The 7 Ways Dropbox Hacked Growth to Become a $4 Billion Company

Did you know Dropbox has spent very little on advertising, yet it is worth $4 billion? What have they done that’s made their business so successful?

They’ve implemented many growth hacks that we’ll discuss in this article. What’s a growth hack? Instead of using traditional advertising to “buy” each new customer, it’s possible to use growth hacks to acquire customers in ways that scale. In other words, the cost of acquiring each additional customer is much closer to $0. All you have to pay for is the execution of the growth hack, and then it keeps growing your business at little to no extra cost.

For example, one growth hack is to incentivize some of your current users to refer others. This incentive may come in the form of company swag or a free month of your service. Another example would be badges or buttons that websites can embed in their website code. These badges and buttons link back to the website, which makes it serve as an advertisement. We’ll explain some Dropbox growth hacks below.

Dropbox has received many awards, including best overall startup for 2011 & the Webby for Best Services and Practices. It’s also now known that founders Drew Houston and Arash Ferdowsi turned down a 9 digit offer from Steve Jobs.

Here are some stats regarding Dropbox’s scale:

Not many SaaS companies can reach that kind of growth in 4 years, with or without advertising. So what has led to the consistent growth that Dropbox has experienced? I’ll share some techniques that Dropbox has integrated into their product that has led to the word of mouth growth of this popular cloud storage company.

1. Signup Driven Homepage

First time visitors to the Dropbox website will notice the simple layout, which lays the groundwork for the rest of the Dropbox product. The 2 minute above-the-fold video gives an explanation of the Dropbox product, something that Dropbox has had on their website from the very beginning.

Then:

Dropbox Home Page

Now:

dropbox homepage

The number of options on the homepage are limited. It’s clear what Dropbox wants people to do when a visitor comes to the site—signup. It’s similar to what many private beta startups will do before they launch to the public:

  1. A video on the homepage demoing the product.
  2. Gauge the interest in the business by seeing how many request an invite.

Takeaway:

It can be tempting to put your latest press release, feature or product on the homepage thinking that this will add more credibility and ultimately improve conversions. While some may help, they can also lead to a cluttered homepage. Anytime you think you need to add more to your homepage, just remember that Dropbox got 70,000 users overnight just by creating a demo video of the product intended for the Digg audience.

Don’t tell the user what to think, a wonderful product speaks for itself. It will need no convincing on your part.

2. Easy Signup Process

The signup process is only a few steps and a user can sign up on their desktop—no web browser needed.

Dropbox Signup on Desktop

Once a user signs up (either via web or desktop program) and installs Dropbox on their computer, Dropbox puts a photos folder and a ‘Getting Started’ text file to help get them started.

dropbox1

This helps the new Dropbox user get a little acclimated to the product and some of its functions.

Takeaway:

Back when it was popular, MySpace added Tom as a friend for you as soon as you signed up. Facebook encourages people to find their friends via email. Mint sends weekly financial summaries. Amazon sends daily emails related to your recent searches. Some eCommerce websites email you with a 10% off coupon if you haven’t ordered from them in a while.

How do you help users on their initial first steps with your product? What do you do to help them keep coming back?

3. Refer a Friend

According to Houston, referrals increased Dropbox signups by 60%. Dropbox makes it really easy for users to tell one another about the product; even giving them incentives. For example, when one person who has Dropbox refers another, they both get a 500MB increase, pending signup.

Dropbox makes it easy to refer:

Via email:

dropbox referral

Link:

dropbox referral link

Friend referrals instill more trust than an advertisement ever could. Furthermore , the sender has an incentive to spread the word about Dropbox—getting extra space. The referee also has an incentive for signing up—more space than if they just signed up through the normal process. This total costs Dropbox 1GB of space – far less than a Google AdWords buy.

Takeaway:

Before you put $5k into Google or Facebook ads, first see if there’s a way you can build in a refer-a-friend program. People will quickly jump on once they discover that there’s an incentive. With SaaS and E-commerce companies, you can also track the effectiveness of your program using it as an experiment. If you don’t know where to start with referral programs or are looking for a word-of-mouth program to help you, check out Curebit.

