
Dropbox and why you should invest in people - aditya
http://cdixon.posterous.com/dropbox-and-why-you-should-invest-in-people
======
callmeed
It's funny, I was reading old Joel on Software posts the other night and
stumbled across this one:
<http://www.joelonsoftware.com/items/2008/05/01.html>

From the essay:

 _"The hallmark of an architecture astronaut is that they don't solve an
actual problem ... they solve something that appears to be the template of a
lot of problems. Or at least, they try. Since 1988 many prominent architecture
astronauts have been convinced that the biggest problem to solve is
synchronization.

...

Jeez, we've had that forever. When did the first sync web sites start coming
out? 1999? There were a million versions. xdrive, mydrive, idrive, youdrive,
wealldrive for ice cream. Nobody cared then and nobody cares now, because
synchronizing files is just not a killer application. I'm sorry. It seems like
it should be. But it's not."_

I immediately thought of dropbox. It appears, to some degree, it _is_ a
problem and some people _do_ care. Like Chris said, its the execution and
people that made the difference.

~~~
nadam
Yeah, I think Joel was right and wrong.

He was right because there are architecture-astronauts who overdesign things
that they don't understand yet.

He was wrong, because the mistake of architecture astronauts is not that they
want to solve a template to a lots of problems. Solving a template to a lots
of problems can be a huge business. Think of the personal computer. Think of
MS Excel. Think of Oracle. It is just very hard to get these things right,
because it is very hard to see the market for these generic products in
advance. Also generic things are very technology heavy usually, so hard to
convince investors. (Maybe I am just defending myself here, because I am also
working on a generic application which is about helping businesspeople to
access/maintain/query their data intuitively. (Like Excel just with a bit more
constraints (with relational db. server backing))).

~~~
api
_"He was wrong, because the mistake of architecture astronauts is not that
they want to solve a template to a lots of problems._ "

YES.

This idea has always bothered me: "don't solve a template of a lot of
problems, solve _one problem_."

Isn't that the essence of innovation? To kill lots of birds with one stone?

The problem with "architecture astronauts" is that they _over-think_ their
problem, and they spend too much time over-thinking and over-developing before
they really understand the problem space. It's a problem of over-engineering
and isolation, not wanting to kill more than one bird.

~~~
michaelcampbell
One issue with that is that solving a template of problems really doesn't
solve anything specific.

So what you end up with is a framework that solves nothing that requires a
bunch of configuration, or unnatural calls to its API(s) to get your one
problem solved.

If your 1 problem took, say, 100 "units" of coding; often the framework will
take 400 since it's generic. Then you have to code another 50-75 for your one
problem.

Sure, the next guy also has only 50-75 to do, but too often these astronauts
have no idea of the ROI of the 400, they just assume that "REUSE IS GOOD!"
since that's all they've ever been taught. The ROI may never breakeven, much
less get profitable.

Also, astronauts VERY often never have to dogfood what they've written, and
have no idea if what they've done is actually any good, or usable.

"Before you design for reuse, make sure you've designed it for use." I'm
convinced "reuse" has caused more unnecessary code than anyone imagines.

~~~
api
Frameworks are the wrong way to solve many problems at once. Frameworks are a
disease.

An example of something that solves lots of problems at once well: a language
and its compiler/interpreter.

~~~
ebiester
Sometimes yes, sometimes no.

A framework makes a lot of sense for internal applications and large
companies. You're often repeating a very similar application over and over
(same style, same database, same replace-unwieldy-Excel/Access power user DB
problem.)

A framework makes a lot of sense for consulting-ware. Deploying 20 versions of
a highly customized application with a lot of reuse. As I see it, this is the
use case for Spring. I can't think of another way to easily test such a
system.

Frameworks make sense when you need to assemble a team together quickly to
solve a problem. You are inheriting a set of best practices that allow a
quicker norming phase. Frameworks make sense when you have average and junior
programmers as the primary workhorses on a project. (Note: we don't have
enough A-listers to solve all of the world's computing problems.)

Frameworks aren't for every problem. That doesn't make them useless.

------
nadam
This is a good post, but there is the risk of survivorship bias here. Drew
Houston is a brilliant guy, but let's be honest most people only recognized
his true brilliance after he became successful. (I think most people thought
he is smart, but I doubt most people thought he is brilliant before his
success.)

So yes, you should invest into people, but the trick is to recognize
brilliance in advance. Which is brutally hard. For example recognizing
technical brilliance if someone is not technical is almost impossible. I think
where YC shines is not only that they try to invest into people but that they
are actually quite good at recognizing brilliance. (I doubt they are perfect
in this, but probably the best in the market.)

