How Dropbox Will Die

In an earlier post, Dropbox: Tech’s Hottest Start-up, we read about the prospects for this new venture. But as David Coursey counters in his Forbes article, it is quite likely Dropbox will go the way of the dodo.

Dropbox, the online file system, may be “tech’s hottest startup” but that does not mean the company will survive.

There is always a “ hottest startup” in tech and in most cases the level of heat is almost inversely proportional to likelihood of lasting success.

Avoiding a dramatic flameout is Job #1 for the young company. My bet is that five years from now, most users will think of Dropbox only in the context of “Whatever happened to?”

Forbes’ Victoria Barret has written a wonderful insider piece about Dropbox that you can read here. She describes an early meeting between Dropbox founder Drew Houston and Apple‘s Steve Jobs.

“Jobs smiled warmly as he told them he was going after their market. “He said we were a feature, not a product,” says Houston.

Steve was right. Houston’s job — along with his partner Arash Ferdowski — is to prove Steve Jobs wrong, but it won’t be easy and few have succeeded.

Over the years, I’ve seen dozens, probably hundreds, of product demonstrations where I told a hopeful entrepreneur they were showing me a feature and not a product. I can’t remember a single one that survived intact.

Most ended up being purchased and rolled into something else (as Jobs tried to do with Dropbox) while others just disappeared. Longterm, I don’t see Dropbox surviving as a standalone company, though its founders may get very rich in the meantime.

What’s the difference between feature and product?

A feature is something that really belongs or can easily be built into something that already exists. For example, iCloud, essentially Steve Jobs’ version of Dropbox, is integrated with the operating system and applications on Apple devices and works with Windows as well.

An application goes further and presents a convincing argument that it needs to stand alone. This is especially difficult if users are asked to pay for it separately, as heavy Dropbox users are.

To Dropbox’s credit, they have done an excellent job of building their feature. It works great, I use it daily, but I am using a free account (you can get one, too) and probably wouldn’t pay for it.

Dropbox is remarkably convenient, though I could use the excellent Evernote for most of the same purposes. (I should probably do a post explaining why Evernote is an application and Dropbox only a feature.)

What makes Dropbox so compelling is also what makes it hard to defend. Dropbox is an excellent online file sharing and storage tool, it works well and offers excellent convenience.

However, unless Dropbox has some really strong patent protection, they are merely an excellent prototype for what a competitor needs to build. Apple’s iCloud is a good attempt, but Dropbox competitors must really push platform neutrality.

That Apple and Microsoft may not be able to attract each others’ customers may be the strongest argument for Dropbox remaining independent.

There is also the question of how Dropbox is different from an online backup service available on a file-by-file basis across multiple machines. That is how I use Dropbox, only occasionally sharing files in Dropbox with friends and coworkers.

To continue enjoying independent living, Dropbox needs to rapidly add additional features that make it more useful and harder to build into to something else. It needs more than one compelling idea, though what that might be I won’t speculate.

Nothing I have written is intended to be critical of Dropbox — if you don’t use it, you probably should. Take this as a cautionary tale of how high flyers almost always fall back to earth, sometimes with a dramatic “thud.”



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