It’s been reported that Dropbox’s challenges and some of its employees weren’t happy with the company’s slow pace of innovation — especially with regards to Dropbox for Business, its upgraded product that’s considered its most important business going forward. On Friday, Jessica Lessin, a former WSJ reporter who launched her own news site The Information, wrote a story about such happenings.
She writes: “I do know that some of [Dropbox’s] employees think its preoccupation with its consumer business has come at the expense of its success in the enterprise, and they have complained that the company is only now adding features like direct integration with the widely used Microsoft Active Directory authentication system.”
What Lessin is referring to is Dropbox’s integration with Microsoft Active Directory, one of the most common security features used by business customers. Although it’s a natural step for any early enterprise product to take, the fact that Dropbox just made this feature available earlier this month after launching its business product nearly two years ago shows just how far behind Dropbox is in the enterprise storage space.
In fact, Stratechery’s Ben Thompson, a popular media critic on the business of technology, raised a similar point in his news letter recently: “I was kind of shocked to realize that [Dropbox] didn’t directly support Active Directory integration until now (Active Directory integration has been possible via 3rd-parties like Okta for some time). This is table stakes for an enterprise product. Then again, as a product that was built first-and-foremost for consumers, why would it?”
Thompson has a point. Dropbox has always been a consumer-centric product, and is probably the most popular consumer file storage product in the market. Because of this, Dropbox never had to really focus on its business product until recently because it was already seeing tremendous growth on the consumer side. Dropbox claims to currently have 300 million users worldwide. But a large portion of those users are estimated to be non-paying users, and Dropbox has learned that going after business customers instead is a far more lucrative strategy. And they need that sales boost from the business side too: our sources have told us Dropbox’s revenue last year was a little over $400 million, which hardly justifies its $10 billion valuation.
The problem is Dropbox was slow to join the enterprise storage market, and as Lessin points out, some employees think its early success on the consumer side was the reason for the hold back. As some former Dropbox employees told us, the company had lost that sense of urgency after seeing massive growth on the consumer side early on — and it’s why Dropbox just started to really build up its enterprise side of the business over the past 18 months. But according to Lessin, the root of the problem may be in Dropbox’s strategy to do well in both the consumer and enterprise spaces. “While it’s more trendy and tempting than ever to want a piece of both pies, it’s more often than not a mistake…I think their continued desire to keep a foot in both worlds is also holding them back.”