Dropbox CEO Drew Houston: How to Pick a Co-Founder; Steve Jobs' Attempt to Buy Dropbox | 20VC #938

1. 0:00 – 1:32

   Drew’s Origin Story

   1. HSHarry Stebbings0:00

      Drew, I'm so excited for this. I told you beforehand, I listened to your show in 2018 with Tim Ferriss, and I thought, "Who is this genius? I have to have him on the show." It only took four years. But thank you so much for joining me today.

   2. DHDrew Houston0:12

      Oh, well, thanks Harry. It's great to be here.

   3. HSHarry Stebbings0:14

      I would love to start today with a little bit of an origin story. So what was the original unique insight you had with Dropbox? How did you get it and how did it lead to the founding of the company, in a succinct two to three minutes?

   4. DHDrew Houston0:25

      Sure, yeah. I mean, it was, uh... Kind of as a user, I, I kept forgetting my thumb drive. I had started another company at the time doing online SAT prep, of all things, um, but I needed to work w- from multiple computers. And so I had everything... All of our company's crown jewels were on this little thumb drive that I kept losing or almost putting in the washing machine, um, all the things that used to happen, and, um, it culminated in this. I, I was taking this bus ride from Boston to New York to visit my friends, but I wanted to get some work done for, uh, my company, and I realized when I got on the bus I had forgotten my thumb drive. Um, and, uh, you know, I, I... (laughs) And I wasn't like, "Oh, I hate my thumb drive." I was like, "Oh, I hate myself. God, I'm so disorganized. I need to, you know, be more on top of this." (laughs) . But as I thought about it, I'm like, "Man, I'm just so frustrated with this. This keeps happening. I never wanna have this problem again." And I started writing some code, some Python code, uh, on that ride 'cause I didn't have anything else to do. And, and this was like before you had iPhones and Wi-Fi on buses and things like that. But I had no idea it would turn... what it would turn into, but it was really just a personal frustration.

   5. HSHarry Stebbings1:31

      I, I,

2. 1:32 – 6:24

   The Y Combinator Story

   1. HSHarry Stebbings1:32

      I love that. Now, speaking of kind of stories that we have to discuss, I spoke to, kindly thanks to your suggestion, uh, Adam before the show, and he told me that the YC story is the ultimate story of hustle and that I had to discuss it.

   2. DHDrew Houston1:43

      Yeah.

   3. HSHarry Stebbings1:43

      So starting there, what was the YC story that we have to hear?

   4. DHDrew Houston1:48

      Sure. Well, Adam Smith is one of my best friends, and we went to college together, and, uh, he did Y Combinator, and him... H- and he moved out to California. He got VC f- VC funding. Um, and so all of that, his experience was a big inspiration, uh, to me as, as he was going through all that. Um, and I... Uh, yeah, so I personally had a very winding road into Y Combinator myself. (laughs) So I actually applied in 2005 to the first batch with that SAT prep company, Accolade, uh, and was rejected. Um, and then I was still working on it when I had the idea for Dropbox. Um, and, um, I was getting a little burned out from the SAT prep thing. I'm like, "I, I don't know how many more equation, you know, equations about parallel lines or the train leaving Memphis and, you know, just like all the things with SAT prep you can..." I mean, as passionate about it as you can be, but kind of getting a little burned out, I recognize now. Um, uh, and I was like, "Hey, this might be a good fit for Y Combinator." Um, so I wanted to apply. That said, one thing that was useful from my whole, uh, test prep background was really understanding college admissions. Uh, actually pretty similar, a lot of similarities with something at YC- Y Combinator. You have a lot of people applying for a few slots, so anything you can do to get an edge or a hook would be helpful. So, to me, um, the Dean of Admissions here was Paul Graham, uh, the, the, uh, one of the founders of Y Combinator, and, um, so I'm... I was sort of working back from like, wha- you know, "What does Paul do all day? How do I get in front of my Dean of Admissions here?" Um, and I'm like, "You know? I think Paul probably does what most of the rest of us do, which is just keep refreshing Hacker News every day, which is Y Combinator's news site." (laughs) Um, it's kind of like Reddit for startup news. Um, and I'm like, "Man, if I can get something on Hacker News, like, Paul will see it. This might be good." So I made this demo video, uh, that actually hit the top of Hacker News for a couple of days in 2007. And so there's a link still, it's still out there. You can see I posted this little video, um, and the response was super good from, um, from the community and I... And sure enough, I... (laughs) it, it actually worked. I got an email from Paul saying, "Hey, like your idea, but, uh, you need a co-founder if you're gonna get into YC." Um, uh, and the only problem was I didn't have one, and the inter- the interview deadline was a couple weeks away, so it's sort of like saying, "I, I know you're not dating anyone, but you need to be married in the next couple weeks."

   5. HSHarry Stebbings4:11

      (laughs)

   6. DHDrew Houston4:11

      So I had this kind of crazy, uh, kind of musical chairs trying... With some of my friends who are also interested in Y Combinator, just try- trying to shake the trees to find a co-founder. And as part of that, uh, I had one guy who was interested in partnering with me, but he's like, "I wanna know what Paul thinks about this." Um, so I decided to drop in unannounced on (laughs) like actually show up physically at Y Combinator before one of their dinners.

   7. HSHarry Stebbings4:33

      (laughs)

   8. DHDrew Houston4:33

      That did not go very well. I was effectively kicked out of... (laughs)

   9. HSHarry Stebbings4:38

      (laughs)

   10. DHDrew Houston4:38

       Escorted out of the building, um, which after putting the, uh, screencast up there... Or I, I think I might have the order wrong. I think I got kicked out first and then did the demo video, but I had a very good experience with getting in front of Paul and a very bad experience showing up unannounced. Um, and eventually, I was... T- talked to enough of my friends, and, our, our, uh, my mu- or my friend Kyle Vogt, uh, who started, who ended up starting the company Twitch and then started Cruise, the self-driving car company. Um, it turned out he also went to MIT. He was floor mates with Arash and then... My, my co-founder, Arash, they were in the same dorm, introduced Arash to me. Um, we hit it off. Maybe we had a couple coffees. Arash and I had a couple coffees, and then decided to throw in (laughs) together. Uh, and... But there are a couple crazy things about that. Well, so one, Arash hadn't... Arash was in his senior year at MIT, so he dropped out of school, um, to basically spend all his... We, we decided like, "He's gonna drop out of school. We're gonna basically spend our waking lives together for the foreseeable future." Um, I was expecting to have to like talk to his parents or something, but he just up and left.

   11. HSHarry Stebbings5:52

       (laughs)

   12. DHDrew Houston5:52

       Um, and we shipped out to California, interviewed, um, and we got into Y Combinator, um, but a- and, you know, just... But there was just thing after thing that kept happ- Our, our... On the day we got into Y Combinator, our car got broken in... Our Zipcar got broken into. Our laptops got stolen. Um, but like our stuff was on Dropbox, so (laughs) like on an early version of Dropbox, so we didn't lose anything. But yeah, it was... We had a very kind of strange...... uh, path into Y Combinator.

   13. HSHarry Stebbings6:21

       Can I ask you, uh, one, uh, you know, the...

3. 6:24 – 8:52

   How to Pick a Co-Founder

   1. HSHarry Stebbings6:24

      We have schedules and then we just go off them. But that's a very-

   2. DHDrew Houston6:26

      Sure.

   3. HSHarry Stebbings6:27

      ... um, loose, like relationship pre-deciding to found a company and spend your life (laughs) together-

   4. DHDrew Houston6:32

      Yeah.

   5. HSHarry Stebbings6:32

      ... with someone, bluntly.

