When Dropbox told Steve Jobs that they weren’t for sale

Tue, Oct 18, 2011

Featured, News

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.


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2 Comments For This Post

  1. Ash Says:

    I think a lot of people signed up for iCloud because Apple put it right in front of them with iOS 5. But how many people will use it? I love Dropbox because I use it as an external drive for any files I want. iCloud, by comparison, does not work this way at all…I don’t think it is going after Dropbox’s market at all. The music storage is a completely separate feature, so no competition there.

    Frankly, I’m really disappointed that iCloud doesn’t include a Dropbox-like system that will let me store and share any files I choose. Sure, it will let people work on, say, Pages docs, but what if I need to share a PDF along with it? Then I have to use another system. And why should I use photo sharing that only works as a stream that I can’t control or keep? Using Flickr or even Google+ I can create sets and store images permanently. How is iCloud an improvement here?

    I love Apple, but iCloud does little to compete with Dropbox, Flickr, or Google.

  2. Jason Anderson Says:

    I still like DropBox because it’s a folder that I can throw anything in and have it sync magically to all my other computers. iCloud doesn’t do this. It just holds backups so far. If iCloud did have a DropBox-like feature where it gave OS X and Windows (Yes, Windows can be part of it too for obvious reasons) users a folder in their User directory for syncing files the exact same way, it could give DB a run for its money and the regret that they should have sold out.

    Now granted, hopefully they don’t for the sake of the people at DropBox, but still. Apple could easily do it and with iCloud already on many Macs and a few Windows machines and all the iDevices out there, DB should be pretty scared.

    They bought out SoundJam and created iTunes. Now look at them. You’d think companies would realize by now that being bought by, or offered to be bought by, Apple is a good thing if you go with it, and a bad thing for you if you don’t. It means Apple is looking to enter your territory. And with their all-in-one ecosystem, it will usually hurt your company quite a bit if you don’t follow.

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