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Tech Firms Worth Billions, But Still Inches From Disaster

Stashed in: Dropbox, Uber, Snapchat

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I've actually stopped using Dropbox. Now I use Google Drive.

Dropbox went dark over the weekend.

According to the company, the widespread outage was the result of a bug it introduced while updating the hundreds of computer servers that drive its massively popular file-sharing service. But the problem was bigger than that. The San Francisco-based startup not only faced countless complaints from users across the net, it was forced to deflect rumors that the service was hacked, something that turned out to be a hoax.

On one level, a dust-up like this is just part of life as a startup. Things go wrong, people get upset, problems are solved, lessons are learned. But the stakes are higher when you’re Dropbox — or any other tech startup that has ascended to the misty heights of the billion-dollar club. This weekend’s Dropbox outage, along with recent problems for Uber and Snapchat, show just how close such companies skate to complete disaster — not because of anything they necessarily did wrong, but because of the very nature of their businesses.

In those tender days between two-scrappy-founders-in-an-apartment and established business, these burgeoning outfits have hundreds of millions of dollars invested in their future, and that future is far from certain. In an age when people can so easily abandon one web service for another, a single screw-up is all it can take to bring things crashing down for good. And the best of these companies know it.

The most successful tech giants — think Google and Facebook — have been able to insulate themselves from the big SNAFU by performing well for long enough that we become inescapably dependent on them. For many of us, Gmail would have to delete our entire accounts before switching became even plausible anymore. But even for billion-dollar companies still in a period of massive growth, such cushions aren’t always there to catch them. If they fall, the landing could still be hard.

Do One Thing, Do It Best

In an interview with WIRED this past fall, Dropbox co-founder Drew Houston acknowledged that his company has almost no margin for error. If Dropbox accidentally destroyed just one person’s file, he said, it could erode the trust of all its users. “This is like the same sort of genre of problem as the code that you use to fly an airplane. Even if it’s a little bug, it’s a big problem.”

The risk for Dropbox is that at its core, it essentially does only one thing: It syncs your files across all your devices. On the one hand, this single-mindedness has brought Dropbox its tremendous success. Founded in 2007, the company concentrates on doing thing and doing it well. But that strength is also its greatest vulnerability — Dropbox is not diversified. Many other companies large and small now offer much the same service. If Dropbox loses your trust by messing up the one thing you thought it did best, you could easily switch your allegiance to another company.

A lot more depends on how much money the company raises than first-time entrepreneurs and their employees really understand.

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