   6. DHDrew Houston6:33

      Yeah.

   7. HSHarry Stebbings6:33

      Given that it, working so well, how do you advise founders on founder selection given so many people say a lot? Given your experience, how would you advise founders-

   8. DHDrew Houston6:43

      Sure.

   9. HSHarry Stebbings6:43

      ... on choosing?

   10. DHDrew Houston6:45

       Well, I don't... (sighs) Yeah, I mean, uh, our equivalent was like getting married on the second date which, um, if you can avoid it. (laughs) So, the good new is we got lucky, so it worked for us. But I think i- it's much better to, uh, or think, you know, on average it's probably better to... A lot of the founder- co-founder stories start with like, "Oh, we played T-ball together as little kids and have known each other since forever." Um, I think if you have that, that, uh, is a bit of a safer bet. Um, I did have friends like that but they were just busy and, and doing other things, so. Um, but I think that's how you... It can still... You know, there's a lot of different co-founder origin stories. I think what the good ones have in common is like any other serious relationship, um, where I think, uh, uh, you need to have a, a sense of mutual trust and respect. Um, meaning trust as in, uh, uh, basic things like integrity, um, and having a good sense of that. But like just are you motivated by the same things? Are you trying to accomplish the same things? Do you have the same picture of what we wanna do with the company? And then respect. I mean, you, one thing about any co-founder reli- relationship is y- you need to have complementarity and overlap on some, on, on some things. So like for the important and kinda existential questions as a company, like what do we wanna, what do we want to achieve? How do we wanna achieve it? What kinda culture do we wanna build? You need to be very aligned. But there's a lot of work and if you're actually gonna get benefit, uh, you need complementarity. So, um, for example, I really loved everything beyond the t- I l- I love technology, Arash and I both love technology, but I was very interested by the business side too. Um, Arash was m- more focused, uh, he's more internally focused. He wanted to make sure our culture was great, that the technology and the quality of the product experience was really good. Um, and so you wanna fit, you want, um, that, uh, you wanna think about where are we, where do we really need to overlap and be totally on the same page? And then where can we have some complementarity to divide and conquer? But I think underneath all that, you need a foundation of, of trust and respect.

   11. HSHarry Stebbings8:48

       Speaking of the foundations there of kind of the co-founder relationship-

   12. DHDrew Houston8:51

       Mm-hmm.

   13. HSHarry Stebbings8:51

       ... I, I, I do want to (laughs)

4. 8:52 – 13:03

   What are you running away from? Towards?

   1. HSHarry Stebbings8:52

      slightly dive on the foundations of like you as a person, um, before we dive into your leadership which is, someone asked me recently, you know, if we're all a function of our history, we're all running away from something and we're all running towards something, what are you running away from, and what are you running towards?

   2. DHDrew Houston9:08

      Sure. (laughs) Um, well, at first I think it's a really important question. The more you can understand what motivates you and bring that from sort of your subconscious to being aware of it is something I wasn't focused on before starting the company, and now, uh, I would be very focused on things like that. But I'd say when I'm running away, like (laughs) , uh, what I'm running away from, or, or my playbook as an entrepreneur has been to get really personally frustrated by something that's not working the way I think it should and then wanting to fix it permanently. Um, maybe that's not the most like motivational way to (laughs) -

   3. HSHarry Stebbings9:42

      It, it-

   4. DHDrew Houston9:42

      ... get after some of these problems.

   5. HSHarry Stebbings9:44

      Is there, is there... So like for me, my father would always tell me that we lived in one part of London and he always would say, "When we live in that part of London, Chelsea, when you do that, you're, you're a better person." And I always-

   6. DHDrew Houston9:55

      Right.

   7. HSHarry Stebbings9:55

      ... ............................ and I was like, "Wow. Like, we need to live there." And it, that's what I'm like running towards-

   8. DHDrew Houston10:01

      Sure.

   9. HSHarry Stebbings10:01

      ... almost, I guess?

   10. DHDrew Houston10:02

       Sure, sure.

   11. HSHarry Stebbings10:03

       Do you see what I mean?

   12. DHDrew Houston10:04

       Yeah, yeah, yeah. I mean, and certainly like I, uh, uh, especially early on I had the same motive. Like I wanna be succ- or I don't wanna be... I mean, even back to childhood, my parents were like, "You need to reach your potential." And me, I was like, "Okay, I really gotta be ambitious." And so there's some kind of, um, uh, very early wiring and motivation that came, came from that. Um, but, you know, learning to harness the negatives. It's okay to have negative, you know, motivations if you're, if you can harness them properly and you're aware of them. So, you know, being frustrated by things and wanting to solve problems, turning that into something useful. Uh, I'm really competitive. Like, I don't like losing. You know, I don't like the person I become (laughs) if I'm like playing a board game and not winning.

   13. HSHarry Stebbings10:45

       (laughs)

   14. DHDrew Houston10:45

       But, um, but okay, trying to turn that into something positive. And then, but what motivates me is, uh, on the more positive side is I've always been inspired by the power of technology to reshape our lives in both positive and negative ways. And while I think it can cut both ways and I think like nowadays compared to 10 years ago, I think we're shining a lot more light correctly on some of the unintended consequences of technology, uh, and how we can avoid them. Um, when you zoom out, I do think, uh, the line goes up. Like the story of technolo- like the technological progress and human progress go hand in hand. Um, and, you know, I, I don't... I think it's easy to sort of skip past something that's really profound which is that like, you know, now it is common for like an extremely small number of people to build things, to have an idea to build something that reaches millions of people. Um, and if you think about it, we're kinda the first generation maybe, or first generation or two where that was like even conceivably possible. Like even for my parents, that was like not a thing growing up. You couldn't be like in your dorm room, have an idea, build a thing, have millions of people using it a couple of years later. Like that's what we experienced when we were building Dropbox. Like our team was only maybe 10, 15 people when we were reaching millions of people, um, uh, millions of customers. So, one thing that keeps me motivating is just doing that on a bigger and bigger scale. So having a bigger platform, going after bigger problems, painting on a bigger canvas, trying to kinda like bend... Trying to be a force for good, um, at scale and like really solving-... more, like, reaching more people and doing more for them.

   15. HSHarry Stebbings12:23

       I remember when you hit a million plays per show and I didn't have an editor. And I was like, "That's quite cool." It was like, there's no one else. (laughs) I was, like, sitting in my bedroom-

   16. DHDrew Houston12:31

       Right? (laughs) Yeah.

   17. HSHarry Stebbings12:31

       ... with Mum downstairs.

   18. DHDrew Houston12:33

       Like, every, every Starbucks I go into, like, I will look over your shoulder on your laptop and I'll s- try to see if there's a Dropbox icon there, and I never get tired of, uh-

   19. HSHarry Stebbings12:43

       (laughs)

   20. DHDrew Houston12:43

       ... of looking, of seeing that. Or people are like, "Oh, you must be really tired of talking about Dropbox." I'm like, "No, I can definitely talk about Dropbox a lot more, for a lot longer than anyone else." Um, but like, really-

   21. HSHarry Stebbings12:53

       I, I, I-

   22. DHDrew Houston12:53

       ... but I think it's really important to, to know what your motivations are, and I think that changes over time.

   23. HSHarry Stebbings12:58

       I wanna talk about your leadership. Uh, you know, I think about high performance a lot in, in sport, but also in business and

5. 13:03 – 15:53

   What does “high performance” mean to you?

   1. HSHarry Stebbings13:03

      leadership. When I say high performance to you, uh, how do you define it and what does it mean to you?

