7 ms·

Dropbox and why you should invest in people

214 points by aditya 16y ago

deleted 16y ago
[deleted]
marcamillion 16y ago
Ahh...so Fred Wilson has started the 'come-to-Jesus' moment for investors. I guess we can now expect to see many more blog posts about missed opportunities, and lessons learned. That being said, thanks for the post Chris. Makes for good reading :)
- BerislavLopac 16y ago
  Bessemer's "anti-portfolio" page is the first of the kind I've encountered, years ago: http://www.bvp.com/portfolio/antiportfolio.aspx http://www.bvp.com/portfolio/antiportfolio.aspx
  - marcamillion 16y ago
    Nah I know. But I predict, just like we are seeing the 'rise of the $1B VC fund', we will likely see the rise of the 'missed opportunities' by high-profile VCs. Wait for it in 4....3....2....
- jijoy 16y ago
  it started with Fred Wilson and airbnb , I think . Missing the cereal point
- fedd 16y ago
  it would be great if there was some positive outcome. because there may be the negative: i passed dropbox, i passed airbnb, i passed mysql and google, and see, i'm fine. what do you want? ;) (it's not about chris or fred)
latch 16y ago
I love dropbox. Dropbox + git is beautiful as is Dropbox + markdown (for writing). But I don't pay for it. I'm somewhere around 5+ free gigs of which I might use around 30%. Normally if I loved a product this much which I wasn't paying for, but ought to, then I would. But I'm not stealing my account, so I don't really feel like I should pay. On top of that, I use a different paid service for storing large amounts of files. It ends up being cheaper and I feel both solutions work best how I have them - dropbox for sharing/working and the other for offsite backups that just transparently syncs every night or something. I guess all that to ask a question...how the heck is dropbox making money? Between the amount of free storage they give and the fact that there are much cheaper remote backup solutions, I just feel like I'm missing something.
- ryanpetrich 16y ago
  Dropbox is selling convenience. For many, Dropbox's featureset and ease of use are worth the price premium over similar services in the space.
- aeden 16y ago
  They make money from subscribers like me. It's just so damn convenient that I had to send them some money - and it just so happens that I exceed the basic amount of space, so it was easily justifiable.
- patio11 16y ago
  Free storage that they allocate but that you don't actually use costs epsilon more than nothing at all at the margin. The part you do actually use costs them about 10 cents a month on Amazon's published pricing, and one could reasonably assume they have a better deal than publicly available. At a buck a year and what I make out to be a viral factor of something like 20, you're approximately the cheapest cost of customer acquisition ever. (If that worked for my business at scale I would be rolling in it, and my LTV is much lower than Dropbox's is.) How they make money is fairly simple: use you as a customer acquisition channel to get people who have money using the service. Charge those people many, many times what servicing them actually costs. Does it matter if there are cheaper options? Pfft, no. There are cheaper caffeine delivery vehicles than Starbucks coffee, but since people don't choose coffee primarily based on price, if they hook one more weekday latte drinker that gets them a LTV of several thousand bucks at a margin of ZOINKS%. Dropbox isn't Starbucks, but their unit economics can be reasonably assumed to be "quite favorable indeed."
vibhavs 16y ago
Tangent: So I'll be honest -- I was curious as to who the "jackass VC" was. After a little digging around, I think it's Ted Schlein: http://www.kpcb.com/team/schlein http://www.kpcb.com/team/schlein.
- ivankirigin 16y ago
  "Ted was the founding CEO of Fortify Software" doesn't mesh with "lifetime middle manager from Symantec who had never started a company"
  - deleted 16y ago
    [deleted]
  - callmeed 16y ago
    But his winery seems to fit ... http://www.schleinvineyard.com/content/family_2.php http://www.schleinvineyard.com/content/family_2.php
    - niallsmart 16y ago
      I bet there's quite a few successful VCs (and entrepreneurs) who own wineries
  - deleted 16y ago
    [deleted]
- hedgehog 16y ago
  FWIW when I pitched him at KP in 2004 or 2005 he seemed like a decent guy.
  - officemonkey 16y ago
    FWIW I thought the whole aside about the VC guy felt off-topic. It didn't add value to the article and its only purpose was to make the writer look cooler than the strawman he constructed. Frankly, I was turned off by the distraction and skimmed the rest of the article.
juniortp 16y ago
This is the second time this week, 'invest in people' - fitting a pattern to a series of events. this is again, classic narrative fallacy - http://statspotting.com/?p=396 http://statspotting.com/?p=396
brett 16y ago
I don't think it's an argument against Dixon's point, but I found this funny because I remember being so impressed with demo of Dropbox at the time. I remember knowing nothing about who Drew was, seeing this on HN: http://news.ycombinator.com/item?id=8863 http://news.ycombinator.com/item?id=8863 and thinking something along the lines of, "that's brilliant, I hope he gets funded so I can use it."
vantran 16y ago
Investing in people over their ideas is always advisable. But let's not forget how brilliant people can still fail. Tons of bright kids come out of MIT, Harvard, Stanford, etc... Should you blindly invest in all of them? Instead, I prefer Mark Suster's "invest in lines, not dots" strategy. You really have to spend more time to have a better idea on whether you should invest. In hindsight, of course Drew Houston would be a good investment.
- three14 16y ago
  I think he's not suggesting investing in "bright kids," but "smart and gets things done." Or "relentlessly resourceful." Smart is just one of the criteria, but he still would invest in people, not in "the idea."
callmeed 16y ago
