dropbox user base, Jaswa viewed
a higher-touch approach as being less efficient than the
company’s current arrangement:
You can’t build an SMB-facing business with high-touch. The
customer acquisition cost is simply too high to justify such a
model. If you had a high-touch model to go after less than 100-
person businesses, customer lifetime value wouldn’t be able to
meet the acquisition cost.
To Jaswa, serving SMBs seemed to be consistent with the

Dropbox brand, even if it meant forgoing short-term profits that
could be mined from larger enterprise accounts. To him, the
Dropbox brand housed the company’s “magic,” and, as such, the
sales process had the ability to both foster the brand’s
development as well as damage it:
We try to find metrics that keep our team from overlooking
smaller customers, because it’s important for us that we not
convey to the market that we treat users— big or small—in a
differentiated way. We don’t want our account managers to get
sloppy by thinking, ‘Well, if Wal-Mart, with their thousands of
seats calls me, that deserves much greater priority than Joe’s
Auto Body Shop that has 10 seats,’ even
if it means neglecting a big-ticket sale for now because the
timing isn’t right. Our worldview has been that we simply need
ensure that all of these customers are happy. And in order to do
that, every customer, regardless of size, needed to have an
account manager with whom to communicate. It was tantamount
to the great Dropbox customer experience.
Rather than viewing sales and go-to-market pathways as
fundamental drivers of the business, Jaswa saw them as
marketing levers, merely meant to enhance the product. As he
noted:
Fundamentally, Dropbox is a product and user-experience-
driven company. So we have always started with the customer
experience. The world is always changing, and if you’re not
user-centric and you’re worrying about things that are not
important to the user—and the user ultimately makes the
decision—the rug will get pulled out from under you. We’re
always starting with the question, ‘How do we make sure that
our users are truly thrilled?’ Only after answering that question,
do we ask, ‘How do we make money, and how do we monetize
the business?’

Jaswa elaborated on the company’s unique philosophy:
The reason the sales function matters at Dropbox is that it
allows us to get feedback that can translate into better product
development. And we wait until the product is only truly
sellable in a very efficient way before we embark on
monetization and it becomes a priority and worthwhile of our
time, attention, and resources. Otherwise, 'sales' becomes the
decision-maker around 'product'. It’s a case of the tail wagging
the dog, because the incentives of a sales organization often
aren’t aligned with the incentives of the end-user or the heart of
the company. So we only embrace monetization if doing so
doesn’t compromise the product, the user experience, and the
culture that has been developed to nurture that user experience.
Large Enterprises? An Internal Debate
While Dropbox’s low-touch sales arrangement still exhibited
traction with certain larger commercial accounts, these larger
organizations often required and were accustomed to a more
proactive level of sales and direct outreach from other vendors.
At the time, there was a lot of internal discussion within
Dropbox around whether a direct sales force—one which
proactively went out and “sold” on a commission-based basis—
would be better aligned to the traditional sales cycle of large
enterprise accounts, and if so, whether the potentially lucrative
opportunity seemed worthwhile.
However, Jaswa strongly believed that if Dropbox decided to
embrace direct sales, it would have fundamentally altered the
business product in unproductive ways because of the nature of
such sales and the second-order consequences of doing so.
Jaswa recognized the particular sales processes that enterprise
buyers typically have in place—RFP procedures, strict policies
around data, and hierarchical buying structures; thus, he viewed
appealing to enterprise buyers required a very different sales

process—one which would involve conversations related to how
the product features stacked up against those of the competition.
As Jaswa explained:
Back then, we felt that building a direct sales team would have
resulted in our seeing our customer as the CIO or IT
administrator of an enterprise—the ultimate decision maker of
tech purchases in an enterprise. We believed we would have
ended up building a product for IT—left, right, and center—and
doing so would have compromised our prioritization of the user
experience. We never wanted to create a product that end-users
didn’t celebrate, and assumed CIOs would likely dictate a
product so encumbered by features that it would be difficult for
end-users to celebrate. We didn’t want to get put in the position
of having to choose between the end-user and IT departments in
the short term.
To Jaswa, a direct approach at the time not only felt anathema
to Dropbox’s approach to date and incompatible with a focus on
the end-user experience, but it also did not seem truly scalable
to him at that moment in the company’s history:
Far from ‘clipping coupons,’ direct enterprise sales would
require real resources and a more IT-centric approach. We
would have had to convince someone that, ‘Hey, you’re right.
This other product has 40 more boxes checked on a standard
feature comparison, but it’s those 40 checked boxes why end-
users don’t use the product,’ and that was a much more difficult
sales process and a distraction from a focus on the user
experience. We view the tech companies that truly succeed as
being the ones that work closely with IT, but never do so to
such an extent that they compromise the magic that their
products offer. We felt at that time that it would be too difficult
to walk that tightrope.
Organizational Design and Culture