   2. DHDrew Houston13:09

      Yeah, so I'm kind of, um... I come from, like, the Andy Grove school. Andy has a great book, High Output Management. He was the former CEO of Intel, or

   3. NANarrator13:17

      Mm-hmm.

   4. DHDrew Houston13:17

      ... one of the founding team in, in Intel, became the CEO, started as an engineer. Um, learned on the business, learned the business side along the way, big inspiration for me. Um, and one of the tenets of his management philosophy is, uh, a manager's performance, uh, cannot be rated higher than the output of their organization. So, I think you start with, all right, do you deliver results, right? You start with the outputs for whatever you're doing. And so in sports that might be the stopwatch or the scoreboard. It's pretty hard to argue that you're, like, a great, you know, sprinter if the stopwatch (laughs) doesn't agree with you or that you're a winning, or if, or that-

   5. NANarrator13:53

      Mm-hmm.

   6. DHDrew Houston13:53

      ... you're a great team if your sc- if the scoreboard doesn't agree. So, I think you start with the outputs, uh, and that's the most important thing. That said, you know, there are plenty of cases where, um... Or one, one issue is you don't really c- in, in most of these efforts, you don't actually control the o- outputs directly, right? You don't... When you're like, "I wanna win the football game," it's not like you're, like, setting the score, right? You can only control the inputs. Um, so-

   7. HSHarry Stebbings14:19

      It also doesn't take account of resulting, which is Annie Duke's theory, which is like, you can get the right outcome with the wrong process.

   8. DHDrew Houston14:24

      Exactly. Yup, so there's sort of false positive, false negatives, uh, in terms of, like, doing the right, taking the right activities and having the right outcomes. So, but in sports that, you know, inputs might be something like your level of fitness or your diet or li- how much you practice. Like, you can, you can totally control those things. Um, in a company that might be, um, uh, okay, well, your systems, your people, your metrics, your processes. So, I, I start by... But I start with results. Are we delivering the results or not? And then I'm like, okay, peel back one layer of the onion. Okay, how's the process? And then the third thing, to me, is mindset. This means... This is something that I didn't pay a lot of attention to early, pay a lot of attention to now, which is, like, self-awareness, uh, like, humility, curiosity, as opposed to being, um, defensive or dismissive or blaming external factors. Which is like, are you coachable, basically? Because... And the reason that matters is because if, uh, it's very... When things don't, aren't going, when the results aren't good or the process isn't good, um, or you're not performing well, you know, it's easy to... There's always some external factors is that are easy to blame. But if you kinda l- but then you can let yourself off the hook. So if you're not, if- if you're not even, if you don't even think there's a problem, you're not trying to do anything differently, your performance is not gonna improve. Um, and, and, and so mindset is really important. But it's r- results, then process, then mindset for me.

   9. HSHarry Stebbings15:43

      Uh, you said there about, kind of, mindset changing.

   10. DHDrew Houston15:46

       Yeah.

   11. HSHarry Stebbings15:46

       I often find mindsets change often actually in quite a catalytic way, which is, like, a certain event causes it to change. Like, when

6. 15:53 – 19:45

   Are there a few catalytic moments that caused your mindset to change?

   1. HSHarry Stebbings15:53

      I-

   2. DHDrew Houston15:53

      Mm-hmm.

   3. HSHarry Stebbings15:53

      Yeah, I'm an investor also. When I lost a company, my mindset changed quite significantly. If you look at back on your timeline, is there-

   4. DHDrew Houston16:00

      Sure.

   5. HSHarry Stebbings16:00

      ... one or two catalytic moments which caused your mindset to change?

   6. DHDrew Houston16:04

      Yeah, yeah. Um, a couple come to mind. So, one, one was my first experience with executive coaching, which I highly recommend. It started off kind of pretty, you know, standard issue coaching experience. You do a 360 with your team, you sit down, you get a little presentation of... You know, starts with like, "All right, Drew, uh, have a seat. Here are your," page one, "Here are your strengths. Uh, you're creative, you like new ideas, you like people and relationships." And I'm like, "Okay, um, I like this coaching thing so far. Keep going."

   7. HSHarry Stebbings16:37

      (laughs)

   8. DHDrew Houston16:37

      Uh, and then, you know, next page. It's always your development areas and not your weaknesses, but your development areas, uh, you're conflict-avoidant, you're a bit of a space cadet, and maybe one of your strengths is you're comfortable in chaos, but then you don't actually create structure for your team, which is frustrating for people. The, kinda, unlock there was, uh, when you paired the strengths and weaknesses, they're sort of both sides of the same coin. Like, if you like new ideas, then you're bored by routine and not super disciplined about little details. If you love building relationships with people and creating positive vibes, you're conflict-avoidant and avoid telling people the truth. Um, so I think the most important... So the, the catalyst was, like, really first just awareness of these things instead of them just being kinda in your, like, sort of buried under the surface and, and not being aware of them. Like, if you're aware of these, it, like... Ben Horowitz, uh, gave, uh, I, gave me a qu- a q- or he had a quote that I like. He's like, "God gave us all weaknesses. It's a blessing to find out about them." So, starting (laughs) with self-awareness, uh, is good. And then I'd say the best exercise I've done on this dimension is learning about the Enneagram, which, uh, for those not familiar is, is ki- you've probably heard of Myers-Briggs or different personality-

   9. NANarrator17:46

      Mm-hmm.

   10. DHDrew Houston17:46

       ... typing systems. I think of the Enneagram as, like, uh, as sort of like Myers-Briggs but useful. Um, so it's similar-

   11. NANarrator17:53

       (laughs)

   12. DHDrew Houston17:53

       ... in that there are, instead of, like, uh, four letters or something or 16 types in Myers-Briggs, you have these nine, uh, basic Enneagram types, personality types. Doesn't mean that there's only, like, nine dots of people. It's more like area codes. You're sort of in this... There are nine sort of categories or buckets, but they're pretty fixed. Like, you start with them from your kinda genetic wiring in your early childhood, but they stay pretty stable over time. Um, and what's w- a- and I think th- the Enneagram is better because I think it's a more-... s- I think has sort of the just right number of types. So, the, the, it's m- some other type or typing systems have like four options or things and 16 is too many. I think nine is, like once you learn them all you're like, "Oh, okay, I know someone in my life who is one of these things." But it's really about what, uh, what fundamentally motivates you. Uh, like what are you running from and what are you running towards is actually what the whole theory of it. And like what's your kind of coping strategy for life that you developed as a kid? So, I think from that, I, I, I learned I'm an Enneagram 7 and a seven is, and everybody gets an, you get a number between one and nine, I'm a seven. Seven is the enthusiast. And I'm like a central casting seven. So seven enthusiasts, they are broadly creative, they like new ideas, they're curious, they're very positive and optimistic, um, and part of the reason for all this is they're basically running from pain and discomfort and they never want to be deprived. So, the downsides of that are, you, you avoid discomfort either by like always planning for the future and avoiding the present, or doing like escapist things or having FOMO all the time, uh, or avoiding conflict. Um, so when I look at like my Enneagram type and I look at my coaching results, abso- it's like totally, uh, I mean, I thought I was a special snowflake, a lot of people do before they do one of these things, then you, you take the test, you're like, "Oh, okay, I'm that." Um, so I think that-

   13. HSHarry Stebbings19:42

       Can you-

   14. DHDrew Houston19:42

       ... was a huge catalyst for me.

   15. HSHarry Stebbings19:44

       Can I ask, I'm

7. 19:45 – 22:30

   Tips for Combatting Conflict Avoidance

   1. HSHarry Stebbings19:45

      incredibly conflict avoidant too, what have been some things that have worked for you in trying to mitigate that and trying to combat it?

