Dropbox and the failures behind it

Drew Houston says he has always been interested in computer programming

In Silicon Valley it is said failure is a badge of honour - and practically a prerequisite for success.

And so it has proved for Drew Houston, the latest high-profile entrant into Silicon Valley's billionaire club.

Mr Houston, 31, co-founded Dropbox - an online file-sharing service - with Arash Ferdowsi in 2007. The company, founded just seven years ago, is now estimated to be worth an eye-watering $10bn (£5.9bn).

But he had several failures before this success.

While studying computer science at the prestigious Massachusetts Institute of Technology (MIT) he happened on the idea of an automated gambling "bot", a computer programme designed to play real-money hands of online poker instead of humans.

However Mr Houston's "bot" kept malfunctioning.

online poker game Drew Houston tried to create a "bot" to play online poker while he was at university

Start Quote

Make something people want. When you look at why companies fail it's normally because they don't have enough customers”

End Quote Drew Houston

"There would be bugs and it would fold my hand. It was an automated way of losing all your money," he laughs.

The entrepreneur's first serious idea was an online course to help students prepare for their college entrance exams.

Three years of work on that project proved fruitless, but his frustrations collaborating with colleagues proved the spark of inspiration for Dropbox.

"I was on a bus from Boston to New York and I had a big list of things I wanted to get done. I fished around in my pockets only to find out I'd forgotten my thumb drive," he explains.

"I was like: 'I never want to have this problem again,'" he says.

With four hours to kill and not a lot else to do, he decided to start writing some code, and so Dropbox - an online cloud storage solution for files - was born.

Drew Houston Drew Houston took to computers from an early age

Initially investors were lukewarm - as there were many other cloud-based storage solutions.

"But I would ask them: 'Do you use any of them?' And invariably they would say no," he says.

Seven years later, and Dropbox has proved a hit, recently reaching 300 million users - an audience that he says he could never have had with his previous ideas.

And that, he says, is part of the key to success. "Make something people want. That sounds so obvious, but when you look at why companies fail it's normally because they don't have enough customers."

Timing clearly played a part too - Mr Houston launched the firm at a time when users were migrating towards multiple devices, from netbooks to mobile phones (and later tablets).

Dropbox pic Dropbox now has 300 million users

Once you've developed a great user-friendly product, Mr Houston believes the other essential ingredient is good distribution.

"With Dropbox people would tell their friends about it and collaborate. So when you go into work and work on a project with colleagues you recruit them in essence to become Dropbox users because you're all working on a project together."

Of course built into the very idea of entrepreneurship is the notion of risk. But Mr Houston believes that is overstated.

New Entrepreneurs

Dropbox

  • HQ: San Francisco, California
  • Year founded: 2007
  • Number of employees: 700
  • Ownership: Private

"One misconception is that entrepreneurs love risk. Actually we all want things to go as we expect. What you need is a blind optimism and a tolerance for uncertainty."

He says that when he started the company he would have been intimidated by having 700 employees and the scope of the operation that Dropbox has today.

"The good news is it happens one day at a time," he says.

"One of the great things about moving to Silicon Valley is that you're surrounded by all these people who've done it before. This place is an assembly line that takes a couple of twenty-somethings and walks you through everything you need to learn.

"What you really need is just a commitment to learning and putting yourself on the edge of your comfort zone to develop all these skills that otherwise don't come naturally."

And about being inducted into the billionaires club?

"It's very disappointing actually," he laughs. "It would be great if there was just a happiness switch which turns on. But of course I feel really fortunate and more and more I and other people at Dropbox are going to spend more time thinking about how to give back."

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    VIRGIN MONEY FLOAT 08:03: Kamal Ahmed BBC Business editor

    BBC Business Editor Kamal Ahmed says: "Virgin Money's announcement of its intention to sell a stake on the London stock exchange brings to an end another chapter in the sorry story of Northern Rock. The functioning bits of the bank, which spectacularly collapsed in 2007 and was bailed out in February 2008 with £1.4bn of tax payers' money, were bought by Sir Richard Branson and US investor WL Ross for £747m in 2011."

     
  2.  
    MARKET REPORT 07:50:
    Share price board, Tokyo

    It has been a shaky session for shares in Tokyo, the Nikkei 225 index closed 2.6% lower at 15,661. The Hang Seng in Hong Kong, which has fallen more than 9% since hitting a six-month peak in September amid pro-democracy protests, is closed for a public holiday.

