Lean Startup in Dropbox

Authors: Tomasz Soroka

05.07.2016

About Dropbox probably heard most of you - If someone has not heard - I can only recommend it as really cool and useful tool for storing documents in the cloud and sharing them with others.


I will describe today how the creators of Dropbox were using  Lean Startup methodology in process of building a Dropbox tool.

In times when Dropbox started, the world was already at least a few prodducts to store documents in the cloud - it was the year 2006 :-)




This is what the authors of Dropbox pointed out, was a problem that ran through most of these solutions - so build a scalable architecture that allows storage in the cloud is a difficult task - Dropbox founders had a background MIT'owy and gave them an advantage over the competition (Unfair Advantage) .

The competition was suffering with  such problems as this one - a quote taken from the forum of competition of Dropbox in the 2006:


"[product] ended up turning all my Word docs and half my Excel Spreadsheets into 0 byte files. Needless to say, I am not happy."



Simple conclusion - It's not so easy to build a solution that does not eat your  files - such problem disqualifies any solution.


The authors Dropbox done their MVP (Minimal Viable Product), which was a short presentation shown on Hacker News in April 2007. This presentation on various forums, met with a great response:




As part of the works on solution they prepared a Landing Page:



We do not spend money, but check whether our product is the demand? You say that it is impossible? Creative guys in  Dropbox did it - using the service digg.





The idea of creators of Dropbox was to put on the  digg website a  video that showed the working solution - the effect - over 12,000 diggs'ów, the number of people waiting on a beta version - reported that their email has grown from 5,000 to 75,000 in one day (around March 2008 ) - without spending money on advertising, PR, etc. :-) - just a matter of need and ingenuity :-)




We allowed ourselves to create a Lean Canvas how could look like in those days, the idea for Dropbox:






Lean Canvas


PROBLEM

  • There is no convenient solution enabling people to work together on common documents over the Internet
  • Problems with the transmission of large files via the Internet
  • Problems with the exchange of data between computers -eg computer at work and at home




CUSTOMER SEGMENTS


  • Small and medium-sized companies do not have intranet systems
  • Individuals working on more than one computer
  • In particular, early adopters - people who use other file sharing solutions (eg. Google Docs)



SOLUTION

  • An application running in the background, detecting changes in the documents
  • Public folder allows you to forward the selected person of a simple link to a file


UVP 

  • Throw away your USB drive

 

UNFAIR ADVANTAGE

  • Technical knowledge - MIT

  

KEY METRICS

  • The amount of shared data
  • The number of invitations sent

 

CHANNELS

  • Viral Marketing
  • Blog

 

COST STRUCTURE

  • Hosting
  • Salaries
  • profitability after 700 users

 

REVENUE STREAMS

  • 14 day trial



Of course Lean Canvas is only our attempt to read how it could look like, but the occasion is a fun lesson to practice creating LC - for running a successful businesses, you can see that the creation of LC is not that hard.



What creators of Dropbox learned without spending large amounts of money?

  • the biggest threat is to create a product for which there is no demand - digg helped convince them that in their case the probability of this is negligible (high interest) 
  • the idea itself is worth $ 1 - there is nothing to be afraid that someone will copy it to us - value is the performance of the idea, and not just have it - an example of the many competing services, which at that time were already on the market 
  • launch an application that is not over is a difficult task - it is difficult to overcome the psychological barrier - are you sure people will want to use it, since it is not ready. No execution causes that we do not have feedback, which is critical 
  • critical is the targeting of early adopters, so as to establish a common understanding of the users, so as to start a dialogue, so that we get as much feedback from potential users 



Dropbox in beta version




Summary

A Dropbox is a very nice example of this how services should be built in proper way. It works for startup as well as for solutions used inside big companies and even in projects where many this is known -such model like Customer Development or Lean startup can help.