It's funny, I was reading old Joel on Software posts the other night and stumbled across this one: http://www.joelonsoftware.com/items/2008/05/01.html http://www.joelonsoftware.com/items/2008/05/01.html From the essay: "The hallmark of an architecture astronaut is that they don't solve an actual problem ... they solve something that appears to be the template of a lot of problems. Or at least, they try. Since 1988 many prominent architecture astronauts have been convinced that the biggest problem to solve is synchronization. ... Jeez, we've had that forever. When did the first sync web sites start coming out? 1999? There were a million versions. xdrive, mydrive, idrive, youdrive, wealldrive for ice cream. Nobody cared then and nobody cares now, because synchronizing files is just not a killer application. I'm sorry. It seems like it should be. But it's not." I immediately thought of dropbox. It appears, to some degree, it is a problem and some people do care. Like Chris said, its the execution and people that made the difference.
- jurjenh 16y ago
  I think it is one of those problems that most people don't run into until they do - for example, you're suddenly having to work from 2 locations on the same code base - then try to find some means of keeping both in sync... The first attempts I had at it ended up pretty much as a "too hard, not worth the effort" solution. I guess the pain threshold was not quite high enough for enough people, but now with a brilliant solution, a lot of people will revisit it, and with the multiplying numbers of web devices, it will become more of an issue - so it was more of an issue of tackling the problem at the right time.
- wladimir 16y ago
  It was one of those problems that everyone was solving in their own way. Either through shared folders, shared gmail accounts, mailing attachments, passing around USB sticks, or putting everything into a version control system. There was no single solution that was both convenient, compatible across devices and platforms, and useful for all the usecases. Dropbox nailed that.
  - fedd 16y ago
    our school teacher has a mail.ru account the password for which is known by all the parents. if we're ill, we go there and see the homework :) anyone may change the password eventually as many people are not that internet savvy, i am always afraid of it she should use dropbox, google docs or have a mailing list, but i don't know how to say that. she knows only web mail as it's around for decades...
joshu 16y ago
Ha, I passed on dropbox too, I was asked to invest in the series B and thought the valuation was too high. Learned my lesson - valuations go up for a reason.
- stevenj 16y ago
  Isn't startup investing mostly about picking the big winners and not worrying too much about what valuation you get in at? If that's the case, wasn't your error not thinking dropbox would be a big winner?
nadam 16y ago
This is a good post, but there is the risk of survivorship bias here. Drew Houston is a brilliant guy, but let's be honest most people only recognized his true brilliance after he became successful. (I think most people thought he is smart, but I doubt most people thought he is brilliant before his success.) So yes, you should invest into people, but the trick is to recognize brilliance in advance. Which is brutally hard. For example recognizing technical brilliance if someone is not technical is almost impossible. I think where YC shines is not only that they try to invest into people but that they are actually quite good at recognizing brilliance. (I doubt they are perfect in this, but probably the best in the market.)
- caustic 16y ago
  Exactly the same thing I thought immediately after reading the article. Yeah, Drew Houston is a brilliant guy, but we would never know how brilliant were all other founders of failed startups.
- revorad 16y ago
  Yeah, consider this from another post from Chris in 2010: Entrepreneurs should always ask themselves “why will I succeed where others failed?” If the answer is simply “I’m doing it right” or “I’m smarter,” you are probably underestimating your antecedents, which were probably run by competent or even great entrepreneurs who did everything possible to succeed. Instead your answer should include an explanation about why the timing is right – about some fundamental changes in the world that enable the idea you are pursuing to finally succeed. http://cdixon.org/2010/11/07/timing-your-startup/ http://cdixon.org/2010/11/07/timing-your-startup/ Here Chris argues that even if he is able to recognize brilliance in advance, he wouldn't necessarily bet on them because of other external factors. So has he changed his mind in the last 5 months? The more I read about startups, the more I feel like ignoring all advice and jfdi.
hanifvirani 16y ago
What I like about Dropbox is that it just works as expected. It's trivial and it's well polished. Dropbox is a great lesson in how ideas don't matter and how execution is king. They had the guts to compete with a dozen other players who were trying to solve the same problem, solely based on the confidence in their execution. Investing in people having the skills to execute, the guts to compete, and the resilience to persist, clearly makes better sense than investing in just ideas.
hootmon 16y ago
The title should have been Name Dropping, why I just can't stop...
nikcub 16y ago
Came to read about dropbox, but stayed for the dig at KP. Amazing to think that one of the top VC firms in the world were out of the game for so long. A new generation of killer startups were created: Facebook, Zynga, GroupOn etc. and KP just watched it all go by. It would be difficult to just quantify how much $ they missed out on, but at least now they are sorta admitting their mistake and getting back into tech investing (greentech didn't really turn out to be the second coming that many thought it would be) Unfortunately people like 'symantec middle manager' are still around.
adw 16y ago
Something related which occurs to me; investing in ideas is basically premature optimisation, because great people can change ideas but average people are unlikely to spontaneously become great.
dami 16y ago
Behind every great product is a motivated and driven team ;)
api 16y ago
