CASE ANALYSIS

CASE ANALYSIS BY: DINKER VAID

Dropbox is a venture-backed Silicon Valley startup, founded in April 2007 byDrew Houston and Arash Ferdowsi, officially launched in September 2008.It provides online storage and backup services to millions of customers using a"freemium" (free + premium offers) business model. The case recountsDropbox's history from conception through mid-2010, when founder/CEODrew Houston must make strategic decisions about new product features, howto target enterprise customers, and whether to pursue distribution deals withsmartphone manufacturers.

Later on they launched BETA version for limited group of users who registeredthrough a simple landing page. They used guerrilla marketing, onlinemarketing, viral marketing.

Houston wondered if dropbox should continues its strategy of offering a singleproducts for all users or whether it should segment its diverse and growinguser base, perhaps by creating a “professional” version that targeted the“power” user or a separate product for small/medium- sized business.

DROP BOX: “ IT JUST WORKS ”

Founded inApril 2007 by

Drew Houston& Arash

Ferdowski.Official launch

in 2008

By 2010 a total capital of$257.2 million is raised

Dropbox hires 6MIT computerscience majors

but not anybusinessmanagers

An analytics engineer washired to improve analytics

and optimize customeracquisition efforts

PROBLEMS / KEY ISSUES1: Houston’s dilemma was to whether continue Dropbox’s strategy of offeringa single product for all users or whether it should segment its diverse andgrowing user base.

2: Customers wanted a service which enables the synching of files outside

the Dropbox folder i.e. My Documents which Dropbox were deliberately

avoiding to implement.

3: The other challenge was to find whether or not the users shared files with

others, and whether or not the users used the application for business.

4: Hiring problem: getting the good employee is not a easy task, getting a

wrong one might kill your business, Dropbox hires 6 MIT computer science

majors, but not much luck with product or business manager hires.

5: Analytics and developers problem: An Analytics Engineer was hired to

improve analytics and optimize customer acquisition efforts.

6: Problem in partnership: Partnering with a PC security software is discussed

and an SVP disappoints Houston when he wants to bury the brand.

They decide they need a VP of business development soon.

Dropbox synchronizes files across your computers and your team’s computers. It’s better than email, uploading or a Windows file share.

It’s seamlessly integrated into Windows, but there’s also a web interface. It also stores past versions of documents, handles huge files gracefully, and works both through firewall and offline.

For dropbox it was vey challenging to penetrate in the market as it already had so many competitors, and few of them are the leader such as Mozy, carbonite. But dropbox had have its unique features which none of them have, i.e it was somehow easy to enter in the market.

Launching the votebox and apple and android apps was successful and performing very nicely.

From their balance sheet which is provide in the case itself they are performing in a decent way getting the gross profit of $7,000 within one year, and they are 80% successful in retention rate.

It implies a $ 10-15million revenue runby mid 2010, whichproves profitable

Dropbox had 4million users inApril 2010 with2.8 million directreferral invites

It is commendablethat they have a$240 millionrevenue with only70 staff membersin 2011

Houston raised$257.2 millioncapital frominvestors

Recommendation/ Conclusions1: Dropbox have a sign-up driven home page, free storage for referrals and free storage for connecting with social media so, drop box should offer a small –medium business version.

2: They should survive their current users and request feedback to see if this service is useful to their companies, Except this they should try to tie up with bigger data based companies and online portals too.

3: A dedicated Google analytics team can solve the problem of finding whether or not the users shared files with others, and whether or not the users used the application for business.

4: Dropbox should segment its diverse and growing user base as per usage rate.

5: Houston’s idea of partnering with large manufacturers of tabletsand smartphone by pre installing the Dropbox service in their devicesshould be implemented as it can help Dropbox to capture the whole ofsmartphone and tablet market.

6: They should try to tie up with bigger data based companies andonline portals too.

7: To compete with rivals like Carbonite and Mozy, Dropbox have torethink on their pricing and their freemium business model and offersuitable and flexible service to cater the demands of the customers.

8: Overall this has great future after having so many challengesdropbox is doing very well, there are some requirement of internalchange and like employees and strategies.