Dropbox is a free cloud service that lets users bring all photos, docs and videos into a folder that can be accessed on any PC, Mac, iOS, BlackBerry or Android device and across a variety of web browsers. Install its application, and a Dropbox folder appears on your computer desktop. Anything you drag into that folder is uploaded automatically to the Dropbox service and then instantly replicated across all your computers and devices. How simple is that!

Dropbox was founded in 2007 by MIT graduates Drew Houston and Arash Ferdowsi, as a Y Combinator startup company. Dropbox now has over 100 million users, has raised $250 million in venture funding and is said to be valued at around $4 billion. The founders shared these lessons and their success story in interviews granted to various technology blogs.

  1. Vision: We envision little Dropbox icons everywhere, analogous to the Facebook icons you see everywhere.
  2. Vision: People may know us today as the magic folder on their desktop or the app on their phone. But we see ourselves as building the Internet’s file system.
  3. Y Combinator Application: Read Drew Houston’s Y Combinator Application for Dropbox
  4. Investor Pitch: Our first sort of marketing attempt was like throwing spaghetti at a wall …we really struggled in terms of how to articulate this with investors because we had never really done that before, and Paul Graham was really helpful to us in terms of distilling down the idea into a much shorter and sort of more compact presentation.
  5. Competition: Asked if he was worried about copycats stealing the concept at the time – Houston responds, “It is easy for me to explain the idea, it is actually really hard to do it.”
  6. Strategy: Dropbox attracts new users by providing at least two gigabytes of Dropbox space free, and by waiving fees for additional space for those referring new customers.
  7. Demo Video: Dropbox released a demo video that captured Y Combinator’s attention and helped Dropbox secure an invitation to join the exclusive startup program.
  8. Demo vide0: The video drove hundreds of thousands of people to the website. Our beta waiting list went from 5,000 people to 75,000 people literally overnight. It totally blew us away.
  9. Marketing:We were founded in 2007 but the product was only introduced in September 2008 and the growth since then has been almost entirely viral. There was effectively no marketing spend responsible for driving the adoption.
  10. Marketing: The first thing that most early web startups say is, “Let’s launch and buy up some AdWords.” The results from paid search were disappointing for us, though. It makes sense in a lot of other markets, but search is a tool for harvesting demand, not creating it.
  11. Marketing: We’ve found it’s a lot more effective to find one hook that people can easily understand. That gets people in the door. Once you have that relationship with a customer, then you have all kinds of opportunities to educate them over time as to everything else that the product can do
  12. Beta Release: Not wanting to risk testing a buggy product, Dropbox carefully screened who could kick around early versions by extending invites through “a Gmail style closed beta.”
  13. Marketing: The success of Dropbox is thanks to our alpha users. They liked us  so much that they kept on sharing it and talking about it.
  14. Customer Acquisition: For us, it starts with having a good product and making sure that the experience is as simple and as elegant as we possibly can make it. People react positively when they find something that’s helpful.
  15. Business Model: On given away 2GB for free, we were a little bit bounded by the norms in the marketplace. We knew we couldn’t do that. We had also noticed a trend where there’s always some startup giving away 50 gigs or 100 gigs or a terabyte of free space and then folding a year later.
  16. Customer Service: We’ve  hired an awesome group of support engineers that not only answer every support ticket that comes in (from free and paid users alike), but who are building automation and auto-suggest systems that allow users find answers to their questions on their own.
  17. Lesson: “Research what other companies have done” but be cognizant of the fact that “often what works for one company is just completely the wrong thing for another company.
  18. Lesson: Learn early, learn often.
  19. Lesson: Know where your target audience hangs out and speak to them in an authentic way.
  20. Lesson: Keep the main thing the main thing.

Image courtesy Mashable