Drew Houston, Co-Founder, Dropbox
By now, the story is legend. When Drew Houston boarded a bus from Boston to New York and discovered that he had—yet again—forgotten to bring his thumb drive, he was frustrated. So frustrated that he sat down and began writing the first lines of code of what would eventually become Dropbox.
After over a decade of changing the way files are stored, synced, and shared, Houston is changing the way people work, once again. This time, to solve a problem that likely plagues every single knowledge worker today: our fragmented, overcomplicated workspaces.
In this episode, you’ll learn more about Houston’s journey—from ideation to launch—with Dropbox Spaces, as well as the most important lessons he’s collected while building a multibillion-dollar company with over 500 million users.
- The relatable experience that inspired Houston to come up with the idea for Dropbox
- Why Houston doesn’t believe there’s any “magic” involved in building a multibillion-dollar company
- The importance of decision making and learning continuously on the job
- How a conversation with a SpaceX engineer sparked the vision behind Dropbox Spaces
- Houston’s advice on “harvesting” versus “planting” when it comes to your business
- Why Houston is such a huge believer in intentionally designing your environment—at work and with your personal relationships
Full Transcript of Podcast with Drew Houston
Nathan: So the first question I ask everyone that comes on is how did you get your job?
Drew: How did I get my job? On a bus ride. I kept forgetting my thumb drive, and the whole Dropbox founding story is I got really sick of having to carry my thumb drive everywhere. And if it wasn’t a bus ride, I was putting in or about to put in the washing machine or I was always one step away from disaster. And then I was on a ride from Boston to New York, forgot my thumb drive, couldn’t get any work done and started writing the first lines of code for what became Dropbox even though I had no idea where that was going to go at the time.
Nathan: Billions of dollars in annual revenue, hundreds of millions of users, you’ve had incredible success. Some people would say that the success that you’ve had, you’re an anomaly. Do you think anyone can achieve what you’ve achieved in life and business?
Drew: Yeah. I think there’s… One thing that’s been surprising about going through this process and meeting other people who have gone through this process is when you’re just in your room with an idea, or if you are starting your first company, you wonder what’s behind the curtain, right? Or like, who is this? Who are these people that are able to do all these things? I’ve been pleasantly surprised that there’s not anything that magical about it.
I mean, there are a lot of factors that go into making something work out that some of those are outside your control, like things we’ve benefited from timing with Dropbox and so on, but… And true, that odds are stacked against having a company that goes public. There’s a confluence of luck and skill and just not giving up is a big part of it, too.
I don’t think it’s literally true that everyone should start a company or that every founder can roll the dice and have that kind of outcome, but I have been pleasantly surprised that it’s achievable. And even if it’s overall successful, there are a lot of ups and downs and it doesn’t always look successful from the outside.
Nathan: Yeah. One thing I’m curious around is from my own experience as well, is when it comes to navigating and the ups and downs, essentially, it’s making decisions. As a leader of this company, you have to make decisions every single day. You see they wear the same uniform. A lot founders, they don’t even want to have that decision fatigue on what they’re going to wear.
So I’m curious, how do you go through the decision making process every single day challenges that you face, ups, downs, fires you have to put out and you’ve got to make these decisions fast. What does that look like for you? How do you work out what the next move is, what’s the right decision? Because you’ve obviously been right obviously 80% of the time. And I think that’s a really critical thing.
Drew: Well, I’d give one answer today, but I think there’s also been a journey where that answer would have been different along the way. So now at our scale, and I think most companies, after a certain level of progress, will be thinking about the same things or most CEOs, which would be… Well, first question is what decision should I be making? Right? And being intentional about that, because part of why you hire a team and you get great people in your company is so that you can divide and conquer on a lot of these decisions.
Part of it is building judgement in some of those formal, like, okay, here are my formal… You know, there’s a document that says it’s true, it’s the role and responsibilities that we thought about. And then there’s a lot of stuff that comes at you. Then developing the judgement and the instinct or spidey sense around this thing seems important, but it’s actually not that big a deal. This little thing that just was some offhand comment somewhere is actually a string I need to pull on, and I think some of that comes with time.
