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Yahoo Finance Presents: Dropbox Founder & CEO Drew Houston

In this article:
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In this episode of Yahoo Finance Presents, correspondent Brian Sozzi speaks with Dropbox Founder & CEO Drew Houston about the companies technology to support remote workers as well as their collaboration with Zoom. Houston also discusses how he personally is being affected by the COVID-19 pandemic.

Video Transcript

[MUSIC PLAYING]

BRIAN SOZZI: I'm here with Drew Houston, founder and CEO of Dropbox. Drew, good to speak with you again.

DREW HOUSTON: Thanks, great to be here.

BRIAN SOZZI: So, you guys are fresh off your quarter. We'll talk about the numbers, but you know for me, I've been working from home for over a month. And one thing that has become abundantly clear to me, there's just a lot of stuff. There's a lot of apps. And there's lots of ways and different ways to collaborate with your team members. What's the solution here? Do some of these companies in Silicon Valley, do they need to be working closer together to get one unified message of work and how it should be done?

DREW HOUSTON: Well, we need a way to tie it all together. And we need good ways of doing remote work. And customers, it's been really great to see, and that's what Dropbox is trying to do. And our customers have been turning to Dropbox to help with that transition to remote work. And because they are, as you said, even when you're in the office, the experience of using technology at work can be really fragmented, because you're using Office and you're using G Suite and you're using Slack and you're using Zoom.

And when we watch our customers, they're always toggling between all these different apps. And we redesigned the Dropbox product to become, to go from a folder of files to really a smart workspace that pulls all your content together. And that becomes even more important in a world where you're not, where you're working from home and balancing your home life, work life. Like working out of your house, a lot of these challenges only become more acute.

So it's been great to see a lot of customers adopt Dropbox for those kinds of use cases. And we've seen hospitals using Dropbox to coordinate their response efforts, and lenders using HelloSign to help small businesses with their loan relief applications. But yeah, it's a huge problem for customers, but it's been a really big opportunity too.

BRIAN SOZZI: Drew, one, I've always viewed Dropbox as cutting edge in what you do. It feels like yesterday I remember covering your IPO. But one missing component, it's not just Dropbox, it's, I guess it's maybe work from home tech more broadly, I don't know what my co-workers are doing necessarily. I can't see them. I can't go up to them and say, hey bro, how is your day going? What are you working on? You miss that interaction.

DREW HOUSTON: Yeah.

BRIAN SOZZI: What are you guys working on in that regard to help solve that? Because I think we can all agree, working from home is here to stay in some capacity moving forward.

DREW HOUSTON: Yeah. I mean, those are great examples. I mean, just figuring out what did my team do today, what's been going on. There's a lot of manual labor that you have to do to figure that out right now. And that's top of mind for us. Actually, as we've all shifted to working from home, that switch happened in the most unplanned and dramatic way possible. And there's a lot of room for improvement in that experience.

And so that's, what we're thinking about is, in our products, given that you lose that human connection, how do you recreate the experience of being together in the app? How do you make it so that you can see what's been going on your team in a much more organized and focused way? Because a lot of the messaging tools are great, but then if you leave your computer for a day and come back, you have to page through all these chats transcripts and emails and try to piece together what's going on. So what if that were easier? So that's a lot of what we're focused on from a product standpoint. How do we pull all this together and organize your work and help you focus?

BRIAN SOZZI: And how does that product look like from a Dropbox perspective? Is it a new video calling feature? Is it something like Zoom? I know you integrate very tightly with them, but what does it look like for Dropbox?

DREW HOUSTON: Well, first it's pulling everything together. And the change we made to our desktop app last year was rethinking Dropbox or moving from a folder full of files to more of a team workspace that pulls all your different apps together. So in the new Dropbox, you can have files, but you can also have your Google Docs, you can share things in a Slack channel, you can start a Zoom conversation with people. All without having to leave the Dropbox app.

And the engagement with our new desktop app is up 60% in last couple of months. People have, or our Zoom integration is up 20 times since the onset of COVID. And so there's a real customer need to pull all this together, it's something we all need, just to pull all these different apps together. And so having more integrated experience, you don't have to switch back and forth between different apps is the first step.

BRIAN SOZZI: What's the next level in terms of collaboration and partnership with Zoom? You've worked closely with them for some time. What else are you working on?

DREW HOUSTON: Well, there's a lot we've been doing there. So even in the last quarter, we announced, we deepened our integration in a number of ways. So people can record meetings and they can record the transcripts into Dropbox directly. So that's really helpful, because then if you need, if you weren't in a meet, or if you weren't in meeting, in one of your team meetings, but you have the transcript in a shared folder, when you search in Dropbox, it'll actually index that transcript.

So there's a whole bunch of things like that. Like, how do we make, and next with Zoom and Dropbox we're working on is, a lot of what you need to do in a meeting is collaborate around content that lives in Dropbox. And so how do we continue to bring those experiences even closer together. Ton more we can do there.