   2. DHDrew Houston19:52

      It's tough. I think first is, I think, uh, well r- rec- recognizing it comes from a good place, you know, a- and often you're trying not to hurt people's feelings or there's, or you know, there are other kind of positive motivations for it. But I think over time when you withhold feedback from people, you realize that the outcome, or you're, you're actually not helping them. Um, and because they keep making the same mistakes over and over again, or, or keep having the same patterns and, and, and they don't know about it and so they don't do anything about it, and then everybody's frustrated. Recognizing that sometimes, and then when you think about your own experience, like you appreciate it when people tell you stuff that (laughs) like you didn't know, or like you have a thing in your teeth, you know? And so, there's sort of this mismatch between what you want to do and what you want others to do for you. Um, and I think just getting, first like recognizing this is a pattern, it's normal. Um, but then, uh, also I, I think starting just to experiment with just being more direct and assertive, and real- and then realizing that, um, you know, usually the world doesn't come crashing down or the person isn't as, uh, kind of offended by all this as, as you think. And then recognizing also, I think there's sort of a superhero complex that can kind of s- be lurking under the surface here. So often, you know, I would spend so much time trying to like anticipate the other per- or I had something that I knew the other person wasn't gonna like, I'm very, I, you know, I try to be pretty empathetic and I'm like, "Oh man, this is really gonna be painful for them." But then just reaching further and further and further over the boundary to be like, "All right, well now I need to like anticipate their response and like make them feel better about it," and all these things. When it's really like, you know, at some point you have to set a boundary which is like, this is your truth and they're gonna have a reaction to that, to, to this information. And, you know, you can't really s- that, that's not, that, that's more, their reaction to the truth is more kind of their world and their (laughs) responsibility. Um, and that doesn't mean like, therefore to say whatever you want whenever you want it or, you know, don't be empathetic. But for some things that are just gonna be difficult news, um, one of the f- uh, quotes I remember from a negotiation class I took is that there's no such thing as a diplomatic hand grenade. Meaning like if you're gonna say something and it's gonna explode, like just, it, that's okay, like that's normal. Uh, uh, you know, you don't have to control or like de- like diffuse every aspect of everything. And I think once you realize that, it takes a lot of, uh, for me at least, it took a lot of weight off my shoulders. And like not having to get, just trying to get the feedback transmitted and received more than like trying to land it perfectly or bend myself into a pretzel trying to solve for all of getting the person the feedback and making them still love me forever. And like,

8. 22:30 – 25:33

   Tips for Diplomatic Hand Grenades

   1. DHDrew Houston22:30

      you just can't solve for all those things.

   2. HSHarry Stebbings22:32

      I'm using you for advice here. I, I have this kind of diplomatic hand grenade right now in this situation, and the feedback that they're getting is, "Just hear me out. Just hear me out. The decision is made, like, d- it's over."

   3. DHDrew Houston22:42

      Mm-hmm. Yeah.

   4. HSHarry Stebbings22:43

      Like, do you hear them out even though it's futile just so they feel heard? Or do you say, "Drew, it's not gonna change anything, like the decision has been made"? Which-

   5. DHDrew Houston22:54

      Well, I think you can do both. I think leading, you know, as I was like a sort of early novice manager, like my s- first experiences, his first experience trying to fire someone, uh, they ended up coming back to the office the next week and they didn't really get that (laughs) it was like, "Okay."

   6. HSHarry Stebbings23:13

      You did a bad job, Drew. (laughs) You know? (laughs)

   7. DHDrew Houston23:15

      (laughs) I clearly... (laughs) You know, and then other things are the people are crying or just like it's, these are like really traumatic for everyone involved. I mean, more the person receiving it, but also for the person, you know, delivering the message. And I'm like, "Wow, I'm cause, this, whatever I'm doing is like not working very well." So I think first communicating clearly, like don't bury the lead, like just saying in the beginning of the meeting like, "Hey, you know, this might be a tough convers- I think this is gonna be a tough conversation." Just like (laughs) getting, think about how you would want to receive this news is one way to do it. But just like not burying the lead, being direct, being like, "Th- yeah, this is not working out and we're gonna need to talk about a transition," or whatever your favorite language is. And then, and then, you know, I think yes, you want, you, you want to both be be- be direct and definitive, and leave room for them to have their experience and share their score- story and be, um, diplomatic about it. Um, hopefully this isn't like the only conversation you've ou- had about the theme, or hopefully this is, or I think if, if there, if the person has like no idea this is coming then there's, then, then the problem started well before this conversation (laughs) or I think there is some element of due process that it's reasonable for people to expect. Um, but I think, you know, hearing people out, um, is fine as long as...Um, you know, I find that when you're in these difficult conversations, people will often wanna then bring it back on you and, you know, and share all the things that you did wrong, um, and I think that can sometimes muddy the waters 'cause... And a lot of these, like, business or performance conversations, they're difficult conversations. It's not like two bad things happening, like, cancel each other out. You know, in American football it's like, two penalties cancel each other out, it's even, everybody go back and start the next play.

   8. HSHarry Stebbings24:57

      Right.

   9. DHDrew Houston24:57

      That's not really how it works. (laughs) So like, if someone's not performing or isn't the right fit, the fact that there are things you coulda done better as a manager, I find it healthy to- to, like, explicitly separate those conversations and... Or, you know, leave some space between them like, "Look, I know there are things I didn't, um, do to help you set up s- set you up for success. Like, I- I own that. Um, I gotta be transparent that this doesn't really change the decision and I'd, you know, I'd welcome feedback on, you know, what I could have done differently, but, like, let... That's not the topic right now. Like, let's cover that later if it starts getting, kinda, in this, you know, uh, this back and

9. 25:33 – 32:37

   What is the most difficult lesson you’re glad you learned?

   1. DHDrew Houston25:33

      forth."

   2. HSHarry Stebbings25:34

      Speaking of difficult conversations to have, I often find that the biggest lessons are learned from difficult times. Um, I- I learned probably one of my biggest investing lessons from, you know, losing an investment. When you think back over the journey, what is the most difficult lesson that you learned that you're also super pleased to have learned because of the value that you gained from it?

   3. DHDrew Houston25:54

      Yeah. Well, I think one of the toughest moments for me was going through the period of hyper growth and then having that... He- and then kinda hitting the peak, and then when the... Then things start going (laughs) the other direction. Um, so for us, we had maybe the seven-year-period from 2007 to 2014 where we were just, like, living the dot-com dream, you know, numbers, money, everything going up, billion dollar valuations, all that, magazine covers, and then it was also clear that, like, we were inviting competition from, like, the best and most (laughs) capitalized companies in the world, and... Microsoft and Google and Apple and literally everyone was coming after us, um, cloning our products, bundling them with the operating system or platform, giving everything away for free, and this kinda came to a head when, you know, on the one hand, we- we had... We were really spreading our wings as a company and expanding in these different areas when we launched this new, uh... Or this- this photo sharing app called Carousel. We bought this company called Mailbox which was, like, the first... One of the first great, kinda mobile email clients. And so, like, uh, this feeling of, like, flourishing and going out, but at the same time it was clear that pretty much everything... (laughs) Well, we discovered pretty quickly that everything we do is gonna be copied very quickly and that fighting against these mega cap companies is like, you know... Uh, it's- it's- it's- it's- it's tough, and, uh, moving into the big leagues means you get harder and harder opponents. And this kinda culminated when things like... A bunch of things happened, like Google launched Google Photos which meant giving, like, everybody unlimited storage for... Globally for life for free. It's like, "Okay, how are we supposed to-

   4. HSHarry Stebbings27:36

      (laughs) Fuck.