Your 80% comment is important because no one gets all the decisions right. When you look at what successful decision making looks like or sort of common failures in decision making, often one is just not making a decision or starting letting things happen to you. There are a whole bunch of things that are important about making good decisions in general, but then I think more important is how do you make good decisions? Or how do you put yourself in or how do you train yourself to be good at that?
Because a lot of what I have experienced with now, I didn’t have experience with 10 years ago. So it’s really more of that, how do you train yourself? Because no one does that training for you. And that training happens on the job. So first, that’s important to know because it can be intimidating when you start, because especially every year or two in, a lot of what you learn is that you don’t even know what you don’t know. As soon as you start to discover to shine a light on that, you’re like, “Oh my God, there’s so many different things that my company and I need to be on top of, and it can be overwhelming.
So just realising that that’s normal, no one comes out of the womb a CEO, it’s a learned role or learned job. It’s not something that you’re born knowing how to do, or there’s not this super class of entrepreneurs that just have it all figured out. Everybody by definition is a CEO for the first time at some point. So I think going into that mindset is pretty important because otherwise you won’t even try or you’d get totally overwhelmed, which is not helpful.
So then the question is like, “Well, how do you train yourself to do that? What does that look like? How do you learn? A big part of your job as a startup founder needs to be… The way I think about it is how do you keep your learning curve or your growth curve ahead of the company’s growth curve? A lot of your job throughout will be, there’s going to be a lot of stuff that comes at you and you have to be right and you have to be fast and right more often than wrong about a lot of different things.
So I’ve found a few things valuable for just thinking about it that way. It’s like, how do I make sure that I’m… What does that mean? How would I do that? One question I like to ask myself is, “Okay, a year from now, two years from now, five years from now, what do I wish I had been learning today? Or what will I wish I’d been learning today? Usually, the answers will be pretty different on different timescales.
I remember back in 11 years ago, we just raised a seed round. We had a prototype and we’re about to raise our first round of funding. And that list of like, what do I need to do? One year, two year, five years would be very different, right? So one year it would be like, all right, we have a prototype, but we have no users. We need to figure out how to get users. Right? But on five years, it’s like how to become a good executive, how to become a good manager, how to become a good leader, how to become a good public speaker.
There’s to-do lists that have pretty heavy things that fortunately you have time before you really need to be great at them, and you can actually improve a lot in five years. So you probably can’t… It’s like learning an instrument. A lot of these skills first, most of them are trainable. You’re probably not going to be great at guitar in three weeks, but you can probably make a lot of progress in three years.
So thinking about or trying to answer that question. And then through me, it’s been reading, it’s been having other founders and a community of folks who are one year, two years, five years ahead, or at the same place. You’ll learn different things from each. And so developing a strategy for learning, which we can talk more about.
Nathan: Yeah. Because when I think about founders that I’ve seen that are really successful, a lot of the times they’ve just been able to outlearn everyone that that joy really comes down to. Of course, they’ve got an incredible team, great product, all those other things, but with the CEO leading the company, they’ve been able to outlearn. So I’d really, yeah. I’d love to dive a little bit deeper on that.
Obviously, being at Y Combinator and having that network has been incredible for meeting founders that are a few years ahead of you. Do you think that that is a must for being able to outlearn or…?
Drew: I think it helps a lot because there’s a part of the learning that you have to do yourself and it’s in the set of actions that you take. And then second is the environment you put yourself in. I think you have to take care of both. For me, the environment was really important. So going back, even to college, a lot of the first employees that worked at Dropbox where some of our fellow students at MIT and Arash, my co-founder, and I… He dropped out of school to do this, which is a whole other story, but he’s about to be a senior. But I met him through another friend of mine who I met in the Entrepreneur’s Club at MIT. If I hadn’t had that relationship, things would obviously have been very different.
So there’s that network of people that have similar goals as you, who inspire you, kind of friendly competition. A lot of what got me interested in Y Combinator is one of my best friends who is another classmate at MIT got into Y Combinator and I had been rejected a couple of years before. I was accepted the second time around, but the first letter from them was a rejection letter. But that kind of environment of choosing your peers, being intentional about it and not just having random people around you. And then certainly, moving to Silicon Valley, being in Y Combinator, it gives you a community of founders who are going through similar things.