     
  3.  
    Via Twitter BBC Radio 4

    tweets: "'Downgrade could follow Brexit' says Standard and Poor's Mortiz Kraemer @EthicalMan"

     
  4.  
    HEADLINES
     
  5.  
    LORD HILL 07:33: BBC Radio 4
    Lord Hill

    "He showed no grasp of the issues," is the verdict of Phillippe Lamberts, co-chair of the Greens in the EU parliament, on Lord Hill's appearance before European members of parliament on Wednesday. "Behind his charm there was apparently little knowledge of the subject matter at hand," Mr Lamberts said on Today.

     
  6.  
    VIRGIN MONEY FLOAT 07:26:

    So, will ordinary folk be able to buy shares in the Virgin Money offering? Not until they start trading. The offer is open to "certain institutional investors". Although they are giving staff £1,000 of shares apiece.

     
  7.  
    VIRGIN MONEY FLOAT 07:11:

    Virgin Money has announced details of its share sale. The firm hopes to raise £150m from the sale of about 25% of the bank, it said. If the sale is successful the Treasury will receive £50m, which was part of the deal when Virgin Money took over assets from Northern Rock.

     
  8.  
    ECB MEETING 06:57: BBC Radio 4
    Eurozone sign

    The European Central Bank (ECB) hosts its monthly meeting in Naples today, amid worries that the eurozone economy is deteriorating. "The ECB can buy time for governments to act... but it cannot generate lasting growth," says Moritz Kraemer from Standard & Poor's on Today. He says Europe needs to reduce the debt load of households, firms and governments.

     
  9.  
    PIMCO EXODUS 06:48: BBC Radio 4

    Investors have taken £14.5bn out of the investment firm Pimco since its founder Bill Gross resigned last week. Andrew Balls, chief global investment office at Pimco, says "it's calmed down very quickly though". The departure was not a huge surprise, he reckons. Mr Balls reminds listeners to Today that Mr Gross was 70 "and wouldn't be there [Pimco] for ever". Ouch.

     
  10.  
    PARIS MOTOR SHOW 06:40: BBC World News
    Rolls Royce chief executive, Torsten Muller-Otvos

    (Imagine a German accent) "We are on the roll ja," says the German chief executive of Rolls Royce Motor Cars, Torsten Muller-Otvos on World Business Report. He expects the company to have another record year. He is standing in front of a limited edition Rolls-Royce Phantom, only 20 were made and, sorry readers, they are all sold out.

     
  11.  
    SHARING ECONOMY 06:31: Radio 5 live

    What is the sharing economy? "The sharing economy defines the assets you own and skills you have" says Debbie Wosskow, chief executive of Love Home Swap on 5 live. (Are we clear now?) Customers need protection, but regulation needs to keep up with this emerging market, she says. She's writing a review into the sharing economy.

     
  12.  
    CONSERVATIVE CONFERENCE 06:17: Radio 5 live

    Lord Digby Jones, the crossbench peer and businessman is on 5 live after his appearance at the Conservative Party conference. He is worried people think money grows on trees, rather than coming from business, but also says business should mend its image: "I don't want chief executives paying themselves big bonuses [right now]. They may deserve it, but it sets a lousy example."

     
  13.  
    ARGENTINA 06:13: Radio 5 live
    President Cristina Fernandez

    The boss of Argentina's central bank has resigned. Juan Carlos Fabrega had been calling the government to tackle inflation and rein in spending. That created conflict with the nation's economy minister. The BBC's South American Business Reporter Katy Watson says the resignation doesn't make President Cristina Fernandez de Kirchner look good either.

     
  14.  
    PARIS MOTOR SHOW 06:07: Radio 5 live

    Jurgen Stackman, chairman of carmaker Seat is on Radio 5 live. Ten years ago electric vehicles were seen as the future, so what went wrong? Industry watchers were very optimistic about the speed of people picking them up, he says. Electric cars still have mileage and range limitations and families with one car don't want to rely on an electric car, he adds.

     
  15.  
    US SHARES SLIDE 06:00: BBC World News
    New York Stock Exchange

    There were sharp losses for US shares overnight. On World Business Report, Michael Hewson, chief analyst at CMC Markets reminds us that the US market has had a good run recently. But there is not much to be positive about at the moment, he says. The recent economic data from China and Japan has not been great. Traders are also preparing for higher interest rates in the US, Mr Hewson says.

     
  16.  
    06:00: Howard Mustoe Business reporter

    Good morning. You can get in touch via email bizlivepage@bbc.co.uk and on twitter @BBCBusiness

     
  17.  
    06:00: Ben Morris Business Reporter

    There were sharp losses for US shares overnight, so it will be interesting to see how Europe responds to that later. Plus we'll have reports from the Paris Motor Show. It should be a fun morning, so stay with us.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.