   5. DHDrew Houston27:36

      ... compete with that?" You know.

   6. HSHarry Stebbings27:38

      (laughs)

   7. DHDrew Houston27:38

      It's one thing to, like, play a board game with your little brother and, like, be... But then, like, when they, like, vaporize... Like- like- like, blast the game off the table such that no one can play the game again, you're like, "Well, this isn't very fun."

   8. HSHarry Stebbings27:50

      (laughs)

   9. DHDrew Houston27:52

      Um... And, um, but the... Like, and then we ended up having to shut down both... I decided to... Well, this was after reading Only The Paranoid Survive by an- another book by Andy Grove, um, recognizing this was... We were kind of in a very precarious st- we were at a strategic inflection point that wasn't good for us where we would now have this... All this competition, and one of the things in the book is, you know, CEOs like to keep their options open and keep doing all these things, but what you really need to do is put all your eggs in one basket and watch that basket, per the Mark Twain quote. And this was... Came after an... Intel's experience where... We know my... Intel now is, like, the processor, you know, microprocessor company, but they were actually... Started and were known as, like, a memory company, uh, making, like, mem- like, RAM and memory for computers, early computers, and they found that they were just knocking the cover off the ball, doing great, hyper growth, until just suddenly things weren't working and they had these Japanese competitors who were, like, subsidized by the government and- and who were building things, like, faster, better, cheaper, and they were just like, "We are lo-... We're not gonna win. Things look okay right now in all the numbers, but, like, we are not gonna win this game." Um, and they had th- There's this vignette from the book where, um, they are like, "Well if we were- were consultants to ourselves, what would we do?" And they're like, "We would obviously get out of the memory business and go all in on this, like, this sketchy little microprocessor thing." And they're like, "Well why don't we just do that?" Um, but that- that sounds easy, and then they did and they lived happily ever after, but that's sort of like Google saying, like, "Hey, let's get out of search." Right? Um, so very difficult situ-... So we ended up... We were like... We were the... We're fighting this and the... What I sort of drew from this was, like, you know, Dropbox is fighting all these wars on different fronts, like, and we have consumers using Dropbox to share photos and there we're competing with Apple and Google and Facebook at the time. You know, in productivity we're competing as a whole no- other set of people and then, you know, as far as, like, s- basic storage, like, we're competing with the iPhone to back up your iPhone. Like, how's that gonna go? You know? So, like, really having to take stock of, um... Like, really take stock of where we are. And then, uh, very, like, public humiliating failure. Like, we should... We- we announce all these things that are the future of the company. A year later I'm shutting them down. Everybody's like, "What the hell is going o-..." Then the press cycle turned very negative on Dropbox for a while. But-

   10. HSHarry Stebbings30:10

       (laughs)

   11. DHDrew Houston30:10

       So what's the lesson? Like, there's, like... As you move... Like, this is how it is. Like, in... As you move up in the big leagues and you make the playoffs, like, your reward every time is a bigger or, like, a- a bigger and stronger opponent, (laughs) you know? And that's just in... That's in the game. That's, like, what you're choosing. And then I think what was hard for me personally is that I'm like, "What am I doing here?" Like, "I made... I don't need more money.... I've kind of gotten all the merit badges I need for startups, like, you know, evaluations or being on, getting this or that investor or milestone. I'm like, "Is this just making big numbers bigger?" Like, "What's going on here?" Um, and I had to decide, um, like, what am I real- what's my motivation? And that was, like, pretty, it was, (fingers snapping) like, very stressful and, like, not a fun period. And I'm like, "Our competitive situation is pretty dire right now, so what, what am I even doing?" Um, so, you know, I had to go off by myself and kind of really think about that and really develop a sense of, of purpose. And actually that year, Andy Grove died. He was one of my, uh, he was a hero of mine. I was fortunate I got a chance to meet him. Uh, Bill Campbell, who was a coach to a lot of the Silicon Valley folks and was helpful to me, he died that year. Um, and I really admired how the two of them had really spent a lot of their lives, like, just helping to light the path for those (laughs) who may follow or, or help people, and that was really inspirational to me. So I'm like, "All right, well, I wanna be able to have some kind of..." You know, as, as m- as big as these problems are, they're ac- you know, at least I, at least I have these problems. If I hadn't read Andy's book, uh, maybe I wouldn't even be here, so it's, these are good problems to have. Um, and, you know, I just wanna keep... Why am I doing this? Well, a couple reasons. One is I just wanna have, I wanna be able to paint on a bigger canvas and, and I believe in the power of technology to make things better. Uh, and then second, like, w- personally, I want it... Like, being CEO is a hard job. Uh, I'm lucky that, you know, unlike chess or sports or something where you can kind of peak in your 20s or 30s, being CEO is something you can do for, you know, decades and still only be kind of midway through your journey. So I can do this for a long time. So I, I'm really motivated by the craft of being a great CEO and, and, and playing the game better and better. And then a lot of the-

   12. HSHarry Stebbings32:23

       My friend, you, you-

   13. DHDrew Houston32:23

       Yeah.

   14. HSHarry Stebbings32:23

       ... are a spring chicken, I think would be the description.

   15. DHDrew Houston32:26

       (laughs)

   16. HSHarry Stebbings32:27

       Uh, I might-

   17. DHDrew Houston32:27

       I'm, like, 300 years old in Y Combinator founder years, but-

   18. HSHarry Stebbings32:30

       Oh, yeah. Oh, yeah. You're, you're screwed-

   19. DHDrew Houston32:32

       Yeah. (laughs)

   20. HSHarry Stebbings32:33

       ... in that one. Yeah, yeah. But I'm old, I'm old in that description, and that's really fucking worrying.

10. 32:37 – 35:16

    How to Cope with Failure

    1. HSHarry Stebbings32:37

       Uh, my question to you is, you know, I'm, you know, I'm, know the Clubhouse found as well, I know the Hopin found as well. We live in a press cycle where it's brutal. Like, you know, I lost a company earlier this year. Fuck, I got savaged on Twitter.

    2. DHDrew Houston32:50

       Yeah.

    3. HSHarry Stebbings32:50

       And I spent the day crying in a corner. So my question to you is, how did you personally handle the cycle which builds you up faster than anything, magazine covers, you name it, and tears you down quicker than anything now? What would you advise me and some of the founders that are going through that?

    4. DHDrew Houston33:07

       Well, I don't, I think there's nothing anyone can say that will make it that much easier, so just recognizing. There's no, like, Band-Aid. You're like, "Okay, now I'm better. I feel better." Like, it sucks. Um, it's really embarrassing. You know, I, I, my first company, my bootstrap company, like, it never really succeeded and then it died. But, like, then Dropbox was, like, succeeding massively and then seemed to be dying massively. And I'm like, "That is way worse (laughs) than any of the others."

