It's funny, I was reading old Joel on Software posts the other night and stumbled across this one:
<a href="http://www.joelonsoftware.com/items/2008/05/01.html" rel="nofollow">http://www.joelonsoftware.com/items/2008/05/01.html</a><p>From the essay:<p><i>"The hallmark of an architecture astronaut is that they don't solve an actual problem ... they solve something that appears to be the template of a lot of problems. Or at least, they try. Since 1988 many prominent architecture astronauts have been convinced that the biggest problem to solve is synchronization.<p>...<p>Jeez, we've had that forever. When did the first sync web sites start coming out? 1999? There were a million versions. xdrive, mydrive, idrive, youdrive, wealldrive for ice cream. Nobody cared then and nobody cares now, because synchronizing files is just not a killer application. I'm sorry. It seems like it should be. But it's not."</i><p>I immediately thought of dropbox. It appears, to some degree, it <i>is</i> a problem and some people <i>do</i> care. Like Chris said, its the execution and people that made the difference.
This is a good post, but there is the risk of survivorship bias here.
Drew Houston is a brilliant guy, but let's be honest most people only recognized his true brilliance after he became successful. (I think most people thought he is smart, but I doubt most people thought he is brilliant before his success.)<p>So yes, you should invest into people, but the trick is to recognize brilliance in advance. Which is brutally hard. For example recognizing technical brilliance if someone is not technical is almost impossible. I think where YC shines is not only that they try to invest into people but that they are actually quite good at recognizing brilliance. (I doubt they are perfect in this, but probably the best in the market.)
Ha, I passed on dropbox too, I was asked to invest in the series B and thought the valuation was too high. Learned my lesson - valuations go up for a reason.
Came to read about dropbox, but stayed for the dig at KP. Amazing to think that one of the top VC firms in the world were out of the game for so long.<p>A new generation of killer startups were created: Facebook, Zynga, GroupOn etc. and KP just watched it all go by. It would be difficult to just quantify how much $ they missed out on, but at least now they are sorta admitting their mistake and getting back into tech investing (greentech didn't really turn out to be the second coming that many thought it would be)<p>Unfortunately people like 'symantec middle manager' are still around.
Tangent: So I'll be honest -- I was curious as to who the "jackass VC" was. After a little digging around, I think it's Ted Schlein: <a href="http://www.kpcb.com/team/schlein" rel="nofollow">http://www.kpcb.com/team/schlein</a>.
Ahh...so Fred Wilson has started the 'come-to-Jesus' moment for investors.<p>I guess we can now expect to see many more blog posts about missed opportunities, and lessons learned.<p>That being said, thanks for the post Chris.<p>Makes for good reading :)
I love dropbox. Dropbox + git is beautiful as is Dropbox + markdown (for writing).<p>But I don't pay for it. I'm somewhere around 5+ free gigs of which I might use around 30%. Normally if I loved a product this much which I wasn't paying for, but ought to, then I would. But I'm not stealing my account, so I don't really feel like I should pay.<p>On top of that, I use a different paid service for storing large amounts of files. It ends up being cheaper and I feel both solutions work best how I have them - dropbox for sharing/working and the other for offsite backups that just transparently syncs every night or something.<p>I guess all that to ask a question...how the heck is dropbox making money? Between the amount of free storage they give and the fact that there are much cheaper remote backup solutions, I just feel like I'm missing something.
But what about great people with a really bad idea <i>that they are committed to?</i><p>Seems to me that that would be a bad investment.<p>Also:<p>Be careful about your metric of great. The metric of great must be "this person is a genius with lots of energy and creativity," not "this person graduated from the right school, knows the right people, comes from the right part of the country, lives in the right zip code, etc." It must be first-hand meritocratic, not based on second-hand derivative indicators.<p>DropBox's founder went to MIT, but that's not what made him great. MIT is just a good school. The guy may well have been just as great if he'd gone to Ohio State or some other less-prestigious school.
I don't think it's an argument against Dixon's point, but I found this funny because I remember being so impressed with demo of Dropbox at the time. I remember knowing nothing about who Drew was, seeing this on HN: <a href="http://news.ycombinator.com/item?id=8863" rel="nofollow">http://news.ycombinator.com/item?id=8863</a>
and thinking something along the lines of, "that's brilliant, I hope he gets funded so I can use it."
Investing in people over their ideas is always advisable. But let's not forget how brilliant people can still fail. Tons of bright kids come out of MIT, Harvard, Stanford, etc... Should you blindly invest in all of them?<p>Instead, I prefer Mark Suster's "invest in lines, not dots" strategy. You really have to spend more time to have a better idea on whether you should invest.<p>In hindsight, of course Drew Houston would be a good investment.
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.<p>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.<p>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.<p>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.<p>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.<p>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.<p>Dropbox's office was <i>calm</i>, 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.<p>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.
What I like about Dropbox is that it just works as expected. It's trivial and it's well polished.<p>Dropbox is a great lesson in how ideas don't matter and how execution is king. They had the guts to compete with a dozen other players who were trying to solve the same problem, solely based on the confidence in their execution. Investing in people having the skills to execute, the guts to compete, and the resilience to persist, clearly makes better sense than investing in just ideas.
Something related which occurs to me; investing in ideas is basically premature optimisation, because great people can change ideas but average people are unlikely to spontaneously become great.
Investing in people is the best kind of investment; because a business of people is always profitable. A very powerful philosophy taught by Dale Carnegie.
There may have been number of storage sites popping up back in the days but didn't Dropbox provide something new and necessary technology to the PC? As in, don't worry about backing up your files? I don't recall even Box dot net - who was much in the tech news - provide such features.