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Dropbox "It Just Works" Case

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1. When Houston applied to Y Combinator, what hypotheses did he hold about the key elements of Dropbox’s business model?

The first key elements were the simplicity and accessibility of the product. To underline this aspect he asked every VC who interviewed him whether or not they were using any other product of that sort, considering that, by that time, there were some other solutions in the market already. The product worked automatically and dealt with complex operations in a simple way.

Another key element was the high quality of service that DB provided. Quality was defined by Houston in terms of safety of the documents and information and quickness of the process. He had also built the program to operate with some innovative …show more content…

Although there was a lot of competitors who offer nearly the same kind of service that Dropbox, Houston used to argue that his business would be different from the others, because they "handle all kind of obstacles...".

The first marketing campaign, was a test "test demand". DB Team posted a screencast video, which showed a demo of the product, in a specialized forum called Hacker News. As a result, Houston could earn his first funding; U$ 15.000,00 from Y Combinator. Later on, with a product that was already tested on its demo version, Dropbox raised U$ 1.2 MM more. Dropbox team later produced another innovative video, which reached hundreds of thousands of views and bumped up the number of dropbox users within few days (5.000 to 75.000)

After defining its business model, Dropbox started an aggressive online marketing campaign, which wasn't" so effective. For instance, "it cost more than U$ 300 to acquire a new customer". Even with more money being raised from different funds, Dropbox wasn't able to decrease this cost/new user.

Trying to change the strategy to acquire new customers, Dropbox experimented different movements, as partnering with big companies, new ways of ads, etc. But they perceived that the most effective marketing was the word-of-mouth referrals and viral marketing, rather than paid advertisements. Other important feature implemented by Dropbox is

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