The relatively automated nature of Dropbox’s sales process
created a management quandary for Jaswa who, in keeping with
company culture, aimed to hire highly talented and
accomplished employees with pedigreed, Ivy League-educated
backgrounds. He deliberated as to how best to keep such
individuals motivated while “clipping coupons” and responding
to an extremely simple process of inbound calls.
Consistent with the company’s product development culture,
Jaswa decided to conduct an experiment. His first four new
hires included the number one national sales performer at ADP,
a leading account manager handling larger accounts at
MySpace, a top sales manager out of Google, and a young,
recent Stanford undergrad. For initial order taking, Jaswa
discovered that discipline was the number one criterion for high
performance. However, interestingly, youth turned out to be the
biggest determinant in the ability to sustain such high levels of
sales. For this reason, he gravitated toward a younger, less
experienced background, which was nonetheless hungry to
impress and eager to exert effort. According to Jaswa:
At the end of the day, reps have to register sales, and you can
correlate that very directly with the amount of time they spend
on the job—rather than past experience—since the job doesn’t
require a lot of rocket science. By and large, time and effort
proved to be the best proxies for performance. We tried
everything from a heavy quota system—requiring that each rep
log a certain quantity of bookings—
to then saying, ‘Wait a minute. We’re hiring such self-
motivated people, let’s see what happens if we have no quota.’
Incredibly, we found no difference in performance. So we
settled on letting the team focus on optimizing its own
problems—allocating a large enough fraction of the job to
problem solving—as opposed to just simply encouraging ‘robot

selling.’
While Jaswa decided against a performance-based sales quota,
he did nonetheless issue a monthly target for each
representative of $100,000 in booked revenue, which, given the
relatively predictable ‘freemium’ conversion rate, he calculated
by looking at past product conversion data and felt confident
assigning. 10 Jaswa was also sensitive to how compensation
could affect organizational culture throughout the rest of the
company:
We realized that in such an order-taking job with self-motivated
individuals, performance is really an hours-in/hours-out
formula. So I thought, ‘Does it make sense culturally to incent
one type of person to be like a slave while everyone else in the
organization embraces creativity and freedom?’ A rivalry is the
last thing you want in a place where you’re trying to create a
one-company culture. And so we decided flat compensation was
fundamentally a cultural decision, because we wanted
something that would scale over a 10-year horizon so as to
eventually accommodate tens of thousands of employees. Above
all else, we wanted to ensure that all functions within the
company held mutual respect for each other so as to avoid the
classic mistake of having smart, introverted engineers and hard
partying salespeople, where all of a sudden, a really terrible
tension arises where engineers don’t want to talk to salespeople.
For Jaswa, a large part of ensuring such cultural compatibility
rested on cultural fit in the hiring process and hands-on
onboarding to ensure all employees epitomized the same values.
As he explained, “We try to hammer into our employees a few
core values, over and over again. First, don’t make short-term
decisions—make long-term ones. Second, it’s team first here,
period. We have a zero tolerance policy with the individualistic
behavior that is often characteristic of other sales
organizations.” While every rep had the potential to make a

higher salary in sales-specific roles at other companies, Jaswa
believed Dropbox represented an opportunity to be a part of
something “bigger than themselves” at a unique moment in tech
history.
Hiring as a Natural Bottleneck
Throughout 2011, lead volume and customer demand continued
to grow at breakneck speed. Jaswa became concerned about
overexposing the product without adequate sales and support
functions. However, the company’s hiring parameters proved to
be so tight that it was virtually impossible to hire fast enough to
keep up with the growth of the business. As he struggled to find
sales talent that met the company’s hiring criteria, Jaswa found
that, on the account management team, each employee’s
customer load exceeded a few thousand customers per
individual. As he explained:
Our cofounder, Arash, still to this day interviews all hires. So
clearly there are some natural bottlenecks in place that
prevented us from hiring at the velocity that
10 This target only applied to representatives that responded to
inbound calls as opposed to account managers.
may at times be needed. So my message to the team was merely
to hire as fast as we could possibly find people that would meet
the cultural bars we set. If we could identify such individuals, I
figured we could simply free up a position for them.
A CHANGE IN TACTICS?
Throughout 2012, competitors began a campaign aimed at
convincing large corporate organizations that Dropbox’s
security features were inadequate. According to Jaswa:
The IT departments of many commercial accounts were sitting