~~~
revorad
Yeah, consider this from another post from Chris in 2010:

 _Entrepreneurs should always ask themselves “why will I succeed where others
failed?” If the answer is simply “I’m doing it right” or “I’m smarter,” you
are probably underestimating your antecedents, which were probably run by
competent or even great entrepreneurs who did everything possible to succeed.
Instead your answer should include an explanation about why the timing is
right – about some fundamental changes in the world that enable the idea you
are pursuing to finally succeed._

<http://cdixon.org/2010/11/07/timing-your-startup/>

Here Chris argues that even if he is able to recognize brilliance in advance,
he wouldn't necessarily bet on them because of other external factors. So has
he changed his mind in the last 5 months?

The more I read about startups, the more I feel like ignoring all advice and
jfdi.

------
joshu
Ha, I passed on dropbox too, I was asked to invest in the series B and thought
the valuation was too high. Learned my lesson - valuations go up for a reason.

~~~
stevenj
Isn't startup investing mostly about picking the big winners and not worrying
too much about what valuation you get in at?

If that's the case, wasn't your error not thinking dropbox would be a big
winner?

------
nikcub
Came to read about dropbox, but stayed for the dig at KP. Amazing to think
that one of the top VC firms in the world were out of the game for so long.

A new generation of killer startups were created: Facebook, Zynga, GroupOn
etc. and KP just watched it all go by. It would be difficult to just quantify
how much $ they missed out on, but at least now they are sorta admitting their
mistake and getting back into tech investing (greentech didn't really turn out
to be the second coming that many thought it would be)

Unfortunately people like 'symantec middle manager' are still around.

------
vibhavs
Tangent: So I'll be honest -- I was curious as to who the "jackass VC" was.
After a little digging around, I think it's Ted Schlein:
<http://www.kpcb.com/team/schlein>.

~~~
ivankirigin
"Ted was the founding CEO of Fortify Software" doesn't mesh with "lifetime
middle manager from Symantec who had never started a company"

~~~
callmeed
But his winery seems to fit ...
<http://www.schleinvineyard.com/content/family_2.php>

~~~
niallsmart
I bet there's quite a few successful VCs (and entrepreneurs) who own wineries

------
marcamillion
Ahh...so Fred Wilson has started the 'come-to-Jesus' moment for investors.

I guess we can now expect to see many more blog posts about missed
opportunities, and lessons learned.

That being said, thanks for the post Chris.

Makes for good reading :)

~~~
BerislavLopac
Bessemer's "anti-portfolio" page is the first of the kind I've encountered,
years ago: <http://www.bvp.com/portfolio/antiportfolio.aspx>

~~~
marcamillion
Nah I know. But I predict, just like we are seeing the 'rise of the $1B VC
fund', we will likely see the rise of the 'missed opportunities' by high-
profile VCs.

Wait for it in 4....3....2....

------
latch
I love dropbox. Dropbox + git is beautiful as is Dropbox + markdown (for
writing).

But I don't pay for it. I'm somewhere around 5+ free gigs of which I might use
around 30%. Normally if I loved a product this much which I wasn't paying for,
but ought to, then I would. But I'm not stealing my account, so I don't really
feel like I should pay.

On top of that, I use a different paid service for storing large amounts of
files. It ends up being cheaper and I feel both solutions work best how I have
them - dropbox for sharing/working and the other for offsite backups that just
transparently syncs every night or something.

I guess all that to ask a question...how the heck is dropbox making money?
Between the amount of free storage they give and the fact that there are much
cheaper remote backup solutions, I just feel like I'm missing something.

~~~
mixmax
Try to find a large popular file (a movie or mp3 file downed from the net for
instance) and put it in your dropbox folder. Notice that it'll sync almost
instantly. When you put a file in your dropbox they calculate a checksum and
see if they already have the file somewhere. If they do they just add a
pointer instead of having two copies lying around.

Since many large files are saved by a lot of people individually (movies, mp3
files, pdf manuals, etc) this saves them a lot of space. As they get more
users this advantage grows.

~~~
brk
Is this exploitable in some odd way?

