The new Dropbox app launched this week seems to tick all the boxes as a unifying collaborative canvas for digital teamwork in the enterprise. But as I set out in part 1 of this two-parter, its success will depend on the reactions of three very important constituencies — users, CIOs, and competitors. Here are CEO Drew Houston's responses on each of those points, during an exclusive diginomica interview earlier this week.
Houston believes that the need for access to an expanding universe of collaboration tools presents Dropbox with its big opportunity to gain traction. Currently people either have to put up with a disjointed experience as they switch between those tools, or they have to sacrifice choice by going with a specific vendor's "walled garden." Dropbox now offers a better alternative, he says:
What we're really trying to give our customers is the best of both worlds, where they have access to any tool — to the sum of all the innovation that's happening in our ecosystem — but have an integrated interface that smooths over the differences between them.
In principle that's very similar to the problem we solved in the beginning, where most people think about, 'Hey, I just have my stuff, and I don't care whether I'm getting getting to it from my phone or an Android phone or Mac, Windows. I shouldn't have to worry about that. Just show me my stuff.' What we're trying to do is move from keeping files in sync to keeping teams in sync, or keeping your working life in sync.
Getting the message to CIOs
When it comes to persuading CIOs, Houston admits that Dropbox has been on a journey to make its platform enterprise-ready, but says it's now more a matter of getting that message across:
Five years ago, it would have been a completely different story. Today, and for a while now, Dropbox has been enterprise-grade, and we have many multi-10,000 seat companies and customers, we have all the security features and all the integrations with the back-ends that CIOs are looking for.
We've been operating in the enterprise for a long time, and maybe at a bigger scale than people might think. We have more work to do to even, just make our reputation catch up to our reality.
He believes that CIOs, just as much as end users though in a different way, are grappling with how to manage the proliferation of tools:
The fact that we have these integrations, we can help IT get some of the visibility and control that they've lost, as employees have taken choice of what tools they use into their own hands. IT has found themselves permanently on their heels, just reacting and having to figure out what's going on. So I'd say there's a whole other value prop we have for IT.
IT is certainly our customer as well. And they have very legitimate needs around making sure that everything's safe and their information is properly accounted for. They've got a whole bunch of compliance and governance needs. We can help them with all that. We're in the early innings of how much we're doing for IT. And we plan to do a lot more there.
What about Microsoft, Google and Slack?
The need to educate users and win the support of CIOs are both formidable challenges. But if Dropbox starts to win those battles, it will end up becoming the gateway through which users access other applications. They will no longer need Google Drive or Microsoft OneDrive and Teams to work with their files. They will no longer need to live in Slack. Dropbox will own the user experience — and I can't imagine those other vendors will be happy about ceding that ground. When I put this to him, Houston tells me he doesn't see it that way:
I would say, we're giving our users a new lens on their working life. I wouldn't say we're taking anyone's users from them. Something that's unusual about our industry is that competition is not necessarily zero-sum. We've known for a long time that just about 100% of our customers are going to be either Office 365 customers or G Suite customers. Increasingly, both.
Importantly, no one's going to stop using Office because they use Dropbox, or no one's going to stop using Slack because they use Dropbox. If anything, we're helping them use these things more. We're actually providing an off-ramp into these other experiences, and in many ways, making them more useful and stitching these things together.
For sure, there will be competitive overlap. Google still has Google Drive, Microsoft does OneDrive, just about all the collaboration players have bigger ambitions. So there'll be more overlap over time. But no one's going to stop using Slack because they're using Dropbox and no one's going to stop using Dropbox because they're using Slack.
We focus particularly on the use cases that are complementary. And we see ourselves as playing an important role in terms of taking a couple steps back and making sure the overall experience is coherent. More than we're trying to engage in a dogfight with any particular tool or facet of the experience.
We’re all still figuring out how to work effectively in a digitally connected world. There's an expanding universe of tools available to us, but very few of them help us bring it all together. This has created a gap in the market for something that I've called the collaborative canvas. When I first wrote about this I took the stance that was something enterprises would have to assemble for themselves by stitching together a collection of separate tools.
What Dropbox has brought to market today does that job for you — there's an impressive amount of engineering that's gone into bringing together a collection of different tools to create a seamless experience. This has now set a new bar that others will have to work hard to emulate.
Having said that, this is a huge marketplace, where the biggest opportunity is among the underserved. There's plenty of room for companies like Dropbox and Slack to continue to grow rapidly without bumping up against each other. Especially since these two companies in particular serve slightly different segments — I suspect Dropbox will do best, loosely speaking, among those whose work revolves around project delivery, while Slack remains best for those whose work revolves around issue resolution.
It's a different matter with Microsoft and Google. Both of these vendors — Microsoft in particular — desperately want to own the collaborative experience because they understand that's where the user loyalty gets built. Otherwise, their document creation tools end up as commodity offerings in an open landscape. As Houston downplays but implicitly acknowledges in his answer, if Dropbox is successful, it will be at the expense of G Drive and Microsoft Teams and OneDrive. This is good for enterprise buyers who now have more choice. For industry watchers, it's time to order in more popcorn.