This content was created by Lorenzo. This content was uploaded by Lorenzo. This is a YouTube video titled "Dropbox founder Drew Houston on why great distribution beats great products" featuring Drew Houston discussing the importance of distribution and virality in the success of Dropbox, referencing strategies like referral programs and user activation challenges from 2007-2008.
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A lot of competitors who built things that probably were reasonably functional, but they didn't get distribution right and they didn't get virality right. And I had been paying attention when 2007 was kind of when the Facebook platform started to take off and a lot of the gaming and you had these companies which were going from zero to 100 records, new land speed records were set all the time. And a lot of that was through virality. And so there's a great. Dave McClure had a great model called Startup Metrics for Pirates. Aarrr. I won't go spend too long. But basically acquisition activation, revenue retention and referral that becomes like this was how we managed the company. Users come in, oh my God. Very few of the folks who signed up, four out of five who sign up don't put a file in their Dropbox, don't install the client. What is going on? We actually brought people in off of Craigslist and watched them install the product that we had like a. And we showed the video in real time to all our whole team in the other room or we had the person and a PM in one room, the rest of the team in the other room. We're like, hey, just sit down. Here's Dropbox. Go from here to sharing a file. Zero of the five people succeeded. Zero of five even came closer. But really paying attention to all the activation is just one example. But all the steps and the viral engine tuning that as much as possible coming up with things like the referral program which had this two side incentive where if I tell you about Dropbox, you get free space, I get free space. That drove like 30% of our signups for a while. Shared folders inherently viral, another 20%. So half of our signups were viral. And that was something that was like a new. That was something that wasn't well understood before that time. And it was inspired by some of the stuff I saw in the late 90s like PayPal or maybe early 2000s. PayPal had an incentive referral bonus. I had the idea for the Dig and Reddit video based on a book called Guerrilla Marketing, which is like how do you do marketing get users when you have no money? And so a lot of these things came together at that time, 2007, 2008, where a lot of the dots were connected from things that I had read over the last several.