What if I wanted to use Dropbox for piracy purposes (I don't, just using an
easy to understand model). Could I upload a copy of Avatar.mp4, compute or
find the checksum for it, and then distribute just that checksum to other
users? Or distribute a file that _wasn't_ Avatar.mp4, but looked like it to
the Dropbox client? Would this effectively trick the Dropbox servers into
distributing the file for more, so that I could legitimately claim to not be
distributing copyrighted material, but just distributing a "magic" file that
caused Dropbox to give me a copyrighted file that someone else had uploaded?

~~~
rmc
_Or distribute a file that wasn't Avatar.mp4, but looked like it to the
Dropbox client?_

Modern hashing algorithms make this practically impossible, sorry.

Just because you have a hash string that's not technically a copyrighted film,
you could still be guilty of copyright infringement. cf.
<http://ansuz.sooke.bc.ca/entry/23>

~~~
brk
Thanks. I was using the film distribution as a simple example, but that wasn't
the exact use case I had in mind.

------
api
But what about great people with a really bad idea _that they are committed
to?_

Seems to me that that would be a bad investment.

Also:

Be careful about your metric of great. The metric of great must be "this
person is a genius with lots of energy and creativity," not "this person
graduated from the right school, knows the right people, comes from the right
part of the country, lives in the right zip code, etc." It must be first-hand
meritocratic, not based on second-hand derivative indicators.

DropBox's founder went to MIT, but that's not what made him great. MIT is just
a good school. The guy may well have been just as great if he'd gone to Ohio
State or some other less-prestigious school.

~~~
sokoloff
I strongly agree with both of your points, at least in theory, but I will also
observe that trivially and concretely verifiable derivative indicators
(graduated from a "named" school) can be more practically useful than
hard/impossible to quickly or concretely verify primary measures ("genuis with
lots of creativity"). YC, Sequoia and other VCs are in the business of
efficiently finding founders/companies to back; they are not and do not have
to be in the business of increasing overall fairness in the world.

There's also the "ambitious and gets shit done" angle. IMO, like it or not,
getting into and graduating from a "named" school is one indicator of
precisely those two qualities.

There was a study recently that found there was a higher correlation between
life outcome and where one APPLIED to college than there was to where one WENT
to college. The takeaway for me was that people ambitious enough (and
presumably confident enough) to apply to MIT would get similar results in
aggregate to those who actually attended. I googled for a few minutes to try
to find the study, but failed, so I apologize if I've mis-remembered or mis-
stated the conclusions.

Disclaimer: 1993 MIT grad here, but while I greatly value my experience there,
I give basically zero "extra credit" for MIT on a candidate's resume over any
other school and I'd take "built dropbox" over any schooling, 8 days a week.

~~~
api
_"There was a study recently that found there was a higher correlation between
life outcome and where one APPLIED to college than there was to where one WENT
to college."_

That is very interesting. Thanks.

~~~
sokoloff
Had a chance to do a little more googling and found the paper:
[http://economix.blogs.nytimes.com/2011/02/21/revisiting-
the-...](http://economix.blogs.nytimes.com/2011/02/21/revisiting-the-value-of-
elite-colleges/)

Excerpt: "Once the two economists added these new variables, the earnings
difference disappeared. In fact, it went away merely by including the colleges
that students had applied to - and not taking into account whether they were
accepted. A student with a 1,400 SAT score who went to Penn State but applied
to Penn earned as much, on average, as a student with a 1,400 who went to
Penn.

“Even applying to a school, even if you get rejected, says a lot about you,""

------
brett
I don't think it's an argument against Dixon's point, but I found this funny
because I remember being so impressed with demo of Dropbox at the time. I
remember knowing nothing about who Drew was, seeing this on HN:
<http://news.ycombinator.com/item?id=8863> and thinking something along the
lines of, "that's brilliant, I hope he gets funded so I can use it."

------
vantran
Investing in people over their ideas is always advisable. But let's not forget
how brilliant people can still fail. Tons of bright kids come out of MIT,
Harvard, Stanford, etc... Should you blindly invest in all of them?

Instead, I prefer Mark Suster's "invest in lines, not dots" strategy. You
really have to spend more time to have a better idea on whether you should
invest.

In hindsight, of course Drew Houston would be a good investment.