BRIAN SOZZI: Are you comfortable that Zoom has solved its privacy problems? I've talked to Eric a couple of times. I know they're working very hard. I know he's up around the clock. But are you confident?

DREW HOUSTON: I'm confident. And security is our number one priority, and I know that security is Zoom's number one priority. And we're all making huge investments there. So I'm confident in the security of Zoom and our integrations.

BRIAN SOZZI: Let's talk some numbers here. I think you caught a lot of people by surprise several months ago, when you raised your longer term profit margins for your business through 2024. But that was before this pandemic. In a way, do you think those targets are now conservative? They were already far above a lot of people in the street, but can they go even further?

DREW HOUSTON: Well, we've always been focused on delivering a healthy balance of growth and profitability. And when we felt that we had an opportunity to update our long-term model to reflect the inherent efficiency in the business. And then with, given COVID, we're heading into a pretty unpredictable macro environment. So we'll be watching everything closely.

But certainly we've seen tailwinds where, as I said, our customers are turning to Dropbox for that transition to a distributed work. And we can see it in record trial volumes. So the number of people who are trying our business products and our individual products, the trials are up tens of percent. Conversion's stable. But that said, heading into the, no one really knows what the overall economic impact of all this is going to be. And so it's something we'll be watching really closely over the coming quarters and years.

BRIAN SOZZI: What have you seen in your business through April? You've had a lot of large, you've had a lot of people trying out Dropbox. But economies across the globe, they've started to reopen. Have do you been able to keep some of that business?

DREW HOUSTON: Yeah. I mean, once you, businesses always, or every business has content and every business needs to collaborate around content. And we saw a lot of our customers, so we had a publishing company, Usborne Publishing, who was using file servers, on premise file servers. And you can imagine as they had to all leave the office and work from home, they needed, not only they needed a solution so that they can work in a distributed way, they needed to build, to stand it up in a week. And that's what they did with Dropbox.

And those customers will continue to have content and need to collaborate on it. I mean, Dropbox is really essential for your business operations. So yeah, we think this is going to create, this creates a ton of demand already, and that demand is going to continue. Because I think this shift to distributed work is going to last well beyond when we eventually physically go back to the office. I think we're all going to have more of a hybrid working model. And I think there's going to be a lot of benefits.

I mean, there's a silver lining to this, is that you'll be able to be productive from anywhere. And even if you might physically go into an office to work most of the time, if you can take a day or two a week to work from home and your co-workers know that you're still, and you know that you can still be productive and you've got great tools, that flexibility is a big benefit. And that's something that Dropbox has always provided. But as we've been talking about, there's a lot more we can do for our customers to help.

BRIAN SOZZI: Drew, you guys have one of the cleanest balance sheets in the next generation of the tech players, publicly trade that I've seen. Over $1.1 billion in cash. What are your plans here? Is there room to acquire assets right now that would only help Dropbox's position?

DREW HOUSTON: Yeah, I mean, it's always been important to us to have a strong balance sheet. And it gives us an opportunity to play offense. And of course, we're going to continue to run the business. But we're always on the lookout for great companies and potential acquisitions who could be additive. And we'll do that in a disciplined way. But yeah, just having strong fundamentals has always been really important to us, even before all this happened.

BRIAN SOZZI: Last, but not least, what has this been like for you personally, as someone who founded the company, been leading the company, led the company obviously through its IPO, to have this switch essentially overnight, when your entire workforce is working from home? How has this life been for you?

DREW HOUSTON: I mean, it's been an adjustment I think we're all figuring out exactly how to navigate this. And running a company entirely from your laptop is kind of a new experience. And as you said, I think that the most, the biggest thing is really just making sure that we take care of everyone's human needs. Because I think this has been an incredibly difficult period for a lot of us.

And whether you're personally affected, I think at this point, most of us have someone in our family or friends who are really, who are medically affected or at risk or economically affected. So I think that's been the toughest thing, is just the personal challenges that people are experiencing and trying to be there for them that way.

But from a business standpoint, I mean, we're fortunate to be not only less impacted than the typical company, but I think this opens up a huge opportunity for companies like Dropbox that are helping facilitate. We're building tools to help customers navigate through this transition.

BRIAN SOZZI: I'll say this, Drew, from a personal note, I'm burning up my Peloton bike. I'm using this thing way too much. I'm thankful for it, but you know, I've got to give it a break.

DREW HOUSTON: Yeah, yeah. I've really, I've gotten into running and catching up on my Netflix. It's week seven, week eight, never a dull moment.

BRIAN SOZZI: All right, well, hang in there and stay safe. Drew Houston, founder and CEO of Dropbox. We'll talk with you soon.

DREW HOUSTON: Thanks, Brian.