    5. HSHarry Stebbings33:35

       (laughs)

    6. DHDrew Houston33:35

       Um, so first just recognizing that it sucks. Um, second, you know, I think you need to, um, as far as how to cope with a lot of the stress and kind of manage your psychology, I think depersonalizing it a little bit and being like, "Wait, this is not, like, me specific. This is just, like, part of the game, or this is how things work." Like, the press, you know, they, it's not personal. They just, they need something that's like the little engine that could, and then at some point, they need to tear it down. Like, this is how it always has been and always will be. It's not really about you. And th- and then sort of seeing it, uh, and then depersonalizing it more. Uh, I mentioned before that, like, I, I wanna play the game really well, but I think the, the game part is intentional. This is not, like, life and death. Like, the more... I- if you sort of internalize, I think it's intor- important to internalize the responsibility you have on your shoulders for people's livelihoods or your customers and things like that. But if it just feels like this, like, overwhelming burden, like, you won't be able to function, and you'll resent the job and you'll burn out. Um, so recognizing that, having a sense of equanimity, like, "Yes, this is all part of the journey. Um, it's not really about me. This is a game I can get better at. No one's dying." You know, even i- uh, you'll always hopefully take your job super seriously, so it's not like don't take things seriously. But just recognizing that this is part of the journey and everyone goes through it. And, you know, look at the, look at the big internet (laughs) companies and the great founders. They all had their periods of kind of being behind the shed and getting whipped. Um-

    7. HSHarry Stebbings35:11

       (laughs)

    8. DHDrew Houston35:12

       ... so, you know, yeah, you're in good company.

    9. HSHarry Stebbings35:15

       You said about the responsibilities

11. 35:16 – 39:36

    Drew’s Biggest Lessons in Talent Acquisition

    1. HSHarry Stebbings35:16

       there, especially with teams. I spoke to Sujay before the show, and he said in particular that your ability to build the most incredibly talented teams was something that stood out to him. He asked what were some of your biggest lessons on talent acquisition, and also what are some of the biggest mistakes you made on hiring?

    2. DHDrew Houston35:34

       Sure. Well, I think the first was, um, the first thing on talent is just really caring about it. We- which sounds kind of obvious, but we, we had a great, uh, we had g- great early investor and advisor, uh, Hadi Partovi, who was also an early investor in, um, in Facebook, and started a bunch of companies, really, um, experienced and successful and, and generous with his time with us. So Hadi told us, he's like, "Well..." I asked, he's like, we were asking, we're like, "Hey, Hadi, give us advice on how do we build a great company." And he's like, "Yeah, I asked my mentors the same question." And he's like, "And my mentor told me, you know, there are 10 things that you need to do as an entrepreneur. Hire the best people, hire the best people, hire those p-" And I'm like, "Okay, Hadi. Yup, got it." (laughs)

    3. HSHarry Stebbings36:22

       (laughs)

    4. DHDrew Houston36:22

       But just, like, drilling into our heads the importance of recruit- especially early on. Really, uh, and I, so w- so we internalized, and then there's like, like, really caring about how do you recruit the best people? How do you, you know, build p- the, all stages of how do you sell the co- how do you...... get candidates excited, source them, really caring about the craft of all of that. That's something that Arash and I became pretty obsessed with, um, in pretty direct response to Hadi's feedback. Um, and then recognizing that, you know, your, your company is, uh, whatever your com- company is or startup is right now is sort of the seed crystal for the company it will become. Okay, what does that mean? Well, you know, people don't usually wanna join companies where the people are, where the, the people are, like, less talented (laughs) than them, right? So talent density is really important or keeping that seed crystal as pure and good as possible is really important. So, um, because any impurities will grow or the, you know, talent bar will only, the talent density will only degrade. So r- in the beginning that was like handpicking the s- ev- for, for Arash and me, it was really just, like, handpicking the smartest people we knew from MIT, um, where we had gone to school. Um, and I think, so just, I'd say the first thing is just caring about it and really getting good at the craft of, of r- recruiting. Um, but then I think it gets a little harder after the first 10 or 20 people when, especially when you have to start hiring executives or people where, uh, you haven't done the job before. So, like, I, I, I grew up an engineer, studied engineering, very comfortable there, pretty, uh, comfortable interviewing engineers and evaluating technical talent. But when you're evaluating businesspeople, all you know is, all, all that you can really tell is, like, "Wow, this person's, like, knows a lot more than I do. They seem pretty good." You know? And often, and so what, so how do you deal with that? Espe- especially if you don't even know what the job really is. Um, we had a couple hacks that made that, uh, that worked for us. So one was, um, actually just hiring consultants, like people who just t- sort of tied us over till we had a need for a full-time person, um, or just to kind of plug the gap. Um, and, eh, there's a lot of folks that will help, that we had a sort of contract head of business development, contract head of marketing that actually, contract head of recruiting, maybe a couple other things. That worked pretty well for us 'cause then, you know, you work closely with that person. You learn kind of enough of the job to know what you're talking about and how to evaluate people. So that's one. And then second, you lean on your investors and if you have a great venture investors, we had Sequoia Capital who we had a great experience with. Um, um, they, part of their job is to have a network and Rolodex of, of great execs and so asking your investor, putting them, your investors to work, being like, "Hey, introduce me to the top five, you know, VPs of marketing in the port- in your portfolio just so I know how to calibrate." And, you know, treat that nicely. Don't recruit the people (laughs) that you're getting introduced to or, you know, behave well. But I think you need to get a sense of, like, what does good really look like 'cause, like, you know, if you hear someone playing guitar in a subway, you're like, "Wow, that person has Beatle song o-" Then you hear Jimi Hendrix, you're like, "Okay, like, there's a (laughs) lot of distance there." And so you just wanna see, all right, uh, once you get a sense of, like, five or 10 people and calibrate, you get a sense of what good looks, good look, good looks like. Um, and so I think those, both of those things help de-risk,

12. 39:36 – 41:22

    Drew’s Biggest Hiring Mistakes

    1. DHDrew Houston39:36

       uh, those exar- early exec hires. It's really hard.

    2. HSHarry Stebbings39:39

       What's the biggest hiring mistakes you made?

    3. DHDrew Houston39:41

       They are the kind of the classic mistakes, just like leaving people in role too long. The, the biggest mistakes that I've made are, I'd say around that. They're b- leaving people in role too long or not thinking critically about what, what do we really need and, or, uh, what is the role that we really need and who is the person and how do they fit and, like, really being rigorous about that. So what that looks like is, you know, I think for my own learning, it's, like, y- I, I'm like, "I really need to keep my personal growth curve ahead of the company's growth curve," and that's a really hard thing to do. Um, and you need your execs to do that too. Like, what your exec (laughs) needs to keep their learning curve or what they're providing ahead of the company's, of what the company needs, um, and if they start falling behind, it's often very difficult to catch up and, and if they can't, then you need to, to move on them. So I think being too optimistic about people's ability to do that or, or conflict avoidance. Some of the stuff we talked about before like I, you know, not wanting to tell people hard, like, things that will be difficult for them to hear. So withholding feedback and then creating an even bigger problem because now (laughs) they're, th- they're surprised by the feedback and things like that. So the, mostly i- in those kinds of, of, of categories. And I think, um, you know, especially if you're a startup, you, like, you're all on a learning journey together, but your execs, you kinda need them to know what to do. Um, and you still have to man- manage them and there's a bunch of m- mistakes you can make around not mana- or, or being too optimistic about them knowing what to do, um, which I can share more about. But, um, but I think the, the, the biggest category here for most people is, uh, leaving a struggling exec in place too long and not de- delivering

13. 41:22 – 47:33

    How did you convince Sequoia to invest?

    1. DHDrew Houston41:22

       feedback effectively.

    2. HSHarry Stebbings41:23

       You mentioned Sequoia there. I told you I did my work before the show. I, uh, I spoke to Doug before the show.

    3. DHDrew Houston41:29

       (laughs)

    4. HSHarry Stebbings41:30

       Um, and he asked two questions. He said, "Ask him about the story of getting Sequoia invested and what you did-"

    5. DHDrew Houston41:35

       (laughs)

    6. HSHarry Stebbings41:35

       "... to convince us." Um, so I'm gonna start on that. What did you do to convince Sequoia?