~~~
three14
I think he's not suggesting investing in "bright kids," but "smart and gets
things done." Or "relentlessly resourceful." Smart is just one of the
criteria, but he still would invest in people, not in "the idea."

------
petenixey
We were in the same YC round as Dropbox and it was interesting was to observe
the discrepancy between our views and the investors' views. While nobody in
our class doubted the success (at whatever level) of Dropbox, it never created
the same investor heat early on that many of the "trendy investments" did. I
wondered about this at the time and put it down to investors' reluctancy (or
inability) to spend the days it takes to actually get to know a company.

I was fortunate to get to know Dropbox a bit more than most (and less than
many). We were in the same YC class and shared an office for a little while.
They was voted top of our class in YC - I don't think anyone doubted they'd be
the most successful company.

I don't think anyone felt that even if they were overtaken by Google Platypus
or similar that they would fail either - they were doing such hard stuff and
had such dedicated users it would still be a great technology acquisition. The
company was a really great investment and in fact after Clickpass was acquired
I asked Drew if I could invest but unluckily for me they weren't taking on any
more (very) small angels.

The interesting thing was that in those very early days (post YC), the
investors still weren't fighting their way into it or making the hullabaloo
that you see around some of the other valley companies. Drew and Arash were
never big-talking sales people, they never focussed on bells and whistles and
instead just concentrated on building great product. Day in, day out they just
came in, built amazing software and, starting with Aston, they slowly added
other amazing developers around them. That relentless progress seemed to be
something that most investors really weren't tuned into.

Investors almost never take the time to actually hang out in a company and
instead rely on consecutive and very similar meetings. They never actually
watch a company work (although Mike Moritz did interestingly come and hung out
in their apartment in the Y-Scraper before making his investment). I always
therefore feel that statements such as you should invest "in the team", "in
the market" or "purely in any other one thing" are all slightly trite because
what you really want to invest in is the relentless march of a product towards
a market.

You can't learn that in a pitch though or from a founder's personality or even
their CV - all of these are single data points and you want to measure the
product trajectory. You can however get a very real feel for that by spending
real time with a company, in their office. I'm sure you would get some false
positives from it but in the long run it would be hard to avoid the true
negatives.

Dropbox's office was _calm_ , intelligent, very productive and full of debate
and fiercely intelligent employees who believed without hesitation in the
product. The developers were constantly interacting with their customers
through their forums and they hung out as a team after work. It was totally
and utterly different to many other offices I have observed and made it very
hard to imagine an outcome that would not be good. They knew the market for
their product, they knew it was big and they marched relentlessly towards it.

I know lots of smart, driven, successful people whom I still wouldn't invest
in but I would be very interested to know how many such teams with the kernel
of a product people like, in a market that is significant and who march
relentlessly towards it do not constitute a good investment.

~~~
wordchute
It amazing how quickly the company seems to have developed into something with
a recognition beyond the development community. I first cam across it a few
years ago while working in England, and that could not have been too long
after its launch. What struck me about it at the time, and this has been said
more succinctly elsewhere, is how simple and elegant it was to work with -
this was confirmed when even the thickest of non-techies in the office could
work it out in less than a couple of minutes. Reading the comments here seems
to verify my initial thoughts.

I have heard it said before that some of the best ideas are those that take
complicated things and make them simple or easily understandable, and their
success goes a long way to proving that point.

------
hanifvirani
What I like about Dropbox is that it just works as expected. It's trivial and
it's well polished.

Dropbox is a great lesson in how ideas don't matter and how execution is king.
They had the guts to compete with a dozen other players who were trying to
solve the same problem, solely based on the confidence in their execution.
Investing in people having the skills to execute, the guts to compete, and the
resilience to persist, clearly makes better sense than investing in just
ideas.

------
adw
Something related which occurs to me; investing in ideas is basically
premature optimisation, because great people can change ideas but average
people are unlikely to spontaneously become great.

------
naiverahim
Investing in people is the best kind of investment; because a business of
people is always profitable. A very powerful philosophy taught by Dale
Carnegie.

------
dami
Behind every great product is a motivated and driven team ;)

------
hootmon
The title should have been Name Dropping, why I just can't stop...

------
u48998
There may have been number of storage sites popping up back in the days but
didn't Dropbox provide something new and necessary technology to the PC? As
in, don't worry about backing up your files? I don't recall even Box dot net -
who was much in the tech news - provide such features.

