Drew Houston is on top of the world.
On Friday, his company, Dropbox, filed its S-1, making it Y Combinator’s first startup to ever file for an IPO.
The file sharing service that began as a two-person team in 2007 is now a sprawling enterprise with more than a thousand employees and a stock ticker symbol that’s soon to be listed on the NASDAQ. The cloud storage giant now provides services to more than 500 million people and generates a billion dollars in annual revenue.
But things weren’t always easy for Houston or his company. He struggled with his initial entrepreneurial venture and faced several obstacles getting Dropbox off the ground. Dropbox has taken 10 years of growth to get to the point it’s at now.
But Houston hung in there. Despite multiple opportunities to sell his company in its early stages – including a bid from Steve Jobs in 2009 – he held on.
Here’s a rundown of Houston’s journey from a precocious tech-loving kid to the CEO of a billion-dollar enterprise:
Houston had his eye on tech from an early age.
As he confirmed to Business Insider in an interview last year, Houston started programming when he was as young as five years old. He began working on ideas for startups when he was only a teenager.
His first company was an SAT prep company he started while in college.
Before his junior year at the Massachusetts Institute of Technology, Houston took a year off to work with a former high school teacher on a test prep company. The company’s goal was to help students get perfect scores on the SAT college admissions test.
After graduating, Houston hoped to get his SAT prep company into a startup accelerator — but was rejected.
Houston applied to get his startup into the first batch of Y Combinator companies in 2005.
He founded Dropbox about two years later in response to a personal technical problem.
While riding the Chinatown bus from Boston to New York, Houston realised he had left his thumb drive containing files he needed at home. In his interview with Business Insider, Houston said that the initial idea for creating Dropbox was born out of his immense frustration over leaving his thumb drive behind.
“I was so frustrated … because this kept happening,” he said. “And I’m like, my God, I never want to have this problem again. I opened up the editor and started writing some code. I had no idea what it would become.”
Houston applied to Y Combinator again, this time with the idea for Dropbox — but he ran into another problem.
Y Combinator cofounder Paul Graham told Houston he liked his idea, but to get into the accelerator, Houston would need a cofounder.
“Paul [says] he wanted cofounders … because it’s kind of an emotional roller coaster, and so having a team or having a partner makes it so you can offset each other’s … ups and downs, which I’ve certainly found to be true,” Houston told Business Insider.
Houston had less than two weeks to find a cofounder for Dropbox — and found one at MIT.
Arash Ferdowski, then a student at MIT, had reached out to Houston after seeing a demo video Houston put together for Dropbox. After a conversation that lasted no more than two hours, Ferdowski agreed to drop out of MIT and work with Houston. Houston compared his business deal with Ferdowski to a shotgun wedding.
“It was sort of like getting married on the first or second date,” Houston said in the interview with Business Insider. “It was wild because I thought I would have to, like, talk to his parents or somehow reassure him that this was a good decision to spend most of our waking hours for the foreseeable future together, but to his credit, he just jumped right in.”
With Ferdowski as his new cofounder, Houston successfully entered Y Combinator — and met with a legendary investor.
Dropbox’s initial funding came from Sequoia Capital after Houston met with the venture firm’s chairman, Michael Moritz. Houston said Moritz dropped by his apartment to discuss the deal. After the funding round had been agreed upon, Houston waited for the funds to go through.
“I’m hitting refresh on my computer and watching the balance go from $US60 to $US1.2 million,” he told Business Insider.
Dropbox publicly launched its service in 2008.
The debut came about a year after the company got its funding from Sequoia.
Dropbox took longer to launch than other startups, Houston said, “because it’s a product you really have to get right.”
Some clever marketing tactics helped boost Dropbox early on.
The book “Guerilla Marketing” influenced Dropbox’s early rollout, according to Houston. During the service’s initial beta-testing period, Dropbox created some demo videos for it that went viral and helped attract a few hundred thousand users.
Even more successful was a referral program that offered both current users and new ones free space on Dropbox when the former signed up the latter for the service.
The company soon attracted the attention of Steve Jobs, Apple’s CEO at the time.
Apple expressed interest in Dropbox early on, and teams within Apple met with folks at Dropbox to discuss technical details of the service. Eventually, Jobs requested a meeting – one that became somewhat testy.
The meeting started off with Jobs complimenting Dropbox’s innovation.
“You guys have a great product,” Jobs said.
He then asked if Houston would be willing to sell to Apple. When Houston turned down the offer, the meeting became less amicable.
“He started trolling us a little bit, saying we’re a feature, not a product … that we’re going to be disadvantaged,” Houston said. He continued: “But then he was like, ‘Alright, well I guess we’re gonna have to go kill you, basically.’ Maybe not in those words, but pretty close.”
It also caught the attention of Facebook CEO Mark Zuckerberg.
Around 2009, Zuckerberg sent Houston a message over Facebook, which Houston first mistook as a prank. Zuckerberg told Houston he was intrigued by the company because several Facebook alumni had gone on to join Dropbox.
In 2013, Houston delivered the commencement address at MIT.
In his speech, he credited the school for Dropbox’s success, noting it was where he had met his cofounder, Ferdowski.
In 2014, Dropbox started developing features for businesses.
The company now provides software services to more than 200,000 businesses.
On February 23, Dropbox filed its S-1 with plans to take the company public in 2018.
Today, Houston’s company is considered one of Y Combinator’s most successful graduates. His company is the first of Y Combinator’s startups to ever file for an IPO.
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