DropBox: The Out of the Box Expansion

Sept 2008: 100K registered users Dec 2009: 4M registered users. Wait, what just happened? This is the story of DropBox. Introduced in 2008 as a simple cloud storage technology which allows you to save and recover your files from the web and access them from anywhere, Dropbox gained huge customer traction in a very short period of time. How you may ask?

By a simple referral program. This is where we introduce the concept of Growth Hacking.

In simple terms, growth hacking is synonymous to traditional “less is more” concept. Under this, marketers (usually startups) uses experimentation to curate methods that can help companies to record massive growth in a short time and on small budgets. In the recent past, companies have even started to focus on growth hacking as a specialized department.

Back to our story. When Dropbox was introduced, there were only two major players in the market, namely box.com and Mozy (Likes of Google Drive and iCloud were introduced post-2010). In order to differentiate themselves from others, Dropbox did two great things that boosted its adoption rate.

1. Reduce Friction

2. Two-way referral program

Friction is basically the stop points that a customer has to pass successfully while signing up for a service before fulfilling their main purpose. For example, the greater is the number of sign-ups and confirmations that an app asks for before successfully creating an account, the greater will be the friction. In real, friction is used in a much wider sense to suggest any attribute in your product/service that is slowing down a potential sale/trial. As expected, Friction tends to reduce product adoption rates and discourages trial inducements. Dropbox realized so. As a pioneer, they created the first ‘only six-step’ onboarding process for their app. This totally worked in their favour as their competitors’ sign up processes weren’t very customer friendly. On top of it, in the onboarding process, the last step was the reward. Dropbox had a simple strategy. Reward people with extra space not just for referring their service to others, but also for accepting the referral. It is called a two-way referral process. Though it is very common today, here we are talking about 2008. This proved to be a good incentive for users. Think this way: what would people want other than some extra space while signing up for a cloud storage service? Hence, the benefits offered by Dropbox’s referral program were clear, communicable and relevant.

This idea soon became a trend. The adoption rate of Dropbox was phenomenal. We are talking about 3900% growth in 15 months. However, Dropbox had its own box of limitations. Citing from my own experience, Dropbox had a very poor image storage mechanism. While storing, they compressed the images to a limit, that on retrieval, the image quality was highly compromised. But today we have better options.

Fun fact: AWS (Amazon Web Services) was the first company to commercially offer cloud storage services.

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