Dropbox: “It Just Works” (HBS 9-811-065) Kunal Sharma Advanced Entrepreneurship March 11, 2013 100410018 Word Count: 854 Question 1 a) The reason that Dropbox is such a universal concept is because anyone in the world can be a buyer of Dropbox. It can be an individual trying to save and access their pictures on different platforms or it can be a multinational firm who uses the product as a “file collaboration” software within the firm. “The idea is to get people using it inside companies without IT’s permission. Once IT sees that Dropbox is in heavy demand and that it works reliably, we’ll get certified for use across the company. (Pg3, P3, Dropbox: it just work’s, 2012). So basically the buyer can literally be anyone with a need for easy access to storage of data across multiple platforms. Usually in other industries the buyers would be a small group of people or companies for whom the product was specifically made and marketed for, as well as each industry tries to capture a part of the market share. Whereas in terms of Dropbox, as we can see that the buyers differ in a way that anyone can become one as the service is offered free of charge for users who do not wish to store too much data.
Identifying buyers is one of the key steps of opportunity assessment. In order to see whether if a product or service will have sales depends on its buyers and if they exist or not, if a product or service is launched and there is not a real need for it then that product will not have sales. Therefore, to conduct an opportunity assessment the buyers must be identified in order to see the potential of a product or service in a limited market space as well as to see if it is worth approaching a certain buyer or not in terms of the return business to recover the costs for marketing to that buyer. Question 2 ) In my opinion, Dropbox was an extremely attractive opportunity mainly because of the fact that there was nothing else like it on the market in terms of an online storage system that catered to the needs of the individuals as well as small to large businesses. The competitive landscape for Dropbox seems to be very high due to the fact that before they even went into business there were already 80 or more websites that offered similar services as well as due to the fact that competition on the internet is fierce since market space is very limited only the company with the best product can survive in the long run.
The biggest threats to a startup such as Dropbox would be the industry giants who can easily offer the same services as Dropbox for a much lower price due their power in the industry and market share; their costs are much lower as well because they have been in the industry for so long the resources available to them are unlimited and these giants have entered the market as Microsoft’s SkyDrive and the Apple iCloud. “But recently, Dropbox has garnered all the press. Why?
Because Steve Jobs wanted to purchase it for Apple, but Drew Houston, Dropbox’s CEO, said, “No, thanks. ” Why didn’t Dropbox sell out to Apple for a likely nine-figure sum? Drew Houston thought he could build a bigger company. Jobs disagreed. He allegedly said Dropbox was “a feature, not a product. ” (Joshua Gans, 2011) As we can see that even Steve jobs believed in the potential of Dropbox and although it wasn’t sold this showed the world that Dropbox was now a recognizable brand on its own and didn’t need the help of their competition.
Question 3 The Dropbox business model was made to be as simplistic as possible in order to target an extremely large market so in essence, Dropbox has basically implemented a “freemium” business model, offering its product/service to users for free (like 2 gigs of cloud storage), but charging a fee for access to the premium features (more storage).
Resource requirements for Dropbox were dealt with in several different ways, the first of which was done by raising capital through ‘Y Combinator’ a firm that invests in start-ups and provides companies with the necessary industry networking tools and business advice. Initially they were given $20000 as well as an office space to further develop their product and at the end of the 3 month process Y Combinator and Dropbox managed to raise just over $1. 2 million.
Although the product was successfully launched for both consumers and businesses the simple file syncing service has grown, in just a few years, to 50 million active users approximately 96% of the users do not pay anything to use Dropbox. The remaining 4% pay for more storage and purportedly make it profitable. This wasn’t sufficient for Dropbox so their tried to attract customers through paid advertising which cost them an acquisition of $300 per paying customer which was way too high since a premium account had an annual fee of only $99 making it extremely costly.
However they overcame that by an additional $6 million in financing from Sequoia Capital and Accel Partners. References 1. LAUREN BARLEY, MICHAEL PAO, THOMAS R. EISENMANN “Dropbox: It Just Works” Harvard Business School Case 9-811-065, January 2012. 2. 2, Joshua Gans | 11:37 AM November, and 2011. “Where Is Dropbox’s Power? – Joshua Gans – Harvard Business Review. “HBR Blog Network – Harvard Business Review. N. p. , n. d. Web. 11 Mar. 2013. <http://blogs. hbr. org/cs/2011/11/where_is