Nation & World

Dropbox shows it's still possible to defy giants

Company has focused its services, strategy

Bloomberg

Drew Houston (center), chief executive officer and co-founder of Dropbox, and Arash Ferdowsi (center right), co-founder of Dropbox, are shown during the company’s initial public offering at the Nasdaq MarketSite in New York on March 23.
Bloomberg Drew Houston (center), chief executive officer and co-founder of Dropbox, and Arash Ferdowsi (center right), co-founder of Dropbox, are shown during the company’s initial public offering at the Nasdaq MarketSite in New York on March 23.

In the age of the tech giants, start-ups face daunting odds. Through aggressive acquisitions, blatant mimicking of smaller rivals, and the built-in advantages of their user networks and internet infrastructure, tech titans rule the scene.

But at least in the case of Dropbox, an online file-sharing company, it’s still possible to defy them.

During its market debut last month, Dropbox’s value leapt nearly 40 percent, a jolt of optimism that arrived in the middle of a tech industry backlash.

The success of Dropbox’s initial public offering came despite facing big-name, multibillion-dollar competitors, such as Google, Microsoft, Amazon.com and Apple.

Dropbox’s stock is up almost 50 percent from its IPO price.

But beyond the company’s public market splash, experts say San Francisco-based Dropbox effectively can compete with much larger, dominant tech companies because of its focused strategy and distinct services, its ease of use and the customer loyalty it has built up.

Founded in 2007, the same year that Apple released the iPhone, Dropbox became a compelling alternative to do-it-yourself file storage. For many people at the dawn of the mobile era, that process was cumbersome and restrictive, as anyone who has tried to email themselves dozens of vacation pictures or frantically searched for a lost thumb drive can attest.

In its filings with the U.S. Securities and Exchange Commission, Dropbox phrased its foundational aspirations this way: “Life would be a lot better if everyone could access their most important information any time from any device.”

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Dropbox’s business relies on selling file storage subscriptions to individuals and teams within companies. Users can save text documents, pictures, music and other types of files to Dropbox’s system, which makes that material accessible across their devices.

People can also share stored information with others. The basic version of Dropbox is free, but paid subscriptions, which start at $9.99 a month, offer additional features and more space to save files.

More than 500 million people have registered to use Dropbox. But only a fraction of them, 11 million, pay for it.

According to the SEC filings, Dropbox generated $1.1 billion in revenue last year, up 31 percent from 2016.

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