there saying, ‘Oh my god, we’re now being told left, right, and
center, that Dropbox is not secure. And if a board document
leaks and I just sort of let this thing happen, I’m going to get
fired.’ And IT’s job above all else is to not get fired. So they
have everything to lose and nothing to gain. And so, while IT
departments recognized that Dropbox was valuable to employee
productivity, they also began paying for large rollouts of
competitors’ products that they deemed to be more secure than
Dropbox. This way, if a document did leak via Dropbox and the
CEO rang, the CIO could say ‘It’s not my fault. The employee
didn’t follow our IT procedures and process by using our
Dropbox-like product. Fire him/her, not me.’
Jaswa determined that the depositioning effort had the potential
to seriously tarnish the Dropbox brand, and thus ultimately
demanded a direct response. As he recalled:
The core Dropbox brand was getting impacted in the enterprise
market by all of these efforts, and we began to worry whether it
was too risky to continue going to market with our ‘happy-go-
lucky, you-have-to-come-and-find us’ approach with our
competition sowing the seeds of discontent by actively and
falsely positioning to IT that we stacked up poorly to them. It
began to feel like the whole IT community was moving against
us.
The depositioning effort made Jaswa begin to wonder whether a
more active approach was now required. Further, given that, in
many large enterprises, Dropbox use had reached considerably
higher levels with the product’s ongoing growth, Jaswa
wondered if the company had reached such a stage that it now
made sense to have a more high-touch sales process and to
journey more deliberately up the ‘enterprise sales food chain.’
After all, the exploding enterprise file-sharing market—
estimated by IDC to grow to $20 billion by 2015—presented an
awfully promising market segment to pursue more

assertively.11
After much consideration, Jaswa laid out two potential
alternatives, both that possessed considerable merits as well as
risks:
1) Preserve the status quo.
Jaswa could continue leaning into the goodwill and support of
the Dropbox user base to fuel organic growth within corporate
environments, both large and small. While his competitors’
efforts were troubling to Jaswa, Dropbox’s approach to date had
proceeded with widespread
11 Gerry Shih. “Dropbox Chases Corporate Customers and
Revenue.” Reuters. February 12, 2013.
This document is authorized for use only by Andres Suarez in
ENT 6006 Fall 2019 taught by Alexander Settles, University of
Florida from Aug 2019 to Dec 2019.
acclaim. Rather than departing from the preexisting
organization, Jaswa pondered whether he could merely continue
to add resources to the company’s sales functions in a way that
stayed true to the status quo. After all, Jaswa thought, why
make a change to something that had been met with such
success and which was still growing dramatically? As he noted:
When we looked beneath the hood of the public customers of
competitors, we made an interesting observation. We could see
we were still growing like crazy within these organizations—
like 35 percent growth in a large company in six months on top
of an already sizable user base, despite the fact that these
companies had made a big deal about deploying another product
after our competitors’ depositioning efforts.

We wondered whether he was making too much out of
competitors’ depositioning efforts. After all, the graves of
handfuls of great tech companies lay scattered throughout
Silicon Valley due to their efforts at trying to grow too quickly
and making their businesses increasingly complicated. Would a
change to the sales organization result in a similar fate for
Dropbox?
On the other hand, Jaswa was concerned that doing nothing
could result in a missed opportunity that would be difficult to
correct and provide a flank from which both current and future
competitors could compete. Moreover, he worried that, if such
an opening were presented to competitors, it would be difficult
or costly to correct.
2) An inside / outside, direct sales team.
Jaswa continued to deliberate whether the company had reached
a point where it now made sense to pursue the large enterprise
data opportunity more aggressively by complementing the
current inside sales efforts with a high-touch, direct sales force.
Did the business product require a team of aggressive sales
reps to proactively promote and sell the product, as other
enterprise software companies typically embraced? Jaswa
debated whether he could really dominate the market share of a
billion-person market, of which businesses represented a
sizeable chunk, without a direct sales force.
He looked to Salesforce.com, Google, and LinkedIn as analogs;
all three had created sophisticated sales organizations with
nearly a third of each company’s headcount allocated to sales.
Jaswa was eager to get “referenceable customers”—customers
with strong brand names and credibility who would be willing
to come out publicly and speak about their love for Dropbox—
that could be used to catalyze enterprise adoption of the