But what about great people with a really bad idea that they are committed to? Seems to me that that would be a bad investment. Also: Be careful about your metric of great. The metric of great must be "this person is a genius with lots of energy and creativity," not "this person graduated from the right school, knows the right people, comes from the right part of the country, lives in the right zip code, etc." It must be first-hand meritocratic, not based on second-hand derivative indicators. DropBox's founder went to MIT, but that's not what made him great. MIT is just a good school. The guy may well have been just as great if he'd gone to Ohio State or some other less-prestigious school.
- sokoloff 16y ago
  I strongly agree with both of your points, at least in theory, but I will also observe that trivially and concretely verifiable derivative indicators (graduated from a "named" school) can be more practically useful than hard/impossible to quickly or concretely verify primary measures ("genuis with lots of creativity"). YC, Sequoia and other VCs are in the business of efficiently finding founders/companies to back; they are not and do not have to be in the business of increasing overall fairness in the world. There's also the "ambitious and gets shit done" angle. IMO, like it or not, getting into and graduating from a "named" school is one indicator of precisely those two qualities. There was a study recently that found there was a higher correlation between life outcome and where one APPLIED to college than there was to where one WENT to college. The takeaway for me was that people ambitious enough (and presumably confident enough) to apply to MIT would get similar results in aggregate to those who actually attended. I googled for a few minutes to try to find the study, but failed, so I apologize if I've mis-remembered or mis-stated the conclusions. Disclaimer: 1993 MIT grad here, but while I greatly value my experience there, I give basically zero "extra credit" for MIT on a candidate's resume over any other school and I'd take "built dropbox" over any schooling, 8 days a week.
  - api 16y ago
    "There was a study recently that found there was a higher correlation between life outcome and where one APPLIED to college than there was to where one WENT to college." That is very interesting. Thanks.
naiverahim 16y ago
Investing in people is the best kind of investment; because a business of people is always profitable. A very powerful philosophy taught by Dale Carnegie.
deleted 16y ago
[deleted]
u48998 16y ago
There may have been number of storage sites popping up back in the days but didn't Dropbox provide something new and necessary technology to the PC? As in, don't worry about backing up your files? I don't recall even Box dot net - who was much in the tech news - provide such features.
petenixey 16y ago
We were in the same YC round as Dropbox and it was interesting was to observe the discrepancy between our views and the investors' views. While nobody in our class doubted the success (at whatever level) of Dropbox, it never created the same investor heat early on that many of the "trendy investments" did. I wondered about this at the time and put it down to investors' reluctancy (or inability) to spend the days it takes to actually get to know a company. I was fortunate to get to know Dropbox a bit more than most (and less than many). We were in the same YC class and shared an office for a little while. They was voted top of our class in YC - I don't think anyone doubted they'd be the most successful company. I don't think anyone felt that even if they were overtaken by Google Platypus or similar that they would fail either - they were doing such hard stuff and had such dedicated users it would still be a great technology acquisition. The company was a really great investment and in fact after Clickpass was acquired I asked Drew if I could invest but unluckily for me they weren't taking on any more (very) small angels. The interesting thing was that in those very early days (post YC), the investors still weren't fighting their way into it or making the hullabaloo that you see around some of the other valley companies. Drew and Arash were never big-talking sales people, they never focussed on bells and whistles and instead just concentrated on building great product. Day in, day out they just came in, built amazing software and, starting with Aston, they slowly added other amazing developers around them. That relentless progress seemed to be something that most investors really weren't tuned into. Investors almost never take the time to actually hang out in a company and instead rely on consecutive and very similar meetings. They never actually watch a company work (although Mike Moritz did interestingly come and hung out in their apartment in the Y-Scraper before making his investment). I always therefore feel that statements such as you should invest "in the team", "in the market" or "purely in any other one thing" are all slightly trite because what you really want to invest in is the relentless march of a product towards a market. You can't learn that in a pitch though or from a founder's personality or even their CV - all of these are single data points and you want to measure the product trajectory. You can however get a very real feel for that by spending real time with a company, in their office. I'm sure you would get some false positives from it but in the long run it would be hard to avoid the true negatives. Dropbox's office was calm, intelligent, very productive and full of debate and fiercely intelligent employees who believed without hesitation in the product. The developers were constantly interacting with their customers through their forums and they hung out as a team after work. It was totally and utterly different to many other offices I have observed and made it very hard to imagine an outcome that would not be good. They knew the market for their product, they knew it was big and they marched relentlessly towards it. I know lots of smart, driven, successful people whom I still wouldn't invest in but I would be very interested to know how many such teams with the kernel of a product people like, in a market that is significant and who march relentlessly towards it do not constitute a good investment.
dablue 16y ago
Ever since it's been blocked, who's interested in creating a Chinese version of dropbox within the GFW? Let's get together and create dropbox.cn or for legal reasons, cndropbox.com ^^

