From Startup to $12B: 7 Lessons from Dropbox

Drew Houston ’05 co-founded Dropbox in June 2007, one year after graduating from MIT, in response to the frustration of losing thumb drives. In the 11 years since, Dropbox has grown from a cloud storage company based in a small apartment to a provider of business collaboration software with close to 2,000 employees — along with a March 23 initial public offering that has valued the company at more than $12 billion.

Houston returned to campus April 18 to talk with students about his experience. Here’s what he had to say.

Don’t wait for the optimal moment
“It may not be ideal to go directly from school to starting a company, but don’t obsess over the optimal circumstances,” Houston said. “Don’t stress so much about trying to get ready. The best training for being a founder or CEO is being a founder or CEO.”

The best way to learn is to read
To learn how to run a business, Houston initially set out to meet as many successful entrepreneurs as he could. He said he quickly realized that there was only so much that they could cover in a 15-minute coffee meeting — and that, after a while, it all started to sound the same.

Instead, Houston took to reading. To learn about sales, he bought the three highest-rated books on Amazon about the sales process.

Find mentors who are one step ahead of you
As Dropbox started to grow, Houston said some of his most helpful mentors came from startups that were anywhere from six months to two years ahead of Dropbox in the process.

These mentors matter because you can ask them pointed and tactical questions about running a startup, Houston said.

Balance internal and external expertise
“You want talented people who have grown up with the company working with experienced people who can help you with the learning curve.”

In 2014, Dropbox hired Dennis Woodside. Now the company’s chief operating officer, he had run a $17 billion business at Google. “We weren’t there yet,” Houston said, “but wanted to be there someday.”

Create things that are hard to copy
Dropbox Paper is a document collaboration product, but the emphasis is on connecting the people working on those documents, not on formatting those documents, Houston said.

“We’re not in a realm where the most important thing is to print something out,” he said.

Make your company evolve with the world
The concept for Paper began to emerge about three years ago. Dropbox was succeeding, but Houston was spending his days going from meeting to meeting. “The way we organize ourselves is dated, descended from the industrial era,” Houston said. “People go to work in an office, but more and more they go to work in a screen. We need to apply that same level of design and thoughtfulness and care to that virtual environment.”

Remain calm
Houston said there have been many intense moments at Dropbox when he thought “the treadmill will be going faster than I can run” and it would be time to step back from his leadership role. After several cycles of this thought process, though, Houston has realized that he prefers to take the good with the bad and just keep going.

“The basics of self-awareness and mindfulness and equanimity are pretty helpful,” he said. “[Being a CEO is] the most rewarding experience I’ve ever had, and it’s the most painful experience I’ve ever had.”

This excerpt was first published in the MIT Sloan School of Management Newsroom. Photo: The Boston Headshot. Read the full article.