The Dropbox Comp
Ben Thompson (Hacker News):
Dropbox’s customer base, thanks to all those consumers, is over 500 million users (Dropbox announced 500 million signups last March, but explained in its S-1 that it had culled what were apparently ~100 million inactive accounts over the last year), while Box, as of last quarter, had only 57 million registered accounts. On the other hand, 17% of Box’s users had paid accounts; only 2% of Dropbox’s did. This contrast in efficiency gets at the biggest difference between the two companies: to whom they sell, and how they go about doing so.
Box sells to big companies using a traditional sales force; free accounts exist primarily to enable temporary collaboration with paid accounts, as well as trials. There is a self-serve option, but that’s not the point: Box notes in its financial filings that “Our marketing strategy also depends in part on persuading users who use the free version of our service to convince decision-makers to purchase and deploy our service within their organization”. In other words, when it comes to Box’s ideal customer, the CIO decides for everyone all at once.
For Dropbox, on the other hand, self-serve is the most important channel by far. The company brags that “We generate over 90% of our revenue from self-serve channels — users who purchase a subscription through our app or website.” Dropbox has a sales team, but as it notes in its S-1, the team “focuses on converting and consolidating these separate pockets of usage into a centralized deployment. Nearly all of our largest outbound deals originated as smaller self-serve deployments.”
After making the decision to roll its own infrastructure and reduce its dependence on Amazon Web Services, Dropbox reduced its operating costs by $74.6 million over the next two years, the company said in its S-1 statement Friday.
Previously: Dropbox Files Confidentially for IPO, Dropbox’s Exodus From the Amazon Cloud Empire.
Update (2018-03-01): Lisa Stromer (via Hacker News):
And today, we’re announcing a new partnership with Google Cloud that will bring Dropbox and G Suite users one step closer to a world where our work comes together.