214 points by aditya 16y ago

deleted 16y ago

[deleted]

Ahh...so Fred Wilson has started the 'come-to-Jesus' moment for investors. I guess we can now expect to see many more blog posts about missed opportunities, and lessons learned. That being said, thanks for the post Chris. Makes for good reading :)

BerislavLopac 16y ago
Bessemer's "anti-portfolio" page is the first of the kind I've encountered, years ago: http://www.bvp.com/portfolio/antiportfolio.aspx http://www.bvp.com/portfolio/antiportfolio.aspx
- marcamillion 16y ago
  Nah I know. But I predict, just like we are seeing the 'rise of the $1B VC fund', we will likely see the rise of the 'missed opportunities' by high-profile VCs. Wait for it in 4....3....2....
jijoy 16y ago
it started with Fred Wilson and airbnb , I think . Missing the cereal point
fedd 16y ago
it would be great if there was some positive outcome. because there may be the negative: i passed dropbox, i passed airbnb, i passed mysql and google, and see, i'm fine. what do you want? ;) (it's not about chris or fred)

latch 16y ago

I love dropbox. Dropbox + git is beautiful as is Dropbox + markdown (for writing). But I don't pay for it. I'm somewhere around 5+ free gigs of which I might use around 30%. Normally if I loved a product this much which I wasn't paying for, but ought to, then I would. But I'm not stealing my account, so I don't really feel like I should pay. On top of that, I use a different paid service for storing large amounts of files. It ends up being cheaper and I feel both solutions work best how I have them - dropbox for sharing/working and the other for offsite backups that just transparently syncs every night or something. I guess all that to ask a question...how the heck is dropbox making money? Between the amount of free storage they give and the fact that there are much cheaper remote backup solutions, I just feel like I'm missing something.

