Dropbox: It just works Case Solution
The first generation of cloud storage services depended on simplistic model, where document accesses were diverted automatically over the web rather than PC's hard drive, yet they had performance advantage of putting away records locally and repairingthe cloud copybyusing time and data transfer capacity (bandwidth) saving optimization. Other is the Freemium model that has online backup storage, easy access of data and globally accepted applications and third business model is risk reduction reliable backup model.
The business expanded from $76 million in 2007 to $ 715 million in 2011. After long stretch and examination, they got their underlying funding from YCombinator, a seed fund and incubator. At first they give those 2% to 10% and additionally managing workspace and acquaintances with different consultants and financial specialists over a three month time frame. Later on they propelled BETA version for limitedgroup of clients who enrolled through a basic landing page. They utilized guerrilla advertising, web based promoting and viral marketing.
They focused on developing the product that provides user friendly and secure services thus, the company involves in product segmentation to increase the growth.
Key elements of business model:
Key partners: it is the strategic partner with HTC that provides 5 GB free Dropbox storage.
Key activities: It shows the continuous development of products and services; troubleshooting for clients and promotion of services.
Key resources: physical assets (servers, internet); intellectual assets (customer database); skilled employees and increasing financial funds.
Value proposition: Freemium model, simplicity model and risk reduction model.
Cost structure: Second round of funding was raised in 2011 in order to finance growth and acquisition.
Revenue stream: Its pricing mechanism involves fixed pricing and payment is made based on subscription or usage based
The main problem was applying the effective strategy as the competition was intense and in order to sustain the growth, the company needed to add features in the product for continuous growth. Secondly, the company was facing the problem of funding as it was involved in the 2% to 10% of the amount through which it survived. Along with this, the company was facing a problem in its beta version testing that increased the beta testers from 5000 to 75000 overnight. The company also faced the hiring products as it was very difficult to hire experienced and good employees and to hire the wrong staff might result in failure of the business. On the other hand, the company was facing the problem of high cost of marketing and promotions that required $ 300 per click to acquire the customer that was very expensive for the company.
Dropbox profitable as of June 2010:
Dropbox’s profit in April 2010 had 4 million clients with 2.8 million direct referral invites, which suggests a $10-15 million income keep running by mid-2010. It is observed that they will be profitable in June 2010. They are on track to have a $240 million income with just 70 staff members in 2011. Houston could raise a sum of $257.2 million in capital from investors. The quantity of users is growing at an increasing rate, as this happens and the quantity of system records becomes bigger their costs reduces and margins become more extensive.
Applied for Y Combinator
Dropbox got funding from Y Combinator in April 2007 of $ 15,000. Houston had comprehended that they could not generate sales unless confirmed by IT and no declaration was acquired until you have a track record. So they began focusing on clients and not organizations initially and they used Guerilla marketing strategy.
Key elements of Dropbox's business model of Y Combinator:
The main key components were the accessibility and simplicity of the products and services. To underline this perspective he asked each VC who talked with him regardless of whether they were usingsame sort of product, considering that, at that point, there were some solutions in the market. The product worked consequently and managed complex operations in just a simple ways.
Another key component was the high quality of services that Dropbox offered. Quality was characterized by Houston as far as security of the documents and data and speed of the procedure. A program was made to work with some new technological ideas that upgraded changes.
Concerning target clients and its technique of client procurement, he mentioned the objective fact at the time, that potential clients were actually skillful, (e.g. undergrads downloading music P2P) yet that because of the simplicity and development of the web it could quickly develop...............................................