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tv   Studio 1.0  Bloomberg  August 22, 2015 9:00am-9:31am EDT

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emily: it all started with a line of code. that is now the foundation for dropbox, a cloud-based file sharing service that allows you to share and store and access any file from any device anywhere. today, dropbox is valued at $10 billion with 400 million users in 200 countries around the world. joining me today, cofounder and ceo of dropbox, drew houston. my life is stored on dropbox.
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252 gigabytes. is that a lot? drew: it is pretty good. emily: the criticism is it is so simple, other companies can do it also. how do you compete with that? drew: for our users, i think it is a couple things. one is the product is easy to use. the other is it is the most popular service of its kind in the world. emily: dropbox has 400 million users. where are they? drew: the vast majority are all outside the u.s. emily: you grew up outside of boston.
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what kind of kid were you? when did you get into computers? drew: it started in a living room when i was maybe three. my dad had just taken this thing out of a box and it was an ibm pc junior. my parents have pictures of me trying to smash the keys. i think i was mesmerized from an early age by this glowing screen. my dad showed me how to write my first lines of code when i was really little. he is an engineer. emily: your mother kind of resisted this. drew: i think she was sort of puzzled. she was like, aren't kids supposed to be playing with legos and going outside? they definitely urged me to have that kind of balance. emily: tell me about this story of a line of code written on a bus.
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drew: i was on a trip to new york. this was in the days before the iphone. you really didn't have anything to do. i was like, i am so disorganized. what does this keep happening? i started writing some code, having no idea what it would turn into. emily: why is dropbox worth $10 billion? ♪
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emily: you hear entrepreneurs talk about starting companies like staring into the abyss of death. what was it like for you? drew: not that dramatic. when i add up all the times i forgot my drive -- that was a motivator but fast-forward to
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today, people save the one billion files on dropbox. the design challenges in building something at that scale are really exciting for an engineer. emily: how many employees? drew: about 1200. emily: what does the bulk of the workforce do? drew: every time i wait a few weeks -- everything from the engineering of the product, interface design. people involved in marketing. emily: how many people are focused on security? drew: we have a dedicated security team. a couple dozen dedicated across all of these different facets of security. more broadly, you think about people who build our infrastructure are for the reliability of the service. emily: what does the office of the future look like?
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drew: i think there is a lot more freedom. in the old days, you would show up at work and they would issue you a laptop and phone and say you must use these things. now, we have a lot of choice. people are using all kinds of different devices. so, i think that has become an expectation. anybody at work wants to have choice and drop box is instrumental in that. people expect to work on their own terms. they want to be mobile, not tied down to any one environment. they can be free to work anywhere with dropbox. it means a lot more fragmentation. it is kind of a mess. the big thing we think about is how can we tie together all these different things you use? that expectation of freedom and seamlessness is really important and a big area of our focus.
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emily: those 400 million users -- how many of those are paying customers? drew: most people are using the product for free. if you need more space, you can buy more. dropbox is in 8 million businesses, up from 4 million. 100,000 business customers. emily: who are the biggest companies you signed up? drew: the vast majority of fortune 500s are using us in some capacity. under armour, hyatt hotels. every quarter, we are adding new customers. emily: what has been the biggest challenge in terms of penetrating the enterprise? drew: i think that businesses -- technology goes through this curve where in the beginning, people are unsure about it. i think it is beginning to flip.
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it is actually safer to have our information in services like dropbox and the cloud. the same way we don't put our cash under our mattresses anymore. emily: what is the value proposition to a business to choose dropbox? drew: anybody can provide storage. more and more it is about -- of course, my stuff will live in the cloud. organize it for me. help me collaborate. storage is just an ingredient. emily: another part is building applications on top of that. mailbox for e-mail, photos. drew: each of those is a new adventure. emily: how many users do those services have? drew: we don't break them out separately but they have been growing. we want to make sure the product is right. emily: why is dropbox worth $10 billion? drew: we are in 8 million businesses now.
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there is a ton of room for us to grow. even at 400 million users, still billions of people on the internet. you look at how valuable that problem is. the things people put in their dropbox are the most important possessions. if your house were burning down, these are the things you would get. for a company making their team productive, having a safe place for the most important information, these are extremely valuable problems we solve. we are shipped on most samsung phones out of the box. there's a lot going on and investors see the potential here. emily: you always said dropbox is a standalone company. do you have that same conviction today you had two years ago, eight years ago when you started? drew: for sure. being independent allows us to
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support all of the different platforms equally. other companies try to move in the space and they tend to favor their native platform at the expense of others. that is something that is really core. the switzerland approach is valuable to us and our users. drew: how do you raise more money in this environment? drew: we have been able to do a lot in the private markets. we were able to raise money we did not really need. emily: why take it if you don't need it? drew: we want flexibility. we do everything from investment in infrastructure, acquisitions. having a stronger balance sheet gives us flexibility to make big long-term investments. emily: do you have the cash you need to reach your long-term goals? drew: for sure. and we have control. the important thing is to keep investing.