business product. Jaswa imagined only a direct sales force that
was actively customer facing would be able to achieve this level
of customer buy-in.
He envisioned that the potential direct sales opportunity would
be driven by current Dropbox utilization metrics within
enterprises. He could conduct a “cherry-picking strategy” and
target high potential accounts—those organizations with high
levels of current Dropbox users registered with corporate e-mail
addresses, in which the product’s goodwill had already
effectively created the sales opportunity. To Jaswa, such a
combination coupled certain positive attributes of the previous
“inside sales” structure with merits of “direct” sales, in that
reps would call on senior administrators directly, but only visit
the customer when absolutely necessary from “sales hubs”
where reps would be concentrated.
Such a sale would involve higher-level sales interactions—
typically at the CIO or head of IT level of the enterprise—and
would offer to “package up all of the organization’s usage” into
the convenient Dropbox for Teams platform. By being in front
of technical administrators at large enterprises and collaborating
with them, Jaswa felt he would be able to ensure that CIOs did
not ban access to Dropbox within enterprise environments.
While Jaswa didn’t feel many enterprises had arrived at such a
dramatic point, whereby they would be willing to shut down the
product, the potential existed for the tide to move in that
direction over the coming 12 to 36 months. By entering into a
dialogue with these administrators, Jaswa hoped to preemptively
mitigate such a risk.
While this effort would be costly and a significant shift in
course, he felt it would nonetheless enhance the product
experience and bolster its ability to touch customers throughout
all aspects of their lives. As Jaswa mused, ‘Google would have
done the same thing if enterprises needed to have control over

Google search, right?’ Given that documents were a critical
aspect of the Dropbox product, he wondered whether it would
make sense to support the proliferation of document sharing
even if it was unprofitable and served as a loss-leader for other
aspects of the product. That is, by proactively supporting the
product in large enterprise environments, Dropbox would ensure
that users had their entire worlds related to data in Dropbox,
which Jaswa thought was exactly what users were asking for. In
fact, while Jaswa had previously been cautious to receive
product feedback from IT organizations within enterprises,
perhaps the Dropbox product had reached a level of maturity
whereby sales could serve as a customer voice back into the
organization and enhance the product’s development?
Yet, pursuing such a strategy would require an altered thinking
in how salespeople would be hired and would require a different
management structure that had yet to be validated at such a
stage in the company’s history. He wondered if such changes to
the sales structure—and the ensuing adjustments required—
could negatively impact the product experience, company
culture and onboarding process. Given such risks and
challenges, Jaswa debated not only whether such an
organizational change was worthwhile, but if so, how he could
best structure such a sales division. While it would be nice to
have field representatives situated in close geographic
proximity to target enterprises, Jaswa recognized the economies
of scale presented by a hub-based organization in which sales
reps would be co-located and would travel to clients from
Dropbox’s large geographic hubs. Yet, even if Jaswa pursued a
hub-based sales model, he wondered whether to organize each
office by industry vertical, region, utilization level, or target
customer size.
Jaswa also fretted over the cultural repercussions that might
result from such an organizational change. After all, he
considered the tight-knit, team-oriented culture that the

company had successfully incubated to date as one of
Dropbox’s greatest and most difficult assets to replicate. Would
creating a new sales entity lead to competitive infighting within
the sales organization, or reverberate to other parts of the
company in a way that damaged Dropbox’s collaborative and
productive environment? Jaswa reflected on the stereotypically
aggressive and loud personality of a direct sales rep, and he
wondered what negative repercussions such cultural dissonance,
if present, could create. Did such a thing as a 'collaborative'
direct sales rep exist, and if so, he asked himself how he could
identify him/her?
Lastly, he deeply debated how to compensate different elements
of the sales organization so as to avoid muddling incentives
throughout the sales functions and the rest of the company at
large. For a direct sales role, Jaswa believed it would be
important to encourage direct reps to, “go out there
on their own.” However, as the company had only provided
fixed compensation to date, Jaswa questioned how direct sales
reps would respond to a fixed compensation structure, or
whether he would need to rather instate a variable-comp system.
The latter could serve as a source of considerable organizational
tension. The other “Inside” sales reps would likely not be
presented with such a compensation opportunity, and, hence,
Jaswa pondered whether a variable-comp system would create a
dysfunctional, “two-class” culture within the burgeoning sales
organization. Furthermore, as high-performing sales reps would
likely be rewarded with large financial benefits—which
generally was not the case for other high-performing roles at the
company—he questioned how other functions at the company
would respond, especially given the “engineering” culture upon
which Dropbox had been founded. Moreover, given the
customer-facing nature of a direct sales role, Jaswa believed
that maintaining the Dropbox brand with the outside corporate
world would be critical to preserving the ‘love’ that the product

