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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


•...
Some context
• 100,000  many millions of users in 18
  months since launch
• No advertising spend
• Hostile environment: ...
How we applied lean startup
    principles at Dropbox

(sometimes on purpose, sometimes by accident)
When to Launch?


 Paul Graham:        Joel Spolsky:
Early and often     When it doesn’t
                    completely su...
2006: Dozens and dozens of
2006: Dozens and dozens of
  cloud storage companies
  cloud storage companies
VC: “There are a million
    cloud storage startups!”

Drew: “Do you use any of them?”

           VC: “No”

           Dr...
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 ...
Learn early, learn often
Dropbox’s minimum viable product:
   Dropbox’s minimum viable product:
3 min screencast on Hacker News (Apr 07):
3 min scr...
Simple landing page: capture interest/email
Simple landing page: capture interest/email
                 address
         ...
Private beta launch video  12,000 diggs;
  Private beta launch video  12,000 diggs;
beta waiting list jumps from 5,000 t...
What we learned
• Biggest risk: making something no one
  wants
• Not launching  painful, but not learning 
  fatal
• Pu...
When “best practices” aren’t best
Public launch (Sep 2008): Time to get real
Public launch (Sep 2008): Time to get real
Public launch (Sep 2008): Time to get real
  Public launch (Sep 2008): Time to get real




     Our Web 2.0 Marketing Pla...
Experiment: Paid search
• Hired experienced SEM & affiliate marketing
  guy ($$)
• Picked out keywords, made landing pages...
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 s...
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...
What we learned
• Mostly ignored (or woefully mishandled):
  – hiring non-engineers
  – mainstream PR
  – traditional mess...
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
  thems...
Typical Dropbox User
Steve Blank & Market Type

•Existing Market
•Resegmented
 Market
•New Market

•Marketing tactics for one market
 type fail...
New strategy: encourage WOM, viral
• Give users better tools to spread the love
• Referral program w/ 2-sided incentive
  ...
Trailing 30 days (Apr 2010) :: users sent
Trailing 30 days (Apr 2010) users sent
     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 an...
Wrapping up
• Learn early, learn often
• Best practices aren’t always best
• Know your market type & how
  your product fi...
Thank you!

 Questions?

@drewhouston
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Dropbox: Building Business Through Lean Startup Principles Slide 1 Dropbox: Building Business Through Lean Startup Principles Slide 2 Dropbox: Building Business Through Lean Startup Principles Slide 3 Dropbox: Building Business Through Lean Startup Principles Slide 4 Dropbox: Building Business Through Lean Startup Principles Slide 5 Dropbox: Building Business Through Lean Startup Principles Slide 6 Dropbox: Building Business Through Lean Startup Principles Slide 7 Dropbox: Building Business Through Lean Startup Principles Slide 8 Dropbox: Building Business Through Lean Startup Principles Slide 9 Dropbox: Building Business Through Lean Startup Principles Slide 10 Dropbox: Building Business Through Lean Startup Principles Slide 11 Dropbox: Building Business Through Lean Startup Principles Slide 12 Dropbox: Building Business Through Lean Startup Principles Slide 13 Dropbox: Building Business Through Lean Startup Principles Slide 14 Dropbox: Building Business Through Lean Startup Principles Slide 15 Dropbox: Building Business Through Lean Startup Principles Slide 16 Dropbox: Building Business Through Lean Startup Principles Slide 17 Dropbox: Building Business Through Lean Startup Principles Slide 18 Dropbox: Building Business Through Lean Startup Principles Slide 19 Dropbox: Building Business Through Lean Startup Principles Slide 20 Dropbox: Building Business Through Lean Startup Principles Slide 21 Dropbox: Building Business Through Lean Startup Principles Slide 22 Dropbox: Building Business Through Lean Startup Principles Slide 23 Dropbox: Building Business Through Lean Startup Principles Slide 24 Dropbox: Building Business Through Lean Startup Principles Slide 25 Dropbox: Building Business Through Lean Startup Principles Slide 26 Dropbox: Building Business Through Lean Startup Principles Slide 27 Dropbox: Building Business Through Lean Startup Principles Slide 28 Dropbox: Building Business Through Lean Startup Principles Slide 29 Dropbox: Building Business Through Lean Startup Principles Slide 30 Dropbox: Building Business Through Lean Startup Principles Slide 31 Dropbox: Building Business Through Lean Startup Principles Slide 32 Dropbox: Building Business Through Lean Startup Principles Slide 33 Dropbox: Building Business Through Lean Startup Principles Slide 34
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A Deck by Drew Houston from Dropbox explaining how Dropbox incorporated Lean Startup Principles in building their company. A great primer on how dropbox executed their startup.

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Dropbox: Building Business Through Lean Startup Principles

  1. 1. Startup Lessons Learned Drew Houston @drewhouston
  2. 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. 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. 4. How we applied lean startup principles at Dropbox (sometimes on purpose, sometimes by accident)
  5. 5. When to Launch? Paul Graham: Joel Spolsky: Early and often When it doesn’t completely suck (avoid “Marimba Phenomenon”)
  6. 6. 2006: Dozens and dozens of 2006: Dozens and dozens of cloud storage companies cloud storage companies
  7. 7. VC: “There are a million cloud storage startups!” Drew: “Do you use any of them?” VC: “No” Drew: “…”
  8. 8. Building a bulletproof, scalable, cross-platform cloud storage architecture is hard
  9. 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."
  10. 10. Learn early, learn often
  11. 11. Dropbox’s minimum viable product: Dropbox’s minimum viable product: 3 min screencast on Hacker News (Apr 07): 3 min screencast on Hacker News (Apr 07): Lots of immediate, high-quality feedback Lots of immediate, high-quality feedback
  12. 12. Simple landing page: capture interest/email Simple landing page: capture interest/email address address
  13. 13. Private beta launch video  12,000 diggs; Private beta launch video  12,000 diggs; beta waiting list jumps from 5,000 to 75,000 in beta waiting list jumps from 5,000 to 75,000 in one day (Mar 2008) one day (Mar 2008)
  14. 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. 15. When “best practices” aren’t best
  16. 16. Public launch (Sep 2008): Time to get real Public launch (Sep 2008): Time to get real
  17. 17. Public launch (Sep 2008): Time to get real Public launch (Sep 2008): Time to get real Our Web 2.0 Marketing Plan Our Web 2.0 Marketing Plan •• Big launch at TechCrunch50 Big launch at TechCrunch50 •• Buy some AdWords Buy some AdWords •• Hire, um, a PR firm, or a VP of Marketing, or Hire, um, a PR firm, or a VP of Marketing, or something something
  18. 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. 19. Cost per acquisition: $233-$388 Cost per acquisition: $233-$388
  20. 20. Cost per acquisition: $233-$388 Cost per acquisition: $233-$388 For a $99 product. Fail. For a $99 product. Fail.
  21. 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. 22. But we were still doing well…? • Reached 1mm users 7 months after launch • Beloved by our community
  23. 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. 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. 25. Fourteen Months to the Epiphany
  26. 26. Why were conventional techniques failing, yet we were still succeeding?
  27. 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
  28. 28. Typical Dropbox User
  29. 29. Steve Blank & Market Type •Existing Market •Resegmented Market •New Market •Marketing tactics for one market type fail horribly in others
  30. 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. 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. 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. 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. 34. Thank you! Questions? @drewhouston
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A Deck by Drew Houston from Dropbox explaining how Dropbox incorporated Lean Startup Principles in building their company. A great primer on how dropbox executed their startup.

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