And then if you’re in some kind of hub for startups and you have role models and people that… especially as you make progress on your business, and if you do interesting things, then you get access to interesting people, which is helpful in a bunch of ways. I think being thoughtful about designing your environment is as important as a lot of the skills, okay, how do I learn? But those skills are important, too.
Nathan: Interesting. I’d like to switch gears and talk about yesterday’s announcement. So yeah, for those that are not familiar with the new vision and mission, I’d love to hear what the kind of switch is.
Drew: Yeah. Well, yesterday, we introduced Dropbox Spaces and Spaces is part of a bigger evolution we’ve been on. That really started with our customers and realising that the experience of using technology at work has become incredibly fragmented and distracting. A lot of the tools we’re using that you think would be helping us focus have unintentionally made it impossible to focus. That’s a problem if you need to use your brain at work because your brain works best when you can focus. So that was the higher level problem.
But then with Spaces, what we wanted to do is like, well, how do we fix this environment? How do we make it less fragmented? How do we make it less distracting? How do we take people out of a hundred different tabs and all these things blinking at you all day and all these different apps that don’t work together? And how do we evolve Dropbox into the app that makes all your other apps work better together? Because certainly we saw our customers having this problem, but we’re all living this, right? Because it’s very different from 20 years ago when we got five emails a day, not 500. Maybe you’re just using Office and that was fine. But now you’re using Office, Angio Suite and Slack and Zoom and Dropbox and all kinds of stuff.
Nathan: Too many tools.
Drew: What we saw people doing with Dropbox was not just… They didn’t see it just as a place for your stuff, or just a folder on your desktop. It’s the place you’re going to work. So when we thought about it that way, we realised we would have designed… We made a bunch of different decisions and realised that Dropbox actually is really well positioned to help people focus at work.
So, what does Spaces do? Well, it’s a more organised… It’s an evolution of the shared folder and moves it beyond being a folder full of files to an intelligent team workspace for any kind of cloud content. So, two big advantages. One is moving beyond files. Certainly a lot of teams need to collaborate around files, but all of us needed… We use a lot of other things, too, right? We’re using Google Docs, Airtables, Figma docs, Dropbox paper, all kinds of stuff.
There’s never really been a great way to organise all that in one place. Because you can go to Dropbox or you can go Google Docs, but then you have two search boxes or 10 search boxes. And we saw a big opportunity to pull that altogether. So you can still have your PowerPoints and PDFs, but they can be next to your Google Docs and be in Trello boards and whatever else you have give you one space, not 10.
The second is turning Dropbox into more of a workspace. So when you look at how Dropbox has worked since the beginning on your computer, the interface is the operating system, and that’s in many ways what people love about it. It’s just in the background, it just works. So there’s a seamlessness that’s really good. But then there are a lot of limitations because if you look at the experience of the finder or just your operating system in general, that user experience hasn’t really changed since, or basically looks the same as the early ’80s, when it’s first introduced on the original Mac, right? It’s a list of files and folders, stuff starting with A. It’s the single player static experience that was perfect for when our whole life fit on a couple of floppy discs and computers weren’t networked.
That’s where that experience was born and it hasn’t kept up. So when we looked at that, we’re like, “If you were to redesign this for 2019, you’d make a bunch of obvious changes. You’d certainly do want to be able to have the content and you’d want to have files and any kind of cloud content, but then you want to have people and you want to have activity and you want to be able to comment on things and see what’s been happening. You want to organise by all the projects you’re working on.
You want to be able to see your calendar and Slack you from the app, or start a Zoom meeting with you from the app. These are all things you can do with Dropbox Spaces. So that in conjunction with a new foreground desktop app, what we call the New Dropbox that we announced in June, is version one of building this smarter workspace. Because a lot of that environment right now is really, there’s a lot of room for improvement.
Nathan: Yeah, no, it’s super cool. I was really excited to see what you guys are doing, but I’d love to dig into the strategy there because you guys are one of the category Kings in storage and files. Right? And in some cases you would think, okay, well, you guys do acquisitions like HelloScience and all the tools that we use. We pay for like a hundred different SAS tools at that company, right?
