Apple this week delivered its latest attempt at giving users the ability to seamlessly share documents and media across a multitude of devices with the roll-out of iCloud. But before Apple developed iCloud in-house, it sought to acquire Dropbox – which you might recognize as the highly regarded web based file hosting and digital storage service that lets users share and download files with unprecedented ease. In many ways, Dropbox is an Appley type of service. It’s sleek, extremely easy to use, convenient, and as Steve Jobs likes to say, “it just works.”
Not too long ago, word got out that Apple was seriously interested in acquiring Dropbox and had offered upwards of $800 million to founders Drew Houston and Arash Ferdowsi. While this report was largely speculative, Forbes has a new profile of Dropbox wherein Houston confirms that Apple was extremely interested in the company and that Steve Jobs himself was involved in the negotiations.
Steve Jobs’ power of persuasion are legendary. He convinced John Sculley to leave Pepsi with his now famous line, “Do you want to sell sugar water for the rest of your life or do you want to help change world?”, and he only needed 5 minutes to convince Tim Cook to join Apple when the two first interviewed in 1998.
But alas, Jobs was unable to convince Dropbox, which now boasts over 50 million users, to sell.
In December 2009 Jobs beckoned Houston (pronounced like the New York City street, not the Texas city) and his partner, Arash Ferdowsi, for a meeting at his Cupertino office. “I mean, Steve friggin’ Jobs,” remembers Houston, now 28. “How do you even prepare for that?” When Houston whipped out his laptop for a demo, Jobs, in his signature jeans and black turtleneck, coolly waved him away: “I know what you do.”
Jobs, the report notes, saw Dropbox as a strategic asset but Houston and co. were uninterested in selling, wanting instead to be in charge of their own business. It didn’t matter that Jobs was Houston’s hero or that they might have been able to extract a nine-digit purchase price from some other buyer, Dropbox simply wasn’t for sale.
So after cutting Steve Jobs’ sales pitch short, Jobs casually told them, or perhaps threatened is a more apt descriptor, that Apple was going after their market.
Jobs smiled warmly as he told them he was going after their market. “He said we were a feature, not a product,” says Houston. Courteously, Jobs spent the next half hour waxing on over tea about his return to Apple, and why not to trust investors, as the duo—or more accurately, Houston, who plays Penn to Ferdowsi’s mute Teller—peppered him with questions.
But Jobs, being persistent, wasn’t willing to give up that quickly. He later followed up by inviting himself to talk some more at Dropbox’s San Francisco Office. Not wanting to let Jobs see Dropbox’s home base, Houston suggested they meet in Silicon Valley instead. Jobs never replied and that was seemingly the end of that story – until, of course, Houston saw Jobs on stage at WWDC this past June introducing iCloud.
And though Apple on your tail is certainly cause for concern, Dropbox doesn’t seem to be sweating too much. They continue to attract new customers in droves and they recently secured $250 million in venture capital.
But with cloud-based backup computing finally gaining a foothold in the market, Dropbox now faces more competitors than ever before. Apple, Google, Microsoft, iDrive, and Box.net are just a few that Houston mentioned
While he believes Dropbox will torpedo the backup industry within five years, he especially fears iCloud, which will surely push itself upon the 222 million people who’ve bought iPhones, iPods and iPads, and Google’s rumored Drive product (1 billion people visit Google sites monthly, according to Comscore, and 190 million worldwide now have an Android device).
And on that note, Apple’s press release yesterday noted that it had already signed up over 20 million new iCloud users. That’s nearly half of the total number of DropBox users in just one weekend.
Steve Jobs certainly wasn’t kidding, Apple is going after their market.
In any event, the entire Forbes article is worth a read and the entire Dropbox team, and in particular Houston, come across as a bunch of good guys just trying to make a great product even better.