Dropbox unveils document tools to lure business customers

Dropbox, once one of Silicon Valley’s fastest-growing consumer tech companies, has shifted its focus fully towards business customers with a new set of tools for workers — in the latest sign that start-ups are seeking more sustainable business models.

Its launch of tools for sharing and editing business documents is part of a deliberate plan to turn away from “growth at any cost” in favour of profits, according to Dennis Woodside, the former Google executive brought in as chief operating officer two years ago.

Dropbox attracted a $10bn valuation in early 2014, making it one of Silicon Valley’s first “deca-unicorns” — a reference to start-ups claiming valuations of more than $1bn. But it stumbled in attempts to move beyond its basic online file storage and synching service, raising fears that it would eventually be overtaken by larger rivals such as Google and Microsoft.

This new move to turn Dropbox into an online productivity tool for workers comes shortly after the company said it had become free cash flow positive — an important financial milestone that means it does not consume cash apart from spending on capital investment.

Silicon Valley has had “a very strong impetus to grow, grow grow,” Mr Woodside said on Wednesday. But he argued that the tech world had now entered a “post-unicorn” phase, in which companies were trying to carve out sustainable businesses in the expectation that new capital would not be as easy to raise in future.

Dropbox’s latest tools offering is aimed at making it easier for groups of workers to share and jointly edit documents.

“It was about keeping your files in sync — now it’s about keeping your teams in sync,” Mr Woodside said of the change of focus.

This new direction follows an earlier attempt by Dropbox to move deeper into the consumer world, with picture and email apps aimed at its individual users. However, those services failed to gain traction, raising concerns that it would face pressure as its basic cloud storage service becomes increasingly commoditised.

According to the company, it now has 500m registered users — although it is unclear how many are active and only a small percentage use the business and “pro” services that Dropbox counts on for revenue.

Dropbox called on its own workers to tighten their belts two months ago, in a cost-cutting drive that drew attention in Silicon Valley as sign that companies known for their lavish staff perks were being forced to cut back.

Mr Woodside said Dropbox had turned its business around partly thanks to a decision two years ago to build its own infrastructure and wean itself off Amazon Web Services, boosting its gross profit margins. He added that revenues had also picked up after an earlier shift in focus to large business customers: sales to companies that have more than 1,000 paying Dropbox users have more than doubled in the past 12 months.