Drew: Sure, yeah.
Nathan: So many different tools. There’s too many tools and I agree with you. But I’m curious why the… I think it’s really interesting how you guys have decided instead of maybe building your own tools, just bolting them on. You’ve got this incredible brand and hundreds of millions of users. Why not just bolt on these different tools like a project management tool, like a messaging tool? But you guys have gone the other way and you’re integrating them all. So it’s all seamless.
I’m curious, why did you choose that strategy? Because yeah, you would think if you’ve got this brand, you would try and just bolt on another tool that is… and try and become a category King and say, yeah, let’s not use Slack. Let’s use our tool with… You know.
Drew: Right. Well, it starts with the customer. What problems do they need solved? Because a lot of these other problems are either solved or are in the process of solving themselves. And we learned this lesson the hard way in some ways early on, because in the beginning, Dropbox was a place for your stuff and that’s how a lot of people used it. But then a few years ago, we found that people were using it for photo sharing, using it to back up their phone, using it to collaborate at work. And these are very different customers, very different use cases and really needed very different products.
So we found ourselves spread pretty thin and we realised that our market was evolving. So our products needed to evolve and you need to be thoughtful about how you do that. You need to figure out where is your company really going to contribute and have an advantage. We have a tonne of advantages in the beginning because we were the first to scale with this market of cloud storage. But then that evolved. And then the most valuable part of that, it became an even bigger market in cloud storage, which was file sync and share, or the ability to collaborate on files.
We realised that if we just try to stay a cloud storage company, that was going to be a bad place to be because of fairly obvious things like are we going to compete with the iPhone to back up your iPhone? How’s that going to go? Right? And then in photo-sharing, a bunch of companies are working on that. But we saw that three, four or five years ago, the problems that really weren’t solving themselves were a lot of the stuff we’ve been talking about, which is the tools that you’d think would be designed to help knowledge workers use their brains, are inadvertently creating all this busy work and friction, making it impossible to focus.
I found that personally, just fascinating. I experienced it myself and I’m like, there’s a big opportunity here. So the strategy has been to think about, all right, yeah, we could bolt on a bunch of stuff. A lot of tech companies do that. That bundling strategy is often very successful. But in our case, we didn’t want to just duplicate, just build another thing that was like everybody else’s thing when there were all these other obvious problems like the one that we’ve been talking about, which is like, all right, now I’ve got this new problem that didn’t exist 20 years ago, which is how do I organise my working life across all these different ecosystems and tools?
Because I’m not going to make the tools go away because they’re great. The tools themselves are great, but they’re just missing a connective tissue. They’re not part of a smart system. The problem is in the tool. It’s the workspace. Our workspaces, no one’s designing it. It’s just sort of happening. So that element of focus on just getting back to fundamentals, who’s our customer, what do they need? Who else is trying to solve this problem? Why are we better? As your company scales, you have to get really explicit about those things when you can kind of wing it before. Those are really important questions to get right.
Nathan: Interesting. Because yeah, as your company grows, you want to expand the business model and try and have that S curve. Right? Because products come and go, right? And you want to be able to ride that. So sometimes it can be too late and you can get left behind, or sometimes which often is the case, founders get, I guess they experience entrepreneurial ADD and they want to create something new because it’s fun. How do you know? Because we talked about focus and this is the kind of the theme. How do you know when it’s time to launch a new product or new service or another way you can help your users?
Drew: We talked about learning. First is having a good understanding of how markets work and realising that whatever your particular business situation is, it’s very unlikely that you’re the first company to ever experience it. Sometimes, especially in Silicon Valley, there can be kind of this exceptionalism. It’s like, “All right, it’s all different this time. We’re a tech company, so the rules don’t apply to us anymore.” And sometimes there are ways in which that’s true, but more often what you’re experiencing is pretty has been seen many times in business or at least rhymes with many. If it’s not the exact situation, you can draw a lot of analogies.
