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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)
Paul Graham:
Early and often
Joel Spolsky:
When it doesn’t
completely suck
(avoid “Marimba Phenomenon”)
When to Launch?
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
"[product] ended up turning all my Word docs
and half my Excel Spreadsheets into 0 byte
files. Needless to say, I am not happy."
From competitor’s support forum:
Learn early, learn often
Dropbox’s minimum viable product:
3 min screencast on Hacker News (Apr 07):
Lots of immediate, high-quality feedback
Simple landing page: capture
interest/email address
Private beta launch video  12,000 diggs;
beta waiting list jumps from 5,000 to 75,000
in 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 (Sep 2008): Time to get real
Public launch (Sep 2008): Time to get real
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
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
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
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 startup lessons learned

  • 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. Paul Graham: Early and often Joel Spolsky: When it doesn’t completely suck (avoid “Marimba Phenomenon”) When to Launch?
  • 6. 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. "[product] ended up turning all my Word docs and half my Excel Spreadsheets into 0 byte files. Needless to say, I am not happy." From competitor’s support forum:
  • 11. Dropbox’s minimum viable product: 3 min screencast on Hacker News (Apr 07): Lots of immediate, high-quality feedback
  • 12. Simple landing page: capture interest/email address
  • 13. Private beta launch video  12,000 diggs; beta waiting list jumps from 5,000 to 75,000 in 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 (Sep 2008): Time to get real
  • 17. Public launch (Sep 2008): Time to get real 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
  • 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
  • 20. Cost per acquisition: $233-$388 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 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