Dropbox's YC Application (S2007) - From MVP to $13B Company
Company Overview
Progress at Application
Founder
Drew Houston
Co-founder & CEOProgramming since age 5; startups since age 14; 1600 on SAT; started profitable online SAT prep company in college (accoladeprep.com)
No commitments, leaving current job to work full-time
Key Strengths
Dropbox's application exemplified clarity in problem identification, deep technical expertise, and strong founder-market fit.
Application Deep Dive
What is your company going to make?
Dropbox synchronizes files across your/your team's computers. It's much better than uploading or email, because it's automatic, integrated into Windows, and fits into the way you already work. There's also a web interface, and the files are securely backed up to Amazon S3. Dropbox is kind of like taking the best elements of subversion, trac and rsync and making them "just work" for the average individual or team. Hackers have access to these tools, but normal people don't. There are lots of interesting possible features. One is syncing Google Docs/Spreadsheets (or other office web apps) to local .doc and .xls files for offline access, which would be strategically important as few web apps deal with the offline problem.
Clear Value Proposition
Presents solution in terms of user benefits rather than technical features
Technical Depth
Shows deep understanding of technical stack while keeping explanation accessible
For each founder, please list: YC username; name; age; year, school, degree and subject for each degree; email address; personal url; and present employer and title.
dhouston; Drew Houston; 24; 2006, MIT, SB computer science; houston AT alum DOT (school i went to) DOT edu; --; Bit9, Inc (went full time to part time 1/07) - project lead/software engineer
Strong Technical Background
MIT CS degree and relevant work experience demonstrate technical capability
Please tell us in one or two sentences something about each founder that shows a high level of ability.
Drew - Programming since age 5; startups since age 14; 1600 on SAT; started profitable online SAT prep company in college (accoladeprep.com). For fun last summer reverse engineered the software on a number of poker sites and wrote a real-money playing poker bot (it was about break-even).
Early Achievement
Shows long history of technical and entrepreneurial accomplishments
What's new about what you're making?
Most small teams have a few basic needs: (1) team members need their important stuff in front of them wherever they are, (2) everyone needs to be working on the latest version of a given document (and ideally can track what's changed), (3) and team data needs to be protected from disaster. There are sync tools (e.g. beinsync, Foldershare), there are backup tools (Carbonite, Mozy), and there are web uploading/publishing tools (box.net, etc.), but there's no good integrated solution. Dropbox solves all these needs, and doesn't need configuration or babysitting. Put another way, it takes concepts that are proven winners from the dev community (version control, changelogs/trac, rsync, etc.) and puts them in a package that my little sister can figure out. At a higher level, online storage and local disks are big and cheap. But the internet links in between have been and will continue to be slow in comparison. In "the future", you won't have to move your data around manually. The concept that I'm most excited about is that the core technology in Dropbox -- continuous efficient sync with compression and binary diffs -- is what will get us there.
Problem Analysis
Breaks down complex problem into clear user needs
Vision
Shows both immediate solution and longer-term technological vision
What do you understand about your business that other companies in it just don't get?
Competing products work at the wrong layer of abstraction and/or force the user to constantly think and do things. The "online disk drive" abstraction sucks, because you can't work offline and the OS support is extremely brittle. Anything that depends on manual emailing/uploading (i.e. anything web-based) is a non-starter, because it's basically doing version control in your head. But virtually all competing services involve one or the other. With Dropbox, you hit "Save", as you normally would, and everything just works, even with large files (thanks to binary diffs).
Core Insight
Identifies fundamental UX problems with existing solutions
What are people forced to do now because what you plan to make doesn't exist yet?
Email themselves attachments. Upload stuff to online storage sites or use online drives like Xdrive, which don't work on planes. Carry around USB drives, which can be lost, stolen, or break. Waste time revising the wrong versions of given documents, resulting in Frankendocuments that contain some changes but lose others.
Pain Point Analysis
Lists specific user workarounds and their problems
How will you make money?
The current plan is a freemium approach, where we give away free 1GB accounts and charge for additional storage (maybe ~$5/mo or less for 10GB for individuals and team plans that start at maybe $20/mo.). It's hard to get consumers to pay for things, but fortunately small/medium businesses already pay for solutions that are subsets of what Dropbox does and are harder to use. There will be tiered pricing for business accounts (upper tiers will retain more older versions of documents, have branded extranets for secure file sharing with clients/partners, etc., and an 'enterprise' plan that features, well, a really high price.)
Clear Revenue Model
Well-thought-out freemium strategy with specific pricing tiers
Market Segmentation
Identifies different user segments and their willingness to pay
Who are your competitors, and who might become competitors? Who do you fear most?
Carbonite and Mozy do a good job with hassle-free backup, and a move into sync would make sense. Sharpcast (venture funded) announced a similar app called Hummingbird, but they're taking an extraordinarily difficult approach involving NT kernel drivers. Google's coming out with GDrive at some point. Microsoft's Groove does sync and is part of Office 2007, but is very heavyweight and doesn't include any of the web stuff or backup.
Competitive Analysis
Shows understanding of both current and potential future competition
How long will it take before you have a prototype? A beta? A version you can charge for?
Prototype - done in Feb. Version I can charge for: 8 weeks maybe?
Development Progress
Clear timeline with working prototype already complete
Which companies would be most likely to buy you?
Google/MS/Yahoo are all acutely interested in this general space. Google announced GDrive/"Platypus" a long time ago but the release date is uncertain. MS announced Live Drive and bought Foldershare in '05 which does a subset of what Dropbox does. Iron Mountain, Carbonite or Mozy or anyone else dealing with backup for SMBs could also be interested.
Exit Strategy
Identifies multiple potential acquirers with clear rationale
What might go wrong?
Google might finally unleash GDrive and steal a lot of Dropbox's thunder (especially if this takes place before launch.) In general, the online storage space is extremely noisy, so being marginally better isn't good enough; there has to be a leap in value worthy of writing/blogging/telling friends about. I'll need to bring on cofounder(s) and build a team, which takes time. Other competitors are much better funded; we might need to raise working capital to accelerate growth.
Risk Assessment
Comprehensive analysis of potential challenges and mitigation strategies
If you've already started working on it, how long have you been working and how many lines of code have you written?
3 months part time. About ~5KLOC client and ~2KLOC server of python, C++, Cheetah templates, installer scripts, etc.
Development Metrics
Specific progress metrics showing substantial development