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Marketing lessons from Dropbox: A Q&A with CEO Drew Houston

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  macslocum's Photo
Posted Apr 19 2010 05:38 AM

Dropbox, an online storage and synchronization tool, has a clever marketing hook. The free version quietly entangles with your workflow until you reach the 2GB cap, and by that point it's almost too easy to convert from free to paid. (I speak from experience.)

Seeing as Dropbox has acquired more than 4 million users in two years, it would appear its process is working. I got in touch with Drew Houston, Dropbox CEO and a speaker at next month's Web 2.0 Expo, to pick his brain for marketing tips. Highlights from that discussion are featured below.

Target the right community with a custom message

Mac Slocum: What types of marketing has Dropbox used?

Drew Houston: 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.

Out of necessity, we made a short video demonstrating Dropbox and launched it on Digg. We were pretty thoughtful about showing a video to that audience. Everyone on the early team had visited sites like Digg and understood how Internet memes work.

To the casual observer, the Dropbox demo video looked like a normal product demonstration, but we put in about a dozen Easter eggs that were tailored for the Digg audience. References to Tay Zonday and "Chocolate Rain," and allusions to "Office Space" and XKCD. It was a tongue-in-cheek nod to that crowd, and it kicked off a chain reaction. Within 24 hours, it had more than 10,000 Diggs. It 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.

Note: here's the video:

MS: Have you created similar videos for other communities?

DH: That was the first experiment. We thought the way we would reach critical mass was to really target a specific early adopter audience that hangs out in places like Digg and Reddit and Slashdot. So there were no obvious other communities that would talk to each other and spread Dropbox around the way that audience did.

People ask what sort of fairy dust they can sprinkle on their product videos. But success comes from really understanding and being part of that community. People can tell when you're pandering. The lack of authenticity hurts.

Simplify your message, then simplify some more

MS: Dropbox's web presence is direct and no-frills. Did you have that clarity of purpose from the beginning?

DH: In the beginning, we didn't. In some of our early pitches to angel investors we'd rattle off a laundry list of features and say, "Hey, it'll back up your files. It'll sync them. You can share stuff. You can collaborate." And people's eyes would glaze over because it's hard for them to conceptualize.

To some extent, we did the same thing on our home page. We had the logo and a link to the video and then we had a smorgasbord of bullet points: it slices, it dices, it cuts your hair. We did this in the hopes that people coming to the page would see one or two of those things and decide that Dropbox was something that they want.

We did some split testing on our home page. What we found is that designs that are simpler, have a very clear call to action, and don't extol all the virtues of the product, converted much better than anything more elaborate. You can see that today: Here's Dropbox; here's a concept video; download it.

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. There's too much cognitive friction if you try to cram all of those things up front.

MS: How do you turn customers into evangelists?

DH: 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. The element of pleasant surprise is a big factor. It causes people to exceed that threshold where they're so happy about something that they're willing to tell their friends about it.

From free to paid

MS: Dropbox has a pretty significant free offering (2GB). How did you arrive at that amount?

DH: We were a little bit bounded by the norms in the marketplace. On the free side, I think Gmail got a lot of mileage out of having orders of magnitude more storage than some of their competitors. 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. We didn't want people to think this was totally unsustainable. There are also limits on how much you can give away if you want people to actually convert.

What we wanted was for this to be something people could engage with over time and that delivered real value from the beginning. If Dropbox is something that becomes part of your life, then there's a natural progression to using more space. Eventually you'll put more in there than is accommodated by just the two gigs.

MS: When do customers typically convert from free to paid?

People either decide early on that Dropbox is going to work for them, or it's something that's gradual and they naturally exceed their storage threshold. So there's two peaks: one at the very beginning and then one later in the progression of usage.

MS: It seems to me that we'll look back on this current period and see third-party services, like Amazon's S3, as the key to a lot of startup innovation. How have these types of platforms helped Dropbox?

Having S3 really let us experiment cheaply with the idea and verify that there was a market. Otherwise, I don't know how many hundreds of thousands or millions of dollars we would have needed to spend upfront just to get off the ground. That's actually one of the things that I pointed to as the reason why Dropbox was a viable idea back in 2007, even though there had been dozens of other products that addressed the same umbrella of needs. The ability to cheaply ramp up storage was a huge thing for us.

Web 2.0 Expo preview

MS: What will you be covering in your Web 2.0 Expo session?

DH: I'll be teaming up with Adam Smith. He's one of the founders of Xobni and a good friend of mine. Xobni is another company that acquired millions of users in the first couple of years. And it did it even though it was a download and even though it was something that people didn't really know they were looking for.

With the Expo session, we're really trying to give people nuts and bolts tactics they can use to leverage whatever mechanism or channel that works best for them. For example, how do you get started without spending $10,000 per month for PR, or having a huge AdWords spend, or praying for coverage on TechCrunch? It's going to be a narrative of what we tried, what worked for us and what didn't.

Note: This interview was condensed and edited.

1 Reply

  Scott Mccoy's Photo
Posted Oct 29 2013 06:21 PM

The video was very helpful and a great tutorial in using dropbox. Nowadays dropbox are quiet common for internet users and for marketers including the top internet marketing service provider at orange county since they can easily access their files in their computers when they are away or out from the office, they are able to view their important files or documents and an alternative storage.