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Comment by wayne | Hacker News Reader

We're well past 2016, but Stratechery had an opinion that Dropbox focused too much on infrastructure projects like this and would have had more success focused on improving product/market fit.

"That's why I actually find this announcement really disappointing. Apparently Dropbox has been devoting significant resources for at least two years to a project that will no doubt have a positive impact on the bottom line but a minimal impact on the top line. It's all well-and-good (and honestly impressive) to announce 500 million registered users, but the reluctance to disclose both active users and especially the number (and size) of its business customers speaks even more loudly. How might have the product and company evolved if the company had continued to rely on AWS and devoted its resources to fixing its product-market fit problem?"

https://stratechery.com/2016/dropbox-leaves-aws-should-ups-a...

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Perhaps the answer to this lies in the incentives for VCs. The current dropbox strategy produces a sustainable, lifestyle business for its employees and customers. They are happy with a product that meets their needs. It's not what VCs want at all; they want either total domination or acquisition. The middle-ground is uninteresting to them. So, had they stayed with AWS, they may have bought a 10% chance at 10x more VC return, and a 90% chance that they are bought up and absorbed into OneDrive.

I prefer the current outcome to a swing for the fences.

I don't think it would be possible for them to stay with AWS considering their storage volume usage. As soon as the storage was out everything else has followed as well

I dunno, if you can’t provide enough value to adequately mark up bulk purchases of commodity Cloud storage, what exactly are you selling?

Cloud storage before all the major cloud players were even a thing, for starters?

Sure, that was a great feature in 2007. (S3 existed when Dropbox was founded, FWIW.)

It eventually stopped being a differentiating source of value, and trying to out-commodity the CSP’s on storage cost at scale seems like a bad strategy to bring value back to the product. At tremendous effort you make it possible to lower prices by 20% or whatever, in order to keep the same profit on an undifferentiated product. Who cares?

Dropbox's business IS storage, which means running on top of storage is always going to be a threat and cut into their margins. What incentive does AWS have to give Dropbox a really sweet S3 deal? They know Dropbox needs the storage. It's like why it's better for a business to own the building its in, because if you become successful, your landlord has the incentive to increase your rent. This isn't about if AWS can provide a compelling bulk rate for S3, it's about if your business lives or dies based on the AWS deal renegotiation.

I guess that depends on whether you think cloud storage is a commodity.

Surely despite their business being storage, Dropbox would be foolish to design and manufacture their own hard disks?

No, I don't think that Dropbox should manufacture its own hard drives. The main reason is that switching hard drive manufacturers can be done piecemeal as you need to buy them. Getting data out of S3 if the contract negotiations go bad can cost more than storing it. It's just very different economics and level of vulnerability given the two.

Dropbox is a company with thousands of engineers. They should be able to focus on both aspects.

It seems Dropbox has an issue with execution. It already has a set of customers. They should be able upsell other things. They are trying with Dropbox Sign.

But other features like Paper and Photos don't seem to do well. Paper is deprecated, I think. Failing to expand to a doc-like saas is a very bad sign, when your customers use Dropbox to store documents.

> Dropbox is a company with thousands of engineers. They should be able to focus on both aspects.

This highlights a big issue in online discourse, the false dichotomy is everywhere. "why didn't they allocate resources in solving world hunger instead of uber for furbies" Because they chose not to, not because it was an either-or.

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