Dropbox: 25 million users and counting

April 18, 2011: 10:00 AM ET

The popular start-up says it grew more than 500% in 15 months. How's that for viral effectiveness? 

FORTUNE -- As many in Silicon Valley know, very few start-ups succeed, and even if they do, even fewer stumble upon the kind of growth Dropbox has in such little time. But since January 2010, CEO Drew Houston and CTO Arash Ferdowsi's file-syncing and sharing service has exploded, from 4 million to 25 million, with 200 million files now saved daily, despite having spent zero dollars on advertising. According to Houston, it's all thanks to word of mouth: 30% of new sign-ups now come via its user referral program, where users get a free, additional 250 MB for each successful referral, while 20% are due to its easy file-sharing features. And despite Dropbox's focus on consumers, it counts hundreds of thousands of businesses among its userbase now, including United Airlines (UAUA), Red Bull, and Tishman Construction, the construction manager for One World Trade Center in New York City. 

Houston dropped by the Fortune offices last week to discuss where his company is headed. Here's a recap:

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When you're a start-up like Dropbox with rapid growth and fiercely loyal userbase, it's all right to think big. Certainly that's how CEO Drew Houston is thinking now, as he figures out how to take the four-year-old file-syncing and sharing start-up mainstream.

In case you're not already familiar with Dropbox -- and as more tech-savvy Fortune readers pointed out after our recent story, who isn't? -- here's a quick refresher. Houston, an MIT grad, co-founded the Y Combinator start-up in 2007 with fellow student Arash Ferdowsi, with the goal of letting users store digital files -- photos, personal documents, music -- in an electronic locker accessible and shareable over any Internet-connected device. The key was keeping things simple: download the utility, create an account and folder, and go.

Dropbox isn't the first product of its kind, and there's no shortage of consumer-facing contenders like PogoPlug and the SugarSync, but it's a service that many in -- and increasingly outside -- Silicon Valley seem to swear by. Meanwhile, the company claims more than 80% of Fortune 100 companies use Dropbox, either officially or, ahem, not.

For Houston, who visited Fortune last week, its rapid growth and buzz-worthiness surprises even him. The 45-plus team regularly hears tales of how Dropbox improved their lives or saved them in particular instances.

Houston likes to bring up one story from an astronomer. Instead of having to spend three hours each morning transferring images from the telescope to staffers among Finland, Boston and New Mexico, his team of star watchers use Dropbox to keep large photo images from their telescope synced among locations at all times.

"For them, Dropbox is the difference between starting work at 9 AM versus 12 PM," Houston says.

With testimonials like that in tow, he's looking into how to integrate Dropbox into more products.

"In 2007, there was no iPhone, no iPad, but now today, normal people are taking pictures with their phone and putting things on their iPads or on their Facebook," he says. "Tomorrow, it's going to be your TV, and your camera and your car. There's just going to be billions of things with on-switches coming out over the next several years that are going to be shipping over the next several years."

Houston envisions a fundamental shift, one that's starting to happen already, where all your devices are seamlessly connected portals to content in the cloud. (One need look no further than Google's (GOOG) upcoming Chrome OS notebooks or Apple's (AAPL) snazzy, but storage-poor MacBook Air for evidence of what's coming down the pike.) So the Dropbox of today, a simple file-syncing and cloud data repository -- becomes a service that links all your devices and web services together, whether they're on the Web, in your living room, your pocket, or driveway.

"The kinds of things we're building are going to make the hard drive go away," says Houston. Thinking way down the road, he continues, "you might have 20 terabytes of stuff, but it'll be OK that you [only] have a 200 gigabyte SSD [solid state disk drive]. We'll just make it work. It's eliminating those basic limitations and frustrations that a couple billion people have with using their computers and helping people cope with the increasing complexity of these things, that silent kind of pain point."

Houston and crew are also looking into web services integration: a Dropbox button integrated into third-party services like social sharing-friendly photo publishing tool Shutterfly. Clicking the Dropbox button would in theory quickly allow the user to access photos stored in their accounts and cut down on unnecessary upload times. Mastering that level of synergy is when the company believes it'll become a true platform.

To achieve that, Dropbox plans to double its staff this year, and though Houston won't say as much, he implies that more funding from venture capitalists is inevitable. ("We're basically replacing tens of millions of hard drives and replacing that kind of infrastructure will require capital," he concedes.)

Ambitious? Sure. But as any entrepreneur will tell you, figuring out how to capitalize on success like Dropbox's is the best kind of problem to have.

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About This Author
JP Mangalindan
JP Mangalindan
Writer, Fortune

JP Mangalindan is a San Francisco-based writer at Fortune, covering Silicon Valley. Since joining in 2010, he has written on a wide array of topics, from the turnaround of eBay to the evolution of net neutrality. A graduate of Fordham University, Mangalindan has also written for GQ, Popular Science, and Entertainment Weekly.

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