4. Social Media

We’ve all seen the stores with a “Like us on Facebook” or the “Follow us on Twitter” decals on front doors. It’s becoming all too common-something that people mindlessly see. Some companies offer an incentive to Like them, such as announcing specials for Facebook fans only.

Dropbox did something a little different. With each Follow on Twitter, Connect with Facebook or Twitter, Dropbox gives the user a 125MB increase:

dropbox growth social media

At the time of this writing, Dropbox had a little over 720,000 Twitter followers. While not all of them can be attributed to this hack, it certainly hasn’t hurt their quest to increase followers.

Dropbox incentivizes users to connect with them on Facebook and Twitter – giving the user yet another platform to spread the Dropbox product.

Takeaway:

It’s no longer enough to have a Twitter or Facebook account and put a decal on your store front window. If you run an E-commerce site, consider having something such as fans of your Facebook page receive 10% off every order.

The trick here is a user could Like you when they place an order, then unlike you once they complete to order and receive the discount. The way around this is to build an API to make sure it only works for fans who have Liked you consistently and not intermittently.

5. Sharing with Simplicity

Dropbox makes it simple for people to share files. Both the sender and the receiver have little work to do. To share a gallery with people, all a user has to do is copy a link:

gallery share

This is very similar to Facebook’s ease of photo sharing:

facebook dropbox similar

By sending people the photos that are hosted on the Dropbox website, Dropbox is getting more exposure (for free) to potential users. When unregistered people view the gallery, they see this short message at the bottom:

gallery message

Users also have the ability to copy the link from their desktop:

gallery desktop

“Zach Bulygo made this gallery by simply dropping files into a folder.
Get your own public gallery with Dropbox.”

Even in this promo, Dropbox is telling of their primary benefit – simplicity.

Sharing folders:

When a user wants to share a folder with a friend on Dropbox, anyone unregistered will have to register for Dropbox. This creates a strong viral coefficient for Dropbox.

Sharing links to files:

Remember when everyone used to download files using Megaupload, Rapidshare, Hotfile, and many other file hosting sites? These services were often plump full of ads, “premium accounts” with faster download speeds and no wait time for downloads, and many other money making tactics that took away from the core objective for the user: getting a file downloaded without having to jump through a million hoops!

Dropbox solved that problem.

If a user wants to share a file, they simply use the ‘Get Link’ function found on either the desktop or web. Users who want to download the file will see an image similar to this:

download get link feature

No ads, no signup required first, no waiting for the download link. Just a clean looking page with a focus on one thing: the file.

Compare this with a Megaupload download page:

megaupload download page

There’s a focus on ads & getting the visitor off the page to pay Megaupload. If they don’t want to, they have to wait at least 35 seconds for the free download.

If this can teach us anything, it’s that addressing pain points in competitors’ products are key when making your own product. Capitalize on their weaknesses and pain points.

Takeaway:

Not all companies have sharing functionality. If you’re one who does, it’s important to make it really easy for your users. Take inspiration from Facebook or Dropbox. Simplicity is at the core of what top technology companies do. When users share with other non-users, it gives Dropbox a chance to show off their speed, simplicity of design & usefulness. What does your product show off when users refer others?

6. Dropquest

Dropquest is a contest run by Dropbox that makes users go through different puzzles and scavenger hunts. Those who complete and place in the top 176 get free space and/or free swag. The announcement on their blog generated quite a lot of Likes and Tweets.

Dropquest has gotten Dropbox lots of publicity in the tech world for this (just Google dropquest).

Takeaway:

Contests can be a great way for companies to generate buzz about their brand and get users enthused about the product. If you haven’t already, you may want to try holding a fun contest with your users where they get more of your product in return. You just may end up generating some PR for your product.

7. Availability on Multiple Devices & Platforms

The nature of the Dropbox product makes it important for them to be on multiple platforms. People need to access their products from anywhere at any time. Being available everywhere is key for Dropbox, according to Co-Founder & CEO Drew Houston.