had created on the consumer side of the business.
A litany of questions remained. How could he allocate sales
credit between the “inside” and direct sales teams, given that an
assist from direct sales would likely be instrumental to any
upselling and follow-on deals landed by the account
management function? Would he need sales engineers (i.e.,
sales reps tasked with providing technical support to
customers), or would the simplicity of the Dropbox product
obviate such a need? The list of considerations seemed endless,
and while Jaswa was open to a new generation of the sales
organization, the potential for mishaps and landmines daunted
him.
CONCLUSION
While Dropbox’s sales organization had fit the company, its
timing, and its needs quite well to date—and had proved itself
by the impressive growth of the company’s ‘freemium’ model—
Jaswa anxiously debated what a sales organization that focused
more specifically on commercial accounts would need to look
like given all the considerations at play. What additional hires
would be necessary? Would the compensation system have to
change, and if so, would he need to set sales targets and quotas?
Just as importantly, would any cultural reverberations manifest,
both within the sales team and throughout the rest of the
company? And if the sales organization were to become more
differentiated and segmented by function, what sort of training,
and management systems would need to be put in place?
Jaswa contemplated the best approach forward and wondered
how he could further develop sales at the company, all while
maintaining and bolstering the “Dropbox magic” and staying
consistent with the company’s culture that had proven so
powerful to date. The excitement of creating true business
history was invigorating, yet Jaswa’s nerves were tense as he

reflected on the old adage, “If it ain’t broken, don’t fix it.”
Exhibit 1
Growth Milestones of the Dropbox User Base
Source: Dropbox.
Exhibit 2
Bio – Sujay Jaswa, VP of Business at Dropbox
Sujay Jaswa is Vice President of Business at Dropbox, where he
is responsible for leading the company’s finance, sales and
business development activities. During his time at the
company, Dropbox has surpassed 100M users and is used in
95% of Fortune 500 companies. Prior to Dropbox, Sujay was a
Principal at New Enterprise Associates, where he sourced and
co-managed lead Series A investments in companies including
Playdom (Disney), Beachmint, and Huddler. Earlier, Sujay was
a Management Consultant at McKinsey & Company, an
Associate in Cisco Systems' Corporate Development group, and
Director of Business Development at CinemaNow.
Sujay received a B.A. in economics from Princeton University
and an M.B.A. from Harvard Business School.
Exhibit 3
The Emerging Market for File Synchronization and Sharing
Source: Gartner Research (February 2013).
Exhibit 4
Different Types of ‘Freemium’ Models
Source: Uzi Shmilovici, University of Chicago.

Exhibit 5
‘Freemium’ Model – Sample Economics
Source: Created by case writer for sole purpose of providing an
example.
Exhibit 6
The Dropbox ‘Freemium’ Product Offering
Source: Dropbox.
Exhibit 7
Dropbox For Teams – Product Features and Admin Console
Source: Dropbox.
Akinola 1
Annotated Bibliography
Oehlschlaeger, Fritz. "The Stoning of Mistress Hutchinson:
Meaning and Context in 'The Lottery'." Essays in Literature
15.2 (Fall 1988): 259-265. Rpt. in Contemporary Literary
Criticism. Ed. Roger Matuz and Cathy Falk. Vol. 60. Detroit:
Gale Research, 1990. Literature Resource Center. Web. 5 Oct.
2011.
In the above mentioned article, Mr. Oehlschlaeger explores the
meaning and purpose of one of the main characters in “The
Lottery” - Mrs. Hutchinson. Within Mr. Oeshlschlaeger’s
article he illustrates the purpose of Mrs. Hutchinson and how
she symbolized the theme of traditions versus morals. The
article not only explores the character’s purpose but it also
reveals what she symbolized to the village.

This source is helpful in explaining the difference between the
protagonist and the antagonist within “The Lottery.” It has also
been useful in identifying Mrs. Hutchinson’s role in the realm
of what her actions symbolized to the reactions of the villagers.
Schaub, Danielle. "Shirley Jackson's Use of Symbols in 'The
Lottery.'." Journal of the Short Story in English 14 (Spring
1990): 79-86. Rpt. in Twentieth-Century Literary Criticism. Ed.
Thomas J. Schoenberg and Lawrence J. Trudeau. Vol. 187.
Detroit: Gale, 2007. Literature Resource Center. Web. 5 Oct.
2011.
Mrs. Schaub reviews the different elements that are used to
enhance the enrichment of literature, by focusing on one
figurative language element -symbolism. As there are numerous
examples of symbolism used the in “The Lottery” it also reveals
the creation and purpose of the characters’ names. Danielle
Schuab identifies how symbolism was purposefully used to
allow the audience to be involved within the dramatic irony of
the short story.
This source will be very essential in finding how specific
symbols were used in “The Lottery” and how symbolism can
enhance the theme that is being used to reflect characters within
the short story.

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