Dropbox has seen some impressive growth- from 0 to 100 million users in five short years. But more impressive is how they managed this without a proper advertising budget, despite being a newcomer in a crowded field. Instead, they relied on getting their users to share the service, simplicity, and a four minute video (featured later in the article).
Dropbox- leading up to this point
In early 2007, Drew Houtson had a problem. Syncing files over multiple computers was a frustration that no one had solved properly. Houtson says that at the time, the existing services “suffered problems with Internet latency, large files, bugs, or just made me think too much”. So he set out to make a better file syncing application.
After four months of talking to potential clients to make sure that this was a problem with working on, hacking together a prototype, and bouncing around ideas, Houston headed to San Francisco to pitch his idea to Y Combinator, the incubator co-founded by Paul Graham. He also posted his application on HackerNews during this time. It’s interesting to go back and look at what people were saying before there was any indication that the service might get big. This comment in particular was insightful. The idea for Dropbox wasn’t a big “this is what I need to do with my life” moment, but rather, one of several ideas that Houston thought might be useful to work on. He just picked the one he felt was the biggest problem in his life.
Houston ended up securing $15,000 in seed funding from Y Combinator. He also picked up a co-founder, Arash Ferdowsi- a fellow MIT student. This was later backed up by an investment of $1.2 million by Sequoia, a backer of Google and Yahoo. Dropbox officially launched at 2008’s TechCrunch50. Now, they needed to acquire users. One of the first thing they tried was advertising on Google, like most services do.
That brings us to this stage.
In late 2008, Dropbox was losing money on Google Adwords. With the cost of acquiring a new user through advertising being at $300, the $99 product wasn’t exactly a runaway success yet. The problem was that Dropbox wasn’t a service that users felt like they needed until they saw it in action. It couldn’t be described properly. This just goes to show that not all forms of advertising work for everybody. By switching to the methods detailed in this article, Dropbox went from struggling to get users to the service we know today.
How did Dropbox get 70,000 beta list sing-ups overnight because of a video? Why are users interested in sharing the service? Let’s have a look.
1. Getting users to share Dropbox
Word of mouth is one of the best ways to grow a service. Friends trust each other’s recommendations, and know which of their friends might also be interested in trying out your product. Satisfied users want to show their friends what they’re using. You should make that process easy for them.
After their failed attempt at Adsense advertising, Dropbox turned to its users. They decided to start a viral referral campaign. Users were rewarded extra space on Dropbox for various actions: sharing the service on Facebook, following them on Twitter, emailing a link to the service, and so on.
This encouraged users to share the product. Not only did they like using it, but now they had extra incentive to spread the word to their friends. During the next 30 days, Dropbox saw a total of 2.8 million invitations sent.
LESSON: Get users sharing your service by offering them something related to it in return. Of course, this requires that you have a product good enough for people to want. By keeping the reward related to your service, you provide them extra incentive to come back- as opposed to giving away a new iPhone. And as we know, people are more likely to act on a recommendation from a friend- so having them tell their friends about the service is one of the best forms of advertising you could hope for.
This might not apply to everybody. It usually requires that you are selling something, whether it’s actual products or subscriptions. But if you are lucky enough to fall into this category, give a referral campaign some thought.
2. A 4-minute video to explain the service
I love this. Dropbox doesn’t sound like much when explained for the first time (“Dropbox allows users to create a special folder on each of their computers, which Dropbox then synchronizes so that it appears to be the same folder regardless of which computer is used to view it”), but the usefulness is easy to understand when seen in action. So the answer is obvious- make a video.
To see if there was actual interest in the product, Drew Houston (founder of Dropbox) made a video explaining Dropbox. It was short, clocking in at just over 4 minutes. It was simple. But most importantly, it catered to the audience it was being presented to. Let’s take a look.
TPS Report? Tom Cruise? I think you get the point. Digg users loved this video. It not only explained a service that looked useful, but it also threw in a bunch of inside jokes. Houston was part of the community, and he knew what worked.
Again, they saw amazing growth. The amount of sign-ups on the “Coming soon” page went up by 70,000 in one night.That’s pretty good validation from just one video, huh?
“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,” Houston says.
LESSON: There’s two main points we can apply to our businesses here. First off, present your product in a smart way. If it doesn’t make as much sense in words, then show it. Your video doesn’t have to look like what Google or Apple do in their explainer videos nowadays- in fact, the kind of simple demonstration Dropbox used works better in a lot of cases.
Remember that you’re not just limited to video. Pictures and screenshots usually work better than just text. Just look at the current Dropbox website- they’ve dropped the video on the homepage, and have opted for pictures instead.
And second, know who you’re advertising to- and include something that’ll show that you’re sincere. If that video got shared on reddit today, users who got a chuckle from the familiar filenames would be quick to upvote. Don’t overdo it, but a laugh here or there helps a lot.
Dropbox saw a lot of success with these two methods. Chances are, there is a way of applying them to your business.
Are you explaining your service simply enough? You want to avoid long walls of text, and opt for Dropbox style videos or pictures.
Have you tried offering your users something for a referral? Until Dropbox decided to try different types of marketing, their Adsense based campaign wasn’t producing results.
When sharing your business with an audience, are you being sincere? Are you showing them that you are a part of the community, rather than just a marketer?
What’s one way you can put these ideas to work for your business?
What happened next.
After this tipping point, Dropbox usage grew quickly. People from all over the world, ranging from law students to relief workers, were using Dropbox to share and store their important files. “Thank you” emails quickly started pouring in from these people. “That’s when I knew we’d hit it,” recounts Ferdowsi.
By October 2011, Dropbox had over 50 million registered users. A few months later, it was reported that Dropbox held 14.4% of the worldwide file backup market. And in under a year, the users had doubled again. By this point, it was pretty obvious that Dropbox was going to be something huge. It’s great to look back at Houston’s simple video, or the Hacker News post about his little startup, and see that not so long ago this was just another small project.
Today, Dropbox is serving 300 million people around the world.