    7. DHDrew Houston41:40

       Well, we had a very... (sighs) As, as I said, our whole, the road into Y Combinator was kinda strange and then the, we, we had a pretty unusual path after that too. So after Y Combinator culminates in demo day where you basically, uh, you know, they would fill up a room full of investors and a few companies. Uh, obviously it's a lot bigger now, uh, than it w- where there were maybe 10 f- companies in our batch. Now there's, like, 1,000 or something. But one of the f- the first person who ca- we, we did our demo at demo day. Uh, one of the people who came running up to us was a guy named Pejman who's, like, actually came up running t- uh, came running up to her. I was giving the presentation, but he ran up to Arash and started speaking Farsi to him and I'm like, "What is going on?" (laughs)

    8. HSHarry Stebbings42:24

       (laughs)

    9. DHDrew Houston42:24

       And Pejman is like, "Oh, you guys need to come down, like, we," e- 'cause we were, we were living in Boston, but we were just in Mountain View visiting for demo day. And he said, "You gotta come visit," and we're like, "I don't know. We're still, we're kind of about, we've almost kinda raised our first round, but..." Sure, he's very...... persuasive and he's like, "Okay, come to our office. Here's my business card. Th- this day, so we got it scheduled." We Come have some tea. Come have some tea. (laughs)

    10. HSHarry Stebbings42:48

        (laughs)

    11. DHDrew Houston42:49

        Yeah. Well, that's the thing. So yeah, we get down there and w- I'm like, and we're like, y- this is where we're go- renting another Zipcar, getting down there on University Ave in Palo Alto, getting... And I'm, and I'm like running late and I'm like, "Wait, what the hell is this pl- Medallion Rug Gallery?" I'm like, "We're not, we're late and we're not even at the right place." And, but I'm like, the, the number is what the, is d- deep, I think from the email okay. So we go in there, we're like, "Hey, is Pejman here?" And you know, you look in the shop, it's just like people looking at rugs and a receptionist just there looking at the people who are looking at rugs. (laughs) And we're like, "Okay."

    12. HSHarry Stebbings43:22

        (laughs)

    13. DHDrew Houston43:22

        And she's like, "Oh, Pejman. Sure, yeah, come with me." And of course, Palo Alto University Ave, the rug shop has a back room with a projector and a startup kind of pitch room, boardroom. And, you know, and so... (laughs) . And so... And Pejman was, was awesome. He was like a, a believer from the beginning. He's like, "I wanna introduce you to all these people. Here, here, here, meet these people at Sequoia." And we're like, Sequoia for us is, uh, we're like, "Whoa, whoa, we're not ready for that." It was just me and Arash at the time. We weren't planning to, uh, you know, we were a little intimidated by the prospect of getting like full venture capitalists involved yet. But we took the meeting, um, so p- everybody... And Pejman made an introduction to Samir Gandhi, who's now at Excel but he was at Sequoia at the time. Um, we met on a Friday. Pejman actually came with us to our pitch, which was, uh, apparently, which I learned later is extremely unorthodox. Uh, and then, uh, uh, Mike Moritz, kind of the godfather of Sequoia, came to our apartment on Saturday morning. We had a handshake deal on Monday, and then money in the bank a week after that. So like one business day turnaround. They move super fast. And you know, it, it was wild for... Oh yeah. The, the, one of the biggest challenges in that process was like, they're like, "Okay, we wanna invest in you. Great. Figure out terms." And they were like, "Send us your wiring instructions." And we're like, "Wiring instructions?" Like, w- what do we just... All we have is like our, just like my first checking, business checking account from like a Bank of America account we opened in the mall in Cambridge, literally.

    14. HSHarry Stebbings44:53

        (laughs)

    15. DHDrew Houston44:53

        Um, I, and so we, uh, had like the, um, j-... To give you a sense of like what you have to do as an entrepreneur. Like, so we're like, "Okay, I, this is really embarrassing if like..." They're like, "Yes, we wanna give you the money," and we can't figure out how to get the money from them into our bank account. So let's c-... We went to the Bank of America, like branched in North Beach, and we're like, "Sit down." We're like, there's like people in line for like the ATMs and there's like the leather seat people. We're like, "This is probably a leather, leather seat thing." So we grab a seat. She's like, "How can I help you?" Hand our like debit card to her and she's like pulling up the account and I, and I'm like, "Hey, um, is there a limit to how much this bank account can hold?" And she's like, "What do you mean?" And she's like pulling up our thing and we have $60 in our checking account, in our c- corporate checking account. I'm like, "Can it hold like a million dollars?" She's like, "Yeah." And you know, I don't know what she thought it... Uh, we were like, "Great." And (laughs) we got the numbers and everything and walked out and we were like, uh, and then fortunately it all worked. But like, just that's a, like I... Wiring instructions, the only thing I knew about it was like James Bond movies or like that, th- and you know. But we were like-

    16. HSHarry Stebbings45:59

        Do, do you remember-

    17. DHDrew Houston45:59

        ... "We probably don't wanna screw up the getting the money in the bank part." (laughs)

    18. HSHarry Stebbings46:02

        Do you remember the deal? How big was the round? What was the price?

    19. DHDrew Houston46:04

        Yeah. Yeah, it was 1.2 million on a 3.8 pre, so five post.

    20. HSHarry Stebbings46:12

        Oh, that sounds great. (laughs)

    21. DHDrew Houston46:15

        Yeah. Yeah, it was great to us. I mean, back then that was a really, that was a really good deal. And then, you know, I'd do it again. And I think it was, uh, um, you know, partnering with, uh, an investor who's like really... Or I think there's a lot of different ways to fundraise. The par- party rounds are very popular, but then they kind of diffuse responsibility or you end up with... You think you have a lot of people supporting you, but e- really no one's invested in your success. And I think a big difference between, uh, versus a venture ca- you know, VC, like if you have a great VC, a couple things. Like one is the partner actually's career is on the line with your investment. So they have a lot of incentive to make it work well. And if you pick a good investor that's seen great comp-... That's had a front row seat to great companies. So like Sequoia's funded Google and Apple and Yahoo and Or, or even Cisco. The list goes on and on. Then they help with some... The pattern recognition can actually, can actually help. I mean, there's, you know, challenges with VCs. They can... You know, you're there, you're there, they, they want their money back with (laughs) you know, many times their money back. So it's not a charity. You have to perform. Um, but for us that was a really great experience, and I think a big difference between my first and second company was having that kind of accountability, having the structure of board meetings, having some guidance, having someone on the, uh, having someone with us who could, who, who could help us, who could help, help us steer

14. 47:33 – 51:02

    The Story of Nearly Getting Acquired by Steve Jobs?

    1. DHDrew Houston47:33

       and see around corners was really great.

    2. HSHarry Stebbings47:35

       A final question before we do a quick fire, and I have to admit, it's another one from Doug. He asked, um, have you ever had the chance to sell the company? And if so, why didn't you?

    3. DHDrew Houston47:44

       Yeah. Um, so w- we, we have at different, um, different points, especially early on. I think any company that's doing well, you get a lot of overtures from different folks. You know, we had a... Uh, we got kind of kicked up the, uh... (laughs) Kicked up the food chain to St-... Uh, we had a meeting with Steve Jobs at Apple after a series of other meetings. Um, and-

    4. HSHarry Stebbings48:06

       How did it go?