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emily: could you go public without raising any more money? drew: for sure. raising this money means we are not forced to go in any direction and we can stay focused on building and growing our audience. emily: what are your plans to go public? drew: we don't have any right now. again, that is what we get with the flexibility from raising this money. emily: what have you learned from box's ipo? it got hammered. drew: i am happy we have our approach. our sales force means we don't have to spend the kind of money that others do on sales and marketing. emily: are you profitable? drew: we don't break that out right now. again, our investors are happy. things have been going well. our focus is really not on profitability, it is on investing and growing. emily: what is your view on
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burning through cash too quickly? drew: it has to start with your business model. we are fortunate that our model has not changed much. we have been largely funded by our users, not investors. emily: how do you balance between the fancy office and the company perks and making sure you are being responsible? drew: we have a great office space and we invest in things to make our employees lives easier. you will not see super expensive paintings -- we really make sure it does not look opulent. the danger companies can run into is giving everybody the impression that we have made it. we have tried to be balanced. emily: one of the things i have heard is that dropbox is losing some talented engineers. how hard is it to keep good people? drew: it is part of the war on talent, selling information like
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that. emily: ok. so it is not happening? drew: it is kind of the circle of life. people don't join any company and expect to stay there their entire lives. our recruiting numbers have been better than ever. emily: how so? drew: we monitor close rates and things like how many engineers are joining. we don't break that out but that is another thing about building a great team. they have friends and people they worked for at previous companies and if you get a core of great people, it makes it easier to recruit the next round. we're building this amazing roster of people and it makes it really exciting for those that consider joining. emily: what is the moonshot? drew: our hands are pretty full.
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what companies like google have done for the world's public information, we are trying to do for the world's private information. emily: uber is working on a self-driving car. airbnb is going into cuba. is there a stretch goal? drew: take something like carousel. when you step back, we are like, ok, i have this problem of my photos are in 100 different places. in the future, we should be able to have every photo you've ever taken with you wherever you are in your pocket. you multiply that times hundreds of millions of people and this is one of the largest collections of human memory ever assembled. we want to reimagine how people remember their lives. those are going to keep us busy for a long time. emily: how much do you think about building your own server? drew: we invest a ton in our own infrastructure and rent a bunch from amazon.
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i think for a lot of our infrastructure, we can get a lot out of commodity servers or commodity hardware. there may be additional gains. there are already companies all over that do a good job of that. emily: meeting steve jobs. how did that happen, what was that like? ♪
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emily: you are 32 years young. what is the hardest lesson you have learned as a ceo? drew: well, i think the hardest challenges are really around people. you bring 1300 people together and get them pointed together in the same direction. in any group, there will be people unhappy.
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how do you get people to collaborate even if they have different backgrounds? emily: what kind of advice has mark zuckerberg given you? drew: a lot of advice on company scaling. how do you organize people, set up -- you have to be a lot more thoughtful about how you compensate people, think about mundane things like their titles. you really stage things, have more merger products, a portfolio. a lot of things like that. emily: your cofounder -- i read it was married at first sight at the beginning. how has your relationship changed over the years? drew: i think it has been pretty steady. we had kind of grown up together doing this.
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our values have shaped by going through this experience together. emily: i know you pitched paul graham in the early days. one thing he told us on your first application is you would sell dropbox for $1 million. obviously, that has changed. drew: i am glad no one was willing to offer us $1 million. emily: it was good you did not get that offer, right? drew: then and today what motivates us is most building something people love. emily: meeting steve jobs. what was that like? drew: it was interesting. apple became aware of dropbox early on. we had some conversations with their team because they were curious about how we managed to put the little green icons on the files. turns out to do that, it was
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actually a pretty tough technical challenge. what we had to do was open our open-heart surgery on a code we did not write and their team understood this was some pretty crazy acrobatics and something no other company had done. eventually, steve reached out and wanted to talk to us. we are said we're not interested in selling the company. we want to be respectful of your time. if you want to hang out, sure. it was wild. we would get up in the morning and we needed one infinitely bad it is already in the phone. we spoke for the formal part of the meeting maybe 15 minutes.
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it was pretty clear they were interested in buying the company but we were having fun building it. emily: he said i want to buy you? drew: in so many words. we did not talk a number. i did not want to go too far down that path. we spent the rest of the time talking -- i had a lot of questions about why he came back to apple. he had different advice for us. we spent a lot more time than he needed to with us. you know, we were pretty clear that we were not going to sell the company but he was also taunting us a little bit. emily: they did. they unveiled the ipod. [laughter] emily: how do you think that worked out for them? drew: different products solve different problems. what people love about dropbox is it is easy to use. emily: apple had a huge problem.
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people's passwords were hacked. how do you make sure that doesn't happen? drew: we have teams of people who think about what can we do even if you are kind of sloppy with your passwords. we try to proactively identify suspicious behavior. we go at it from a bunch of different angles. emily: how has your personal life change now that you are rich and famous? drew: people would be surprised. it is not that different. i still spend most of my waking hours thinking about dropbox. emily: you have been on silicon valley. drew: i had a very important role standing there at a party. it is fun. i look at all of this as a new series of interesting experiences. emily: what is next for drew houston? drew: we have a lot work to do. emily: what do you want your place in silicon valley history to be? drew: the two things we really
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care about are we want to create a great company, a place were people can do their best work and our culture is a little -- we admire all of the other companies but we have our own distinctive culture and there is a handful of aspects we really want to preserve. for me, it is we are a pretty big scale now. what does it mean? what are ways that we can go even further? build this kind of treasure. this home for everybody's most important step is something that matters to a lot of people. emily: have you ever regretted not selling? drew: no. there are good times and hard times but it is all part of the adventure. emily: all right. drew houston. thank you for joining us. great to have you here. ♪
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♪ emily: it is a show about a bunch of geeks locked in a house, writing code. a most unsexy, un-hollywood premise that is now an hbo hit. the show is named after the world it lampoons. "silicon valley." it pokes fun at the india secrecy's behind the place where people can make millions overnight. behind the show, people that brought us some of the greatest satire in entertainment history. mike judge of "office space" and "beavis and butthead" fame, and alec berg, a top writer on
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