Uh, thousands of users isn't scale.

After being lured away from a potential career in academia, Eranki joined when Dropbox had only 2,000 users. He worked at scaling up the platform with just one other person working full time on the back end. In those days, Dropbox had just one database machine and one front-end server.

Eranki told the audience how that early team did “a lot of things that weren’t efficient but did actually scale for thousands of users.”

So for instance, the first iteration of sharding on Dropbox was quite buggy. “Joins” across databases had to be separated, and there was a lot of ‘denormalisation’.

That said, they “would not have changed a thing” and this kind of scrappy, slightly haphazard way Dropbox started up actually created some benefits in engineering terms.

They could run queries on the user behaviour very easily without having to write any special code. They could do Joins across databases as they needed. And the structure allowed for a lot of bug fixing as they could do queries in MySQL easily. Users with large numbers of shared folders only had to make one query of the database. Another benefit was that having just one front end meant the team only had one log to look at.

All this meant they “gained tremendous flexibility and scalability,” said Eranki.

I do not think the word scale means what he thinks it means.

Dropbox is just a shim on top of Amazon Web Services that its power users have to pay for every month.

Google understands scale WAY better than Dropbox.

Why doesn't Google Drive just copy Dropbox but make a Terabyte free (like Yahoo did for Flickr)?

Add a one-button migration from Dropbox -- or maybe start a "back up your Dropbox for free" campaign?

Why does Google let them live?

Or is this a failure of Google Product Marketing?

Here is the answer, I guess...:

http://www.linkedin.com/today/post/article/20130423100225-25056271-my-best-mistake-i-could-have-launched-google-drive-in-2006

He was right -- folder hierarchies are complicated!

But when I brought it to Larry, he said he didn't want to launch it. He wanted a more unified Google, and didn't want Gdrive to ship until it did a bunch of other things like integrate deeply into Google Docs. There were a number of reasons, both technical and organizational, that those integrations were extremely difficult -- including the fact that the Google Docs team understandably didn't want to complicate their product with folder hierarchies at all!

Dropbox created a business out of not being clever:

It meant that after one million users the whole platform was still only running on hundreds of lines of code, instead of thousands. By using Python for it all “we could get to 40m users without having to write thousands of lines of C code.” Even the client app was written in Python.

Out of this came some learning such as, in terms of app specific metrics such as ease and ‘fooplroofness’. Plus, it emerged that “most graphs are useless”. Instead they built dashboards to analyze the performance; they always put lefts on values (like failed log-ins etc); and they kept some slack such as: extra queries were memcached, and delayed optimization of SQL queries.

Eventually, it turned out that “users” who used Dropbox the most – like almost constantly – were either using is illegitimately (like trying to use it as a CDN etc) or it was just bugs. It was the second biggest users of Dropbox – the core legitimate users – and the categories of behavior that they were exhibiting that ended up suggesting how Dropbox could evolve as a real business. It’s moments like that when a mere product can turn into a multi-million-user business.

Eranki also came up with some great startup lessons.

He said that every time they tried to anticipate things or “be clever in advance” they failed. In fact, it was much easier to just stay on top of the architecture as it grew and keep tabs on it.

so I guess we should call them Durrrrrbox?

Except, of course, that they won. Gdrive story conclusion:

Larry was so successful and smart, I just didn’t have the confidence back then to do what I wish I’d done in hindsight: Put together a clear, coherent presentation on why Gdrive was the time to make a rare temporary exception to Google’s product integration strategy. As President of Product, Larry was overseeing dozens of products; he didn’t have time to think deeply about each one. It was my job to crisply explain that this market was about to take off, with lots of competent startups entering the space, that we should ship it now, start gaining market share with a revolutionary product, and then go back and integrate (do it right).

Of course, maybe I still wouldn’t have convinced him, but, in hindsight, I think I just didn't try hard enough. I didn't have enough confidence I was right. I also didn't have the organizational capital to influence the Google Docs team, and so when Dustin asked me in 2007 to join Facebook, I left Google without completing the project. Google eventually launched an integrated Gdrive five years later, but by then file-sharing competitor Dropbox had already risen to 50M users.

I have a tech M&A friend who loves Dropbox but is weary of the company because he believes it's just a fast/clever skin on top of EC2 etc. That said, consumers like it, but it remains to be seen if the company can make the turn into a real platform and then diversify their product/revenue. Do you think they can? Recent valuations are very high, probably too high for public markets to swallow given numbers.

I don't think they can but I've been wrong before.

Google or Amazon should be able to create a "back up your dropbox" one-button solution that, if pressed, could offer the user free storage for life. That's one way to suck the oxygen out of that market.

I'm sure there are other ways.

Eventually, downward price pressure will kill Dropbox.

If Google doesn't do it, Amazon certainly will. That's their bag, baby.

I will say, Dropbox is VERY GOOD at what they do. The software is really fast. It's very very reliable. I don't think Amazon minds because Dropbox probably pays them a lot. Do you think Dropbox will be able to make this turn? I certainly commend them for trying.

Dropbox has benefited from neither Amazon nor Google putting price pressure on them at all.

As long as Amazon and Google don't suck the profit margins out of their business, they'll be fine.

Building a developer community is a smart way to lock in customers through the apps they use.

But it would not surprise me if in a few years, very few consumers will want to pay for storage.

But, doesn't Amazon enjoy getting checks from Dropbox without the hassle of dealing with individual consumers?

For now. Dropbox is creating a market.

Amazon likes to find created markets and disrupt them by sucking out all of the margins:

http://pandawhale.com/post/2642/eliminate-all-the-gatekeepers-jeff-bezos

Dropbox is becoming a gatekeeper for things like peoples' media collections.

Long term that just won't do for Amazon.

P.S. Great articulation of the bull and bear arguments for Dropbox, Semil:

http://techcrunch.com/2013/07/14/as-dropbox-transforms-from-utility-to-platform-the-bulls-and-bears-emerge/

I do love Jeff Bezos' line "Your margin is my opportunity."