ryanpetrich 16y ago
Dropbox is selling convenience. For many, Dropbox's featureset and ease of use are worth the price premium over similar services in the space.
aeden 16y ago
They make money from subscribers like me. It's just so damn convenient that I had to send them some money - and it just so happens that I exceed the basic amount of space, so it was easily justifiable.
patio11 16y ago
Free storage that they allocate but that you don't actually use costs epsilon more than nothing at all at the margin. The part you do actually use costs them about 10 cents a month on Amazon's published pricing, and one could reasonably assume they have a better deal than publicly available. At a buck a year and what I make out to be a viral factor of something like 20, you're approximately the cheapest cost of customer acquisition ever. (If that worked for my business at scale I would be rolling in it, and my LTV is much lower than Dropbox's is.) How they make money is fairly simple: use you as a customer acquisition channel to get people who have money using the service. Charge those people many, many times what servicing them actually costs. Does it matter if there are cheaper options? Pfft, no. There are cheaper caffeine delivery vehicles than Starbucks coffee, but since people don't choose coffee primarily based on price, if they hook one more weekday latte drinker that gets them a LTV of several thousand bucks at a margin of ZOINKS%. Dropbox isn't Starbucks, but their unit economics can be reasonably assumed to be "quite favorable indeed."

vibhavs 16y ago

Tangent: So I'll be honest -- I was curious as to who the "jackass VC" was. After a little digging around, I think it's Ted Schlein: http://www.kpcb.com/team/schlein http://www.kpcb.com/team/schlein.

ivankirigin 16y ago
"Ted was the founding CEO of Fortify Software" doesn't mesh with "lifetime middle manager from Symantec who had never started a company"
- deleted 16y ago
  [deleted]
- callmeed 16y ago
  But his winery seems to fit ... http://www.schleinvineyard.com/content/family_2.php http://www.schleinvineyard.com/content/family_2.php
  - niallsmart 16y ago
    I bet there's quite a few successful VCs (and entrepreneurs) who own wineries
- deleted 16y ago
  [deleted]
hedgehog 16y ago
FWIW when I pitched him at KP in 2004 or 2005 he seemed like a decent guy.
- officemonkey 16y ago
  FWIW I thought the whole aside about the VC guy felt off-topic. It didn't add value to the article and its only purpose was to make the writer look cooler than the strawman he constructed. Frankly, I was turned off by the distraction and skimmed the rest of the article.

juniortp 16y ago

This is the second time this week, 'invest in people' - fitting a pattern to a series of events. this is again, classic narrative fallacy - http://statspotting.com/?p=396 http://statspotting.com/?p=396

brett 16y ago

I don't think it's an argument against Dixon's point, but I found this funny because I remember being so impressed with demo of Dropbox at the time. I remember knowing nothing about who Drew was, seeing this on HN: http://news.ycombinator.com/item?id=8863 http://news.ycombinator.com/item?id=8863 and thinking something along the lines of, "that's brilliant, I hope he gets funded so I can use it."

vantran 16y ago

Investing in people over their ideas is always advisable. But let's not forget how brilliant people can still fail. Tons of bright kids come out of MIT, Harvard, Stanford, etc... Should you blindly invest in all of them? Instead, I prefer Mark Suster's "invest in lines, not dots" strategy. You really have to spend more time to have a better idea on whether you should invest. In hindsight, of course Drew Houston would be a good investment.

three14 16y ago
I think he's not suggesting investing in "bright kids," but "smart and gets things done." Or "relentlessly resourceful." Smart is just one of the criteria, but he still would invest in people, not in "the idea."

callmeed 16y ago

It's funny, I was reading old Joel on Software posts the other night and stumbled across this one: http://www.joelonsoftware.com/items/2008/05/01.html http://www.joelonsoftware.com/items/2008/05/01.html From the essay: "The hallmark of an architecture astronaut is that they don't solve an actual problem ... they solve something that appears to be the template of a lot of problems. Or at least, they try. Since 1988 many prominent architecture astronauts have been convinced that the biggest problem to solve is synchronization. ... Jeez, we've had that forever. When did the first sync web sites start coming out? 1999? There were a million versions. xdrive, mydrive, idrive, youdrive, wealldrive for ice cream. Nobody cared then and nobody cares now, because synchronizing files is just not a killer application. I'm sorry. It seems like it should be. But it's not." I immediately thought of dropbox. It appears, to some degree, it is a problem and some people do care. Like Chris said, its the execution and people that made the difference.

