Dropbox CEO says tech sector should prepare for the worst

8 Nov 2022

Drew Houston, CEO, Dropbox. Image: Conor McCabe Photography

On a visit to the company’s transformed international headquarters in Dublin, Dropbox co-founder Drew Houston offered a level-headed view of the current chaos on the scene.

Founded in 2007, Dropbox grew up in the shadow of the 2008 financial crash. Drew Houston, who has led the company as CEO since he started it with Arash Ferdowsi, knows what it’s like to bring a business through tough economic circumstances.

“We have some institutional memory of things being difficult,” he said. “I think we operate a lot better in that kind of environment, strangely.”

Houston was in Dublin today (8 November) visiting the Dropbox Studio in the city centre. The purpose-built office space has been designed to best facilitate flexible, ‘virtual-first’ and asynchronous work. All of Dropbox’s employees globally ­– about 3,000 of them – now have access to these spaces for in-person collaboration. Otherwise, they work remotely.

While Dropbox has a policy of not disclosing regional breakdowns of its staff, the impression is that a substantial body of workers is now spread across Ireland thanks to the company’s flexible working policy.

The ominous question hanging over the CEO’s visit, however, was if Dropbox would be planning to cut any of those team members, in light of a spate of such announcements from Twitter, Stripe, Twilio, Patreon, Intercom and Shopify, among others.

The answer was a flat no, seeing as the company already reduced its global headcount by 11pc in early 2021. Houston said Dropbox is now hiring again, focusing on “the fundamentals”, sustainability, and “balancing growth and profitability”.

‘Our business has been stable and resilient, but we’re not immune to the macro environment’
– DREW HOUSTON

All of this offers context as to why Houston is facing the current situation in the tech sector with stoic realism. As valuations crash, jobs are cut and belts are tightened, he said that the tech sector should prepare for more to come.

“I think it’s smart for companies to plan for things to get worse,” he said, indicating that probability points in this direction.

This view, however, has not darkened Houston’s forecast for Dropbox. He’s just keeping his eye on the bigger picture.

“I think we’re fortunate in that our business has been pretty stable and resilient,” he said. “It didn’t run up during Covid and it didn’t run down. And Dropbox for a lot of our customers is mission-critical, and we facilitate this kind of distributed work. So customers need Dropbox in good environments [and in] bad environments.”

In contrast, Houston sees why “Covid-beneficiary companies” that saw “explosive growth and then equally fast decline” are now facing a “really tough environment”. Accelerated growth led to the kind of overhiring that leaders such as Stripe’s Patrick Collison, Twitter’s Jack Dorsey and Shopify’s Tobias Lütke have all admitted to.

Having already gone through “austerity measures” at this point, Dropbox is “on a journey of operational excellence and fiscal discipline” that Houston believes has put the company in a better position today. But, like a well-trained scout, he is staying prepared.

“Our business has been stable and resilient, but we’re not immune to the macro environment,” he said. “And anything that’s bad for our customers is bad for us.

“All that is to say we’re monitoring things closely.”

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Elaine Burke is the editor of Silicon Republic

editorial@siliconrepublic.com