There are an estimated 20 million Ubuntu (Linux) users worldwide. Dropbox released their Linux program as soon as they launched to the public. These millions of Linux users did not have a free cloud storage solution at the time. By adding Linux support and continuing to this day to be on as many platforms as possible, Dropbox is making it easy for anyone who wants a Dropbox account to have one.

There are an estimated 2.0% of Dropbox users who use Linux exclusively. Going by the 50 million user base number, there are a million Linux Dropbox users. These are a million people who can spread the product by sharing galleries, referring friends, adding them on social media, and all the other growth hacks Dropbox has done.

Beyond Linux, Dropbox has maintained Blackberry support despite their shrinking market share. It’s also supported on even the least popular devices such as the Symbian.

Support on multiple platforms is not just important for the Dropbox product; it can also be considered an opportunity for growth. One Symbian user can spread the Dropbox product to one Mac user who may spread it to 100 people.

Takeaway:

Dropbox understands their users and the needs they have. They also have a leg up on many of their competitors who don’t support every platform. What are you doing as a business owner to achieve a distinguishable competitive advantage?

CEO Houston has big plans for Dropbox. They’ve gotten to where they are not by advertising, but by going to where their users are (Digg in the early days), keeping things simple, and implementing a few growth hacks. Startups are hard, but implementing a few of these growth hacks into your own company may make things a little easier on you.

Have you tried any of these? What else do you think has led to Dropbox’s growth?

Look for more growth hack posts from us in the near future.

About the Author: Zach Bulygo is a blogger for KISSmetrics, you can find him on Twitter here. You can also follow him on Google+.

  1. I LOVE Dropbox. I think keys to their success are because they are dead simple, clean, usable and initially….free.

    • Yup…I think it’s one of the best internet products out there – along with KISSmetrics ;)

  2. I’ve recently signed up for Dropbox and so far, I’m very impressed. Easy, clean and simple to use. I can already see why they have become a huge success! Thank you for sharing their strategies – certainly worth a shot!

    • Yeah–the first impression of Dropbox is the minimalist design.

      It just works – it doesn’t get in the way, it doesn’t slow down your computer, tech novices can understand it & it’s useful.

  3. That was a great article. I’m just starting out online for business and I’m sure this would work for a retail type website business? Or at least it sounds like it would? I’m doing a lot of studying and research before jumping into it. I hope to one day need your services, thanks.

    • Many of these probably could, specifically the social media and referrals. We’ll be having more growth hack posts in the future, so you can get even more ideas!

  4. When you say less is more.in landing page (and homepage too).
    I love dropbox, and I love their privacy policy. Try to comparing dropbox’s legal statements to the googledrive one!!!

    -M

    • There was a lot reported on that and I think a lot of people will shy away from Google Drive because of it.

  5. I’ve fallen in love with posts on growth hacking and I think this is a great start. Would love to see more examples down the line!

  6. Dropbox is great. I have been using them for well over 2 years. Thanks a lot for the information that shows us how they got to our brains. i will definitely use these points in my future projects.

    Question: How do they compare to Google Drive?

    Thanks

    • A) Google Drive is not available on all platforms
      B) Google Drive offers more initial storage

      I’m a Linux user, so (like almost every product) I have to wait until they release their Ubuntu program. Therefore, I haven’t gotten the chance to play around with GD. All indications are that it’s simple like Dropbox–it uses the folders so there’s no new program to learn.

  7. Great story! But how did they optimize for SEO? Or what kind of campaign did they deploy to get the first traffic to their website?

  8. Using a £50 adwords coupon and my referrer link I’ve managed to get up to 22.8GB for free in my Dropbox account. Free cloud space is important to my workflow so I’m more than happy to implement my own growth hacks for them! I use Google for much of my online productivity but I haven’t even considered switching from Dropbox; partly due to the free space I have but also due to the qualit of their service!

    • Wow–you’re probably getting close to the limit they place on free accounts.

      I agree with you–I’m not sure if people have a reason to switch from Dropbox. There’s not many flaws or weaknesses in the Dropbox product. They’ve made it tough for anyone to disrupt them in the cloud space–even if it is Google.

  9. The video on the Dropbox homepage also increases their conversion rate vs. a static page by a reported 10%. Given the traffic to Dropbox that means a huge number of new customers just because they have a video.