And so studying business, business histories, studying markets has been really helpful to me. One of the things that caused me to get clear on strategy was not actually reading about tech. It was reading this book Playing To Win by A.G. Lafley and Roger Martin. What was interesting about it to me is it’s a strategy book, but it’s about Proctor & Gamble. I thought it was interesting because I’m like, well, if we think of people, people say Dropbox is getting commoditized, whatever, and I think there are important ways that were wrong about that, but they were right about parts of our business. But anyway, if we think we’re dealing with commodity elements of business, try selling paper towels, right?
Drew: How does that work? The way it works is getting really specific about it. And what I just said about getting really specific about who is your customer, where are you going to play? What markets can you be number one, and how are you going to win? How is your playbook different from your competitors? A lot of that came from that book and books like it and connecting the dots between how strategy works in general.
So that was kind of the learning progression for us. We just sort of built this product. We knew we were solving an important problem and our timing was great because the public cloud came along literally a year before we founded the company. The iPhone launched the year we founded the company. Suddenly this went from a very like file syncing in cloud storage, went from this very niche thing to something that everybody needed almost overnight. And that was enough to us.
So understanding the strategic questions, understanding those S curve, that kind of S-curve thinking, and in our case, our initial S curve was cloud storage. Then we sort of rode that wave and now to get on another wave, which is file sync and share. That market is reaching relative maturity, although there’s still a tonne of opportunity there. But actually, this is all going to be part of this smart workspace, which is going to be an even bigger opportunity than that, which is similar. You imagine Apple, right? They start with the iPod. Then the iPod gets kind of subsumed in the iPhone. Or the Office Suites, the word processor, spreadsheet, presentation software, those used to be separate categories. Then they came together in the Office Suite. That was new category. So understanding categories and how they evolve is really important.
And then you’re like, well, how do you know how much to spread your wings or focus? That’s a huge challenge for any founder at any scale. You have to have a portfolio once you’re at a certain point. In the beginning, you have to have one idea of use. The focus is you have to do one thing. If your existing category is starting to mature, then you need to start thinking about a portfolio approach where most of your investment is going to be in the core business because that’s going to deliver the results. That’s going to fund all the other stuff.
So you need to, especially a CEO, one of your jobs has to be is, how do I allocate resources between like planting and harvesting yield in the future? Like future versus yield in the present. Because if you’re all harvest, no plant, you have one problem. If you’re all plant and no harvest, you have another problem. And if you have to pick one, you have to pick. You have to drive the core business because otherwise you can’t fund anything else. That’s a long answer, but it’s an important series of questions.
So you have to have some investments in the core business, and to some things that are smaller scale that you want, that will be part of tomorrow’s core business, and then you have a bunch of speculative bets. To use an analogy, you have your trees, saplings and seeds, and it’s not that one is better than the other. You just need all of them. And you’re going to proportionally put more of your investment in the core, but make sure that each thing is graduating to the next stage.
Nathan: Yeah, it makes sense. Yeah. I think it’s really smart, what you guys are doing and the strategy with Spaces and it all makes sense. So we have to work towards wrapping up. Right? Sorry. I really enjoy this conversation.
One last question, and I’m just curious with everything that you’ve accomplished. I guess as founders, we always tell ourselves like, if we can get to this, it’ll be amazing. And we tell ourselves this story and it’s like, when we hit this, it’s going to be amazing. And then you hit it, and then what’s the next thing. I’m curious, at this point of your growth as a CEO and a founder, can you have it all? Do you still have that going through your mind? Like, I can’t wait till we get to this. Is this what you’re going through now with the new …?
Drew: Well, it’s an interesting journey. I mean, I think some of the big… We’ve been through a lot of cycles where a lot of the stuff we’ve done has been very successful and we’ve had periods where a lot of people were wondering what we were doing. I think what I’ve learned is stuff that’s pretty obvious, but it’s really important that… People say, get passionate about what you do. Okay. But I think you need to kind of be obsessed.
So I think one of the most important things you need to figure out is what can you get obsessed with and figure out what’s your playbook as an entrepreneur. You’re not really going to know until you start. But for me, I realised my playbook at this point is get really frustrated about something, want to solve it permanently. That’s not necessarily other people’s playbook. I’m like, “I can’t stand carrying my thumb drive. This is dumb. We should all live in the cloud. Why is it not like this? There are no good answers. Okay. Let’s just do it.”