jurjenh 16y ago
I think it is one of those problems that most people don't run into until they do - for example, you're suddenly having to work from 2 locations on the same code base - then try to find some means of keeping both in sync... The first attempts I had at it ended up pretty much as a "too hard, not worth the effort" solution. I guess the pain threshold was not quite high enough for enough people, but now with a brilliant solution, a lot of people will revisit it, and with the multiplying numbers of web devices, it will become more of an issue - so it was more of an issue of tackling the problem at the right time.
wladimir 16y ago
It was one of those problems that everyone was solving in their own way. Either through shared folders, shared gmail accounts, mailing attachments, passing around USB sticks, or putting everything into a version control system. There was no single solution that was both convenient, compatible across devices and platforms, and useful for all the usecases. Dropbox nailed that.
- fedd 16y ago
  our school teacher has a mail.ru account the password for which is known by all the parents. if we're ill, we go there and see the homework :) anyone may change the password eventually as many people are not that internet savvy, i am always afraid of it she should use dropbox, google docs or have a mailing list, but i don't know how to say that. she knows only web mail as it's around for decades...

joshu 16y ago

Ha, I passed on dropbox too, I was asked to invest in the series B and thought the valuation was too high. Learned my lesson - valuations go up for a reason.

stevenj 16y ago
Isn't startup investing mostly about picking the big winners and not worrying too much about what valuation you get in at? If that's the case, wasn't your error not thinking dropbox would be a big winner?

nadam 16y ago

This is a good post, but there is the risk of survivorship bias here. Drew Houston is a brilliant guy, but let's be honest most people only recognized his true brilliance after he became successful. (I think most people thought he is smart, but I doubt most people thought he is brilliant before his success.) So yes, you should invest into people, but the trick is to recognize brilliance in advance. Which is brutally hard. For example recognizing technical brilliance if someone is not technical is almost impossible. I think where YC shines is not only that they try to invest into people but that they are actually quite good at recognizing brilliance. (I doubt they are perfect in this, but probably the best in the market.)

caustic 16y ago
Exactly the same thing I thought immediately after reading the article. Yeah, Drew Houston is a brilliant guy, but we would never know how brilliant were all other founders of failed startups.
revorad 16y ago
Yeah, consider this from another post from Chris in 2010: Entrepreneurs should always ask themselves “why will I succeed where others failed?” If the answer is simply “I’m doing it right” or “I’m smarter,” you are probably underestimating your antecedents, which were probably run by competent or even great entrepreneurs who did everything possible to succeed. Instead your answer should include an explanation about why the timing is right – about some fundamental changes in the world that enable the idea you are pursuing to finally succeed. http://cdixon.org/2010/11/07/timing-your-startup/ http://cdixon.org/2010/11/07/timing-your-startup/ Here Chris argues that even if he is able to recognize brilliance in advance, he wouldn't necessarily bet on them because of other external factors. So has he changed his mind in the last 5 months? The more I read about startups, the more I feel like ignoring all advice and jfdi.

hanifvirani 16y ago

What I like about Dropbox is that it just works as expected. It's trivial and it's well polished. Dropbox is a great lesson in how ideas don't matter and how execution is king. They had the guts to compete with a dozen other players who were trying to solve the same problem, solely based on the confidence in their execution. Investing in people having the skills to execute, the guts to compete, and the resilience to persist, clearly makes better sense than investing in just ideas.

hootmon 16y ago

The title should have been Name Dropping, why I just can't stop...

nikcub 16y ago

Came to read about dropbox, but stayed for the dig at KP. Amazing to think that one of the top VC firms in the world were out of the game for so long. A new generation of killer startups were created: Facebook, Zynga, GroupOn etc. and KP just watched it all go by. It would be difficult to just quantify how much $ they missed out on, but at least now they are sorta admitting their mistake and getting back into tech investing (greentech didn't really turn out to be the second coming that many thought it would be) Unfortunately people like 'symantec middle manager' are still around.

adw 16y ago

Something related which occurs to me; investing in ideas is basically premature optimisation, because great people can change ideas but average people are unlikely to spontaneously become great.

dami 16y ago

Behind every great product is a motivated and driven team ;)

api 16y ago

But what about great people with a really bad idea that they are committed to? Seems to me that that would be a bad investment. Also: Be careful about your metric of great. The metric of great must be "this person is a genius with lots of energy and creativity," not "this person graduated from the right school, knows the right people, comes from the right part of the country, lives in the right zip code, etc." It must be first-hand meritocratic, not based on second-hand derivative indicators. DropBox's founder went to MIT, but that's not what made him great. MIT is just a good school. The guy may well have been just as great if he'd gone to Ohio State or some other less-prestigious school.

