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Clouds forever: the Dropbox Service

October 24, 2011

The problems with hard drives are endless – they fail, they’re expensive, they’re delicate, they run hot, they need power… the list goes on. That’s where this whole “cloud” business comes in – people want to be able to store files and do work remotely, and until recently there have been precious few ways to go about it. If you’ve ever had to work on multiple computers then you know the frustration of forgetting which machine plays host to a file. If you multiply this problem across multiple work sites, you’ll end up with frustrated employees and inefficiency. There has to be a better way. Luckily, there are several. While the historical solution to this dilemma was to operate a central data warehouse or storage area to which computers merely act as terminals, this data warehouse requires massive bandwidth and connections are often slow. It also creates difficulties in terms of allowing who gets to access which data and when.

In 2007, Drew Houston and Arash Ferdowsi were upset about this inaccessibility and decided to create a company that would be able to address this issue. Reportedly, Houston was fed up with losing or forgetting his USB drive as a student at MIT. Houston named his venture “Dropbox” and shortly received funding from Y Combinator. For the end user, Dropbox functions primarily as a special folder on a computer whose contents are automatically synchronized to the cloud. Past versions of changed files are stored, along with comprehensive metadata that’s accessible through a web interface. Users may install the same Dropbox folder on any number of machines. Pricing is tiered at a freemium scale – free users have access to only 2GB of storage, but may upgrade for a price at any time. As of April 2011, Dropbox reported more than 25 million users, translating into 10.41% of the worldwide Backup Client market.

In 2008, during TechCrunch50, Tech Crunch’s annual technology conference, Dropbox officially launched and rapidly grew in popularity. Growth was so fast, in fact, that Dropbox had to secure funding and received approximately $7.2 million from Sequoia Capital, Accel Partners and others.

Early in 2011, Dropbox received some controversy in the press when several outlets reported that their Terms of Service were misleading and that cloud-side versions of user-data were encrypted in such a way that they could be accessed by Dropbox employees. CTO Arash Ferdowsi released a statement clarifying the Dropbox terms of service and announcing that the company followed best practices for file security. Dropbox also engaged in a fairly high-profile venture to wrest control of the domain URL from a squatter.

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