We were in the same YC round as Dropbox and it was interesting was to observe the discrepancy between our views and the investors' views. While nobody in our class doubted the success (at whatever level) of Dropbox, it never created the same investor heat early on that many of the "trendy investments" did. I wondered about this at the time and put it down to investors' reluctancy (or inability) to spend the days it takes to actually get to know a company.
I was fortunate to get to know Dropbox a bit more than most (and less than many). We were in the same YC class and shared an office for a little while. They was voted top of our class in YC - I don't think anyone doubted they'd be the most successful company.
I don't think anyone felt that even if they were overtaken by Google Platypus or similar that they would fail either - they were doing such hard stuff and had such dedicated users it would still be a great technology acquisition. The company was a really great investment and in fact after Clickpass was acquired I asked Drew if I could invest but unluckily for me they weren't taking on any more (very) small angels.
The interesting thing was that in those very early days (post YC), the investors still weren't fighting their way into it or making the hullabaloo that you see around some of the other valley companies. Drew and Arash were never big-talking sales people, they never focussed on bells and whistles and instead just concentrated on building great product. Day in, day out they just came in, built amazing software and, starting with Aston, they slowly added other amazing developers around them. That relentless progress seemed to be something that most investors really weren't tuned into.
Investors almost never take the time to actually hang out in a company and instead rely on consecutive and very similar meetings. They never actually watch a company work (although Mike Moritz did interestingly come and hung out in their apartment in the Y-Scraper before making his investment). I always therefore feel that statements such as you should invest "in the team", "in the market" or "purely in any other one thing" are all slightly trite because what you really want to invest in is the relentless march of a product towards a market.
You can't learn that in a pitch though or from a founder's personality or even their CV - all of these are single data points and you want to measure the product trajectory. You can however get a very real feel for that by spending real time with a company, in their office. I'm sure you would get some false positives from it but in the long run it would be hard to avoid the true negatives.
Dropbox's office was calm, intelligent, very productive and full of debate and fiercely intelligent employees who believed without hesitation in the product. The developers were constantly interacting with their customers through their forums and they hung out as a team after work. It was totally and utterly different to many other offices I have observed and made it very hard to imagine an outcome that would not be good. They knew the market for their product, they knew it was big and they marched relentlessly towards it.
I know lots of smart, driven, successful people whom I still wouldn't invest in but I would be very interested to know how many such teams with the kernel of a product people like, in a market that is significant and who march relentlessly towards it do not constitute a good investment.
It amazing how quickly the company seems to have developed into something with a recognition beyond the development community. I first cam across it a few years ago while working in England, and that could not have been too long after its launch. What struck me about it at the time, and this has been said more succinctly elsewhere, is how simple and elegant it was to work with - this was confirmed when even the thickest of non-techies in the office could work it out in less than a couple of minutes. Reading the comments here seems to verify my initial thoughts.
I have heard it said before that some of the best ideas are those that take complicated things and make them simple or easily understandable, and their success goes a long way to proving that point.
I was fortunate to get to know Dropbox a bit more than most (and less than many). We were in the same YC class and shared an office for a little while. They was voted top of our class in YC - I don't think anyone doubted they'd be the most successful company.
I don't think anyone felt that even if they were overtaken by Google Platypus or similar that they would fail either - they were doing such hard stuff and had such dedicated users it would still be a great technology acquisition. The company was a really great investment and in fact after Clickpass was acquired I asked Drew if I could invest but unluckily for me they weren't taking on any more (very) small angels.
The interesting thing was that in those very early days (post YC), the investors still weren't fighting their way into it or making the hullabaloo that you see around some of the other valley companies. Drew and Arash were never big-talking sales people, they never focussed on bells and whistles and instead just concentrated on building great product. Day in, day out they just came in, built amazing software and, starting with Aston, they slowly added other amazing developers around them. That relentless progress seemed to be something that most investors really weren't tuned into.
Investors almost never take the time to actually hang out in a company and instead rely on consecutive and very similar meetings. They never actually watch a company work (although Mike Moritz did interestingly come and hung out in their apartment in the Y-Scraper before making his investment). I always therefore feel that statements such as you should invest "in the team", "in the market" or "purely in any other one thing" are all slightly trite because what you really want to invest in is the relentless march of a product towards a market.
You can't learn that in a pitch though or from a founder's personality or even their CV - all of these are single data points and you want to measure the product trajectory. You can however get a very real feel for that by spending real time with a company, in their office. I'm sure you would get some false positives from it but in the long run it would be hard to avoid the true negatives.
Dropbox's office was calm, intelligent, very productive and full of debate and fiercely intelligent employees who believed without hesitation in the product. The developers were constantly interacting with their customers through their forums and they hung out as a team after work. It was totally and utterly different to many other offices I have observed and made it very hard to imagine an outcome that would not be good. They knew the market for their product, they knew it was big and they marched relentlessly towards it.
I know lots of smart, driven, successful people whom I still wouldn't invest in but I would be very interested to know how many such teams with the kernel of a product people like, in a market that is significant and who march relentlessly towards it do not constitute a good investment.