In 2007, when Drew Houston was pitching Dropbox — the cloud-based file storage provider — to investors, he often had this exchange:
Venture Capitalist: “There are [already] a million cloud storage startups.”
Houston: “Do you use any of them?”
Venture Capitalist: “No.”
… into what is now an $11B public company with 700m registered users and — in 2020 — revenue of $1.9B, per The Wall Street Journal.
There’s a problem, though.
Unlike Houston’s conversations from the early Dropbox days, there are countless cloud storage companies now… that people do use. You may know these 2: Apple and Google, which both offer loads of free storage.
It includes efforts in centralized document editing and 2 notable acquisitions: DocSend (document tracking) and HelloSign (digital signatures).
However, revenue has slowed and its core cloud business is largely commoditized.
… has taken a sizable stake in the company, per WSJ. To get a return on its investment, the hedge fund will likely have to find a private equity buyer for Dropbox or a merger partner.
The hedge fund has notched some recent high-profile wins, catalyzing change at AT&T (to leave the media business) and Dell (to spring off VMware).
However this shakes out, Houston will likely be facing much tougher investor conversations than he did in 2007.