    5. DHDrew Houston48:08

       It was wild. You know, it was... Uh, h- he, you know, he came in, he sat down, he's like, "You guys have built a great product." You know, I had like a bucket list like under the table. I'm like, "Hey, check. Steve said we have great products." (laughs)

    6. HSHarry Stebbings48:19

       (laughs)

    7. DHDrew Houston48:19

       It's awesome. Um, but I was also a little terrified because I talked to a lot of other founders and the Steve stories kind of fell into one of two buckets. Like either super charming, wonderful, or like the opposite. Like total asshole Steve. And you know, we didn't know which one we were gonna get. And so he kind of launches into this pitch. He's like, "You guys should really throw in with us. We're like a startup with unlimited resources," et cetera, et cetera. And I'm like, "Oh, this is gonna be awkward," but I'm like, "Steve, like we really love Apple, really admire everything you've done, um, but..."... you know, we're really enjoying building this company and, you know, uh, I think we, we have a long way to go, uh, to do that. Um, I'm sure you understand. (laughs) But I thought he was gonna, like, start throwing stuff. (laughs) And then he, yeah, he started... His mood shifted a lot. He was like, "Well, you guys are a feature, not a product. Now we're gonna have to, like, compete with you and kill you, and you don't have distribution and da-da-da-da-da-da-da." So it was very... And he was, he was very overt, um, and kind of intimidating. Um, and, uh, this was 2009. And then... But to, to his credit, the, the formal part of the meeting lasted maybe, like, 10 or 15 minutes, but he stuck around for another 30, 40 minutes, just, like, asking us about, uh, you know, our backgrounds and I... You know, I got to ask... I was asking him about, like, you know, "Why'd you come back to Apple and why Cupertino?" And all these different things. So it was a great experience. That was the only time we really, really met. But, um, but, but for me, I wa- And I didn't even wanna talk numbers, and mainly I just didn't wanna piss him off. Uh, mainly I wanted to m- leave that meeting with no action items (laughs) , um, uh, 'cause I didn't wanna get him spun up that, oh, man, that Apple should be more serious about this or that... Or didn't wanna piss him off and, you know, lose a partnership opportunity or different things. The reason why we didn't wanna sell was that we just thought the company was just gonna be doing better and better and, like, maybe that would change, in which case we probably still have good options. But, you know, I think we were... Arash and I were very focused on building for the long term, um, and we thought, you know, as big shareholders, this was the best thing (laughs) , um, to stay independent. Um, but, you know, I don't think it's a religious thing. I th- Yeah, I've had other experiences where... You know, I let my first... My test prep company, I had to let that go. So the- these are... I, I think these existential decisions really... I think that's why it's really important to, like, get a sense of con- be- be conscious about, like, what... "Why am I doing this? What does winning look like for me?" And being in touch with, like, what, what is really motivating f- me and, and what do I wanna solve for with the company.

    8. HSHarry Stebbings50:42

       Drew, I wanna move into a quick fire round. I love that one, Good Steve, Bad Steve. But I say a short statement-

    9. DHDrew Houston50:46

       (laughs) All right.

    10. HSHarry Stebbings50:46

        ... and you give me your immediate thoughts. Does that sound okay?

    11. DHDrew Houston50:49

        Yeah, great.

    12. HSHarry Stebbings50:50

        Is Dropbox a consumer or a B2B company?

    13. DHDrew Houston50:53

        (laughs) Um, so more a B2B company. Now, that said, we're applying the consumer playbook to business software. So if we had to choose one, it's we're helping people at

15. 51:02 – 51:28

    Whats the hardest element of your role at Dropbox?

    1. DHDrew Houston51:02

       work, um, although do, people do use Dropbox at home.

    2. HSHarry Stebbings51:05

       What's the hardest element of your role with Dropbox today?

    3. DHDrew Houston51:08

       I think going from... Or, or the, the biggest journey we've been on is going from building a great pro- building an innovative product to building a machine that builds innovative products. They are very different things. Um, so driving that kinda transformation and then maturing the company, uh, to drive operational excellence, um,

16. 51:28 – 51:52

    What have you recently changed your mind on?

    1. DHDrew Houston51:28

       has been, uh, has been really tough.

    2. HSHarry Stebbings51:31

       What have you recently changed your mind on?

    3. DHDrew Houston51:34

       I think the importance of that kinda structure and discipline. So as an Enneagram Seven, you're comfortable in chaos, loosey-goosey. That is not a great... That does not scale. (laughs) So-

    4. HSHarry Stebbings51:43

       Yeah.

    5. DHDrew Houston51:43

       ... having to model that myself to really, um, be a lot more organized and disciplined and assertive and not conflict-avoidant, uh, and, you know, so

17. 51:52 – 52:39

    Who’s the best board member you’ve worked with?

    1. DHDrew Houston51:52

       therefore being direct, I think that's been a thing I've had to change a lot.

    2. HSHarry Stebbings51:55

       Who's the best board member that you've worked with and why?

    3. DHDrew Houston51:59

       So I, I mean, I've, I've got a lot of wonderful board members today, don't wanna pick favorites among them. I'd say, th- in the past, so Condoleezza Rice was on our board for several years, um, and she was great. She's seen c- she's seen scale in all its forms. So she's, she's on public company boards, she ran the State Department, which is an 85,000-person organization, uh, made very weighty, consequential decisions, and then also, uh, was provost at Stanford, where she had to manage a huge organization operationally there too. So just, like, her insights on, w- you know, what is it... What, what is the definition of a difficult problem (laughs) or, like, you know, how do you lead with principle, um, yeah,

18. 52:39 – 53:16

    Biggest Lesson from Joining the Meta Board

    1. DHDrew Houston52:39

       I, I learned a lot from her.

    2. HSHarry Stebbings52:40

       Penultimate one. Biggest lesson from joining the Meta board.

    3. DHDrew Houston52:44

       It's been a lot of fun. I think first is just the scale, right? The... Just the numbers are so huge, the decisions are so consequential. Um, and then also just, like, a lot of the prob- fundamental challenges are kind of unsolvable. They're, like, part of the human condition, like, where, how do we trade off between, um, you know, privacy and security and safety? Um, how... And, and, and a lot of those things are what are, we deal with on a smaller scale too. Um, and then I've learned a lot from Mark in terms of how to cut to what is essential and focus and, and move

19. 53:16 – 53:42

    Where will Dropbox be in five years?

    1. DHDrew Houston53:16

       decidively, decisively and kinda be direct and assertive.

    2. HSHarry Stebbings53:20

       Final one. Dropbox in five years. Where will we be, Drew?

    3. DHDrew Houston53:23

       Well, I think w- what... Well, where we're headed is shifting from Dropbox from syncing your files to organizing all your cloud content and stuff, to organizing your whole working life. And so, um, we're all using a ton of different tools. It's like we have very fragmented experience, you know. Under the Zoom window here is just total

20. 53:42 – 54:39

    Is Dropbox a Consumer or B2B company?

    1. DHDrew Houston53:42

       mayhem, a hundred tabs open. We think Dropbox can do a lot to help you with those kinds of problems. Um, and, uh, and then... So I'd say both with... In a world where we're now working out of screens instead of offices, there's a lot of room for... That, that digital environment we're all in is a lot... Is really important. There's a lot of room for improvement. Um, and then also the renaissance we're seeing in machine learning, where we're all kinda getting this silicon brain in addition to our human brains, and where I think we'll be able to... We're finding that we're gonna be able to split up the work, uh, or offload a lot of our busy work to machines. Um, so I think the combination of pulling everything together and building a s- a generation of smarter tools and a smarter system, those are things that I'll... I'm really focused on with Dropbox.

    2. HSHarry Stebbings54:25

       Drew, as I said at the beginning, I wanted to make this happen since your episode with Tim in 2018. I can't thank you enough for joining me and for putting up with my wayward questions.

    3. DHDrew Houston54:34

       Oh, it's been great. Thanks, Harry.

Episode duration: 54:40