And then three, four, five years ago, similar kind of thing. I’m like, “I’ve kind of collected all the merit badges that I want for in startup land. What am I doing?” It’s great, the stuff that we’re doing with files, but there’s so many more bigger challenges in the world, and then realising that… Well, I talked to this engineering director at SpaceX who was literally working on a Mars landing. I’m like, “This is really amazing. How does it work? What tools do you use? How do you all work together?”
And he looked at me like I had three heads. He’s like, “What are you talking about?” I was like, “What’s it going to take to put someone one Mars?” And the answer was basically a lot of emails and a lot of files. And I realised that every, whether it’s a Mars landing or sustainable energy, climate change, healthcare, education, with any big thing, big cause you care about depends on organising groups of knowledge workers, and basically getting them be able to use your brains.
And when I talked to him and anyone else I talked to, like the struggles of a rocket scientist are the struggles of an every day knowledge worker, like all these things and distraction, can’t focus. So I realised like, wait, we’re only as good as our tools and the tools are getting in the way when they should be helping us. I’m experiencing this as just in my own professional life. I’m like, “I’m running around all the time, like meetings all day, inbox all night. But I’m like, I’m not actually using my brain. What’s up with that?”
I got super frustrated. I’m like, “I want to fix that problem permanently.” I got obsessed with that problem where like there’s big organisation that can often have a lot of smart people, but the company makes some questionable decisions or build stuff that doesn’t make sense. And I got fascinated with that. I also had the chance to watch some of my friends who kind of reached the finish line, went on the beach, had a blast for like two months, and then they started having these existential crises. They’re like, “What am I doing in my life?”
They weren’t happy actually. And I realised the happiest people around me were the ones who were working on something that they really cared about. I think this is a lesson that you just have to keep relearning. And in my first company, I really love the idea of being a founder. I really love Photoshopping business cards that said founder on them, but I was doing test prep and helping kids get into college. And there’s nothing wrong with that.
But I was like, “If all my dreams come true, I’m going to be the King of standardised test prep.” And I’m like, “I don’t know if that’s really what I…” Again, nothing wrong with that. But I’m like, I think it was just like other stuff that I’m probably more passionate about and kind of burned out. And that led me on a meandering path. So forgetting my thumb drive and kind of becoming obsessed with Dropbox. I think a lot of these things are the fundamentals. It’s kind of basic, but there are lessons you have to keep relearning, even if you’ve been through it before.
Nathan: So can you have it all?
Drew: No, of course not. The last thing that is really important is… There’s this quote, I think it’s Ray Dalio and he might’ve gotten it from somewhere else. He’s like, “You can have anything you want, you just can’t have everything you want.” That sounds obvious, but if you think about it, it’s like, then that means trade-offs. Right?
I love what I do, but yeah, there are a lot of things I don’t love every moment. It’s a lot of responsibility. Right? And there’s just a lot of stuff that comes at you that you have to deal with. By choosing one thing you’re saying no to a lot of other things. But when you also realise that it’s your choice, it’s not a burden you carry, it’s a choice you’re making.
That’s important because if you’re like, “Oh, this is just such a pain and it’s happening to me.” You’re basically saying, “I have no control over this. I’m helpless. I’m a victim.” That’s a recipe for burnout and resentment and all kinds of bad stuff. But if instead you’re like, “No, no, no, I’m choosing to do this because look at this future state that the world… Look at the way the world should be, and it’s not happening by itself.
I actually need to put a dent in that problem. And I choose to do that and I choose to have this. And look at all this awesome stuff I have. And yeah, there’s the parts of my job or whatever that aren’t as great, but it’s my choice.” Then you have agency and it’s true, you’re making these choices. I think that’s really important because then that carries you through. One of your biggest risks can be burnout and getting exhausted and giving up. Figuring out how to manage your own psychology prevent that from happening. No one’s going to do that for you. So mindset and having a healthy mindset around these things is really critical.
Nathan: Yeah, I agree. Well, look, we have to work towards wrapping up. Thanks so much, Drew. I really enjoyed that conversation.
Drew: Thanks for having me.
Nathan: You’re welcome. Thank you.
Key Resources From Our Interview With Drew Houston
- Learn more about Dropbox Spaces