    The math is really, really compelling.

    50 million customers
    10% increase in number of customers (5 million customers!)
    $240 million in revenue
    $4.80 of revenue / customer
    $24 million of revenue per customer that converted because of the video.
    Cost of video would be less then $50,000

    This all takes into account only the revenue for 1 year! The video is a few years old and has been paid for many many times over while the incremental revenue from the video just keeps increasing.

  10. Not sure that their growth had much to do with anything you mentioned. The reason they grew is because it is an insanely useful product that is very easy to use. Essentially it is FTP that uses the mental model of your local folders. Everyone understands how to navigate their local file system – not everyone knows how to use FTP. Having a great name didn’t hurt either.

    • A really easy product is great and can help a product spread. But it’s a fact that Dropbox got 70,000+ users by posting a video on Digg. Dropbox CEO Drew Houston also has said that their referral system is their strongest driver for new user signups. Dropquest is also very popular and gets a ton of PR.

      I respectfully disagree. Simplicity & usefulness alone cannot get you to a $4 billion valuation. If you only needed those two than many more products would be successful.

    • IMHO I’d agree that the usefulness is number 1 but there is a viral loop built into the product, i.e. the usefulness of the product is that others use it too (friends/colleagues). Thus the incentive to share is inherent in the product. Same with facebook and groupon (the latter more so in the early days). The other growth hacks help in aggregate I’m sure, it’s the design & viral loop which are number 1 and 2! But having these two things isn’t a recipe for success. Positioning, customer segmentation and timing (first in the mind, not in the market) are all part of it… You’ve got to get a lot of things right to have a blockbuster success on your hands.

  11. Interesting, seems to me almost all big/incumbent companies do the exact opposite of this when launching products or services. The most obvious example is the sign-up process which far too often asks you to fill in a “life story form” and sometimes only with the payoff of getting a salesperson to contact you… The real mystery is that many of the people that come up with these stupid constructs would never put up with them for 2 seconds when looking to use a service.

    • Yeah-most signup forms ask for way too much. Websites should be happy that they have a visitor who is even thinking about signing up in the first place. They should ask for as little information as possible. Instead, too many of them then screw it up by asking for way too much & more than the minimum. Then visitors leave because they aren’t willing to take the time for a long signup form and the business loses out on money…all because of a form. The business could be great, but you have to get people in the door first.

  12. GIVING AWAY FREE SPACE for referals is ADVERTISING!!!

  13. GIVING AWAY free space is ADVERTISING through word of mouth! and that COSTS (like rewards and loyalty schemes)!

    • Calling word of mouth advertising is subjective. When I say they’ve spent little on advertising, I am referring to Adwords, Facebook ads, or any other promotion that takes place on a third party site. Dropbox has done little of that, as the CEO can tell you.

  14. Great Post! This is why growth hypotheses are so important. Each of these started as an assumption for something that worked. When it did they kept it. If any of the above didn’t work, I highly doubt it would be in Dropbox today.

  15. I tried to read this article on an iPad but when I zoomed in on the column of text that sidebar overlays otop of it.

    Thats literally the worst website design choice i’ve seen in weeks.

  16. Charlie Gilichibi Jul 16, 2012 at 7:19 am

    Newspapers moving to Digital should take a leaf out of this article. Simplicity and focus is what the design trends of today are. Missing this boat will allow others to come in and squat on the advantage. Apple did it with iPhone. Facebook on social networking. Microsoft hasn’t got it right and one day sooner or later someone will move in to usurp and supplant it from its throne of natural monopoly. Like Apple moved in and dethroned mobile platform incumbents Microsoft’s turn is coming. The digital space is becoming crowded now and that will push some to start seeking white space in other sub-sectors where there is only one or two players. For instance, Hewlett Packard (HP) took a leaf out of IBM, sold out its hardware business and is now doing enterprise software as IBM is the only major player in that space. HP was hardly surviving with manufacture of hardware devices in a crowded space, the margins were hardly enough as Microsoft was milking out too much on license fees for its software so HP had to swim away from a sinking business model.

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