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870 Words Nov 5th, 2012 4 Pages
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Entrepreneurship case analysis : DropBox | | | Biswajit Mishra P122056, PGPM 2012-13, Great Lakes Institute of Management, Gurgaon | | | | |

Question1:
Dropbox is a late mover in crowded space. What opportunity did Houston see? Specifically what are the key elements of Dropbox’s current business model?
Houston wanted to develop a product keeping in mind the voice of the customer. He wanted to develop a product which could have the ability to sync and share files online and across networked computers automatically where the user simply downloads the service on any number of
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of customers | Revenue from each source | Cost/ user | Total Cost/user type | 2GB | $0 | 2925000 | 0 | $0.11 | $321,750.00 | 100 GB | $10 | 45000 | 449550 | $3.18 | $143,100.00 | 200 GB | $20 | 30000 | 599700 | $3.18 | $95,400.00 | Monthly | | 3000000 | 1049250 | | $560,250.00 | Yearly | | | 12591000 | | $6,723,000.00 |

Amount left for salary and other expenses(loan repayment)- $5,868,000
Hence it’s a profitable company. * Current crop of users were individual customers. * Can leverage on the brand equity and approach group users such as institutional, corporate etc.

Question 3:
When he applied for Y Combinator, what assumptions did Houston hold about key elements of Dropbox’s business model? As of june 2010 which of these hypothesis have been confirmed and discarded? What is your assessment of the approach Houston used to test hypothesis? Did he waste time and resources and make notable mistakes? Can you suggest better ways to validate key hypothesis?
Hypothesis that Houston used:
The confirmed hypotheses were :

1. assumed that acquiring small and medium customers won’t be profitable. 2. They used a freemium based model to generate revenues. 3. His main expense was to attract customers through paid advertising 4. incorporated the security and antivirus software’s to provide built in applications for dropbox in partnerships with the OEMs. 5. He assumed that customer loyalty will play a major role

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