sokoloff 16y ago
I strongly agree with both of your points, at least in theory, but I will also observe that trivially and concretely verifiable derivative indicators (graduated from a "named" school) can be more practically useful than hard/impossible to quickly or concretely verify primary measures ("genuis with lots of creativity"). YC, Sequoia and other VCs are in the business of efficiently finding founders/companies to back; they are not and do not have to be in the business of increasing overall fairness in the world. There's also the "ambitious and gets shit done" angle. IMO, like it or not, getting into and graduating from a "named" school is one indicator of precisely those two qualities. There was a study recently that found there was a higher correlation between life outcome and where one APPLIED to college than there was to where one WENT to college. The takeaway for me was that people ambitious enough (and presumably confident enough) to apply to MIT would get similar results in aggregate to those who actually attended. I googled for a few minutes to try to find the study, but failed, so I apologize if I've mis-remembered or mis-stated the conclusions. Disclaimer: 1993 MIT grad here, but while I greatly value my experience there, I give basically zero "extra credit" for MIT on a candidate's resume over any other school and I'd take "built dropbox" over any schooling, 8 days a week.
- api 16y ago
  "There was a study recently that found there was a higher correlation between life outcome and where one APPLIED to college than there was to where one WENT to college." That is very interesting. Thanks.

naiverahim 16y ago

Investing in people is the best kind of investment; because a business of people is always profitable. A very powerful philosophy taught by Dale Carnegie.

deleted 16y ago

[deleted]

u48998 16y ago

There may have been number of storage sites popping up back in the days but didn't Dropbox provide something new and necessary technology to the PC? As in, don't worry about backing up your files? I don't recall even Box dot net - who was much in the tech news - provide such features.

petenixey 16y ago

We were in the same YC round as Dropbox and it was interesting was to observe the discrepancy between our views and the investors' views. While nobody in our class doubted the success (at whatever level) of Dropbox, it never created the same investor heat early on that many of the "trendy investments" did. I wondered about this at the time and put it down to investors' reluctancy (or inability) to spend the days it takes to actually get to know a company. I was fortunate to get to know Dropbox a bit more than most (and less than many). We were in the same YC class and shared an office for a little while. They was voted top of our class in YC - I don't think anyone doubted they'd be the most successful company. I don't think anyone felt that even if they were overtaken by Google Platypus or similar that they would fail either - they were doing such hard stuff and had such dedicated users it would still be a great technology acquisition. The company was a really great investment and in fact after Clickpass was acquired I asked Drew if I could invest but unluckily for me they weren't taking on any more (very) small angels. The interesting thing was that in those very early days (post YC), the investors still weren't fighting their way into it or making the hullabaloo that you see around some of the other valley companies. Drew and Arash were never big-talking sales people, they never focussed on bells and whistles and instead just concentrated on building great product. Day in, day out they just came in, built amazing software and, starting with Aston, they slowly added other amazing developers around them. That relentless progress seemed to be something that most investors really weren't tuned into. Investors almost never take the time to actually hang out in a company and instead rely on consecutive and very similar meetings. They never actually watch a company work (although Mike Moritz did interestingly come and hung out in their apartment in the Y-Scraper before making his investment). I always therefore feel that statements such as you should invest "in the team", "in the market" or "purely in any other one thing" are all slightly trite because what you really want to invest in is the relentless march of a product towards a market. You can't learn that in a pitch though or from a founder's personality or even their CV - all of these are single data points and you want to measure the product trajectory. You can however get a very real feel for that by spending real time with a company, in their office. I'm sure you would get some false positives from it but in the long run it would be hard to avoid the true negatives. Dropbox's office was calm, intelligent, very productive and full of debate and fiercely intelligent employees who believed without hesitation in the product. The developers were constantly interacting with their customers through their forums and they hung out as a team after work. It was totally and utterly different to many other offices I have observed and made it very hard to imagine an outcome that would not be good. They knew the market for their product, they knew it was big and they marched relentlessly towards it. I know lots of smart, driven, successful people whom I still wouldn't invest in but I would be very interested to know how many such teams with the kernel of a product people like, in a market that is significant and who march relentlessly towards it do not constitute a good investment.

dablue 16y ago

Ever since it's been blocked, who's interested in creating a Chinese version of dropbox within the GFW? Let's get together and create dropbox.cn or for legal reasons, cndropbox.com ^^