Dropping in to Korea’s cloud storage scene

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Dropping in to Korea’s cloud storage scene

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Drew Houston

The name Dropbox says it all - you can simply drop files into the blue box icon and take them out by using any mobile device you have.

Dropbox was the original cloud storage service and quickly became one of the hottest companies in tech. This year, it’s worth $10 billion.

There is also a famous story behind the useful and addictive service. Just two years after it was created in 2009, Steve Jobs approached Dropbox and offered it $1 billion to join Apple.

But Drew Houston, CEO and co-founder of Dropbox, had bigger ambitions - to grow the company independently.

The Internet cloud service for photo, video and document storage allows the user to easily access the files. That person in turn can also share files with others.

Following the huge success of Dropbox, other tech giants flooded the market with similar services including Google Drive, Apple iCloud and Microsoft One Drive. Naver has a version for its users called N-Drive.

But despite the number of other companies entering the field, Dropbox is still No. 1, with 300 million users worldwide and 97 percent of Fortune Magazine’s largest 500 corporations using the storage service.

Dropbox has also partnered with mobile phone makers and carriers - including Samsung in 2011 - to bring in new users as mobile has eclipsed PCs as its most important platform.

Houston sat down at a coffee shop at the Grand Hyatt Hotel in Seoul on Oct. 25 to talk with the Korea JoongAng Daily.

Q. What brought you to Korea this time?

A. We are here to visit partners and potential customers, and also learn more about the Korean market.

Korea is also one of the top world leaders in technology, especially cloud services and mobile, and therefore it’s an important place for us to explore further.

In particular, partnerships for mobile - like the deep integration we currently have with Samsung - are a key part of our global strategy.

They help us keep expanding our distribution and reach globally, while we provide a high-engagement product that makes their devices even more relevant to their audience.

Did the partnership with Samsung help Dropbox gain popularity in Korea?

It helped both of us. Many tens of millions of people have either signed up for Dropbox or a lot of people who already have Dropbox attached their phones to Dropbox.

Dropbox is currently preinstalled in Samsung’s mobile phones.

As you can imagine, getting to all your files, all your photos, being able to work from anywhere, being able to have all the pictures you’ve taken, have led the popularity of Dropbox among users.

We have about six million registered users in Korea, which is roughly double that of last year.

That is 10 percent of the population, so we think that word of mouth and the network embedded in Dropbox is very important.

How is Dropbox different from its competitors such as Google Drive, N-Drive and One Drive?

If you ask people who use Dropbox, they usually say they love it because it is so easy to use. It is reliable, fast and it works with all the different platforms.

So, it does not matter if you work on an Android phone, Apple’s iPhone, Windows PC or Mac.

And we were really the first service to become popular and we’ve continued to improve the service and do more.

That’s why people have stayed and even though there are competitors, we’ve continued to grow. We have about 300 million users around the world. That has grown from 100 million in the last year and a half.

The fact that other competitors have a common layout is because what we are doing is important and there is a global need.

For N-Drive, obviously its core is Naver and N-Drive is its supplement service, but for us, we have a whole suite of services - we have Dropbox Basic, Dropbox Pro and Dropbox for businesses. So, we continue to innovate on top of just providing storage. I think we are way beyond that.

Does Dropbox mainly profit from B2B business? How do individuals gradually expand the amount of storage?

If you think about how our lives have changed, four to five years ago, most people were just getting a smartphone for the first time, and they got used to taking pictures on their smartphones, and the files were small because the megapixels allowed on their cameras were smaller.

But now, phones are bigger, so you can do more on them and the mega-pixels for photos are larger, so the files are bigger.

The bandwidth of the mobile networks is greater so you can take more videos, and it’s easier to synchronize what’s on your phone with other devices.

And people just want their information to be in one place and they want to be able to access it regardless of where they are, they want to be able to share it easily, much easier than email and chat.

When you get started, you don’t have anything in your Dropbox, but we see overtime that everyone who uses Dropbox tends to put in more and more.

Especially now that you have great screens on your phones and take HD videos and files that are gigabytes large, say an hour of 10 gigabyte video, there are a lot more reasons to have Dropbox.

So, individual users start out with Dropbox Basic, which is free and you get up to 15GB of storage and then when they use up the storage, we sell Dropbox Pro, which is $10 a month or $100 a year to provide terabytes of space.

B2B is also a new area for us that has been growing quickly, because it is like a server for companies, in replacement of existing file servers.

They start out using it as individuals, but they bring it to work, and they realize that it is so easy to share, start collaborating and the Dropbox users grow quickly in companies, so we found ourselves with companies that had 10,000 or 20,000 users of Dropbox, when we hadn’t done anything to sell the product to companies.

Dropbox has been enhancing its partnership with Samsung. Was that to counter Apple’s iCloud?

We partner with companies around the world. Samsung is probably one of the more important partners we have because of the success they have in the mobile business.

But we partner with Sony, with a number of PC makers like Dell that also distribute our products. We have partnerships with technology players who integrate their product into Dropbox, so the Dropbox becomes the place where all the information is stored.

We partner with companies that integrate their services into Dropbox like DocuSign, so you can do work within Dropbox.

There are 300,000 applications that are integrated in the Dropbox platform.

So, it’s not because of any competitive issue. From Samsung’s standpoint, we offer the best product, and they want to provide their users with the best product and from our standpoint, they have tremendous innovation and that’s important for us.

Recently, security on storage services has been a big issue around the world.

Security is very important to us, because our business runs on trust. If people think their stuff is not safe in Dropbox, then we don’t have business.

There are a couple things to think about. For an average person, you are much more likely to be safe if Dropbox is protecting your information than if you try to do it yourself.

When was the last time you backed up your computer? What happens if you lose your phone?

What people were doing before Dropbox was way less secure, because they would leave their computer on a plane and so on.

So, it is actually much better to use Dropbox, whether you are an individual or even a company.

Companies often have security departments, but if the products are too hard to use, and you don’t like your file server, and you’re running late, you’re likely to send the files to your Gmail account, and that might not be secure.

There are all kinds of things that Dropbox does to protect users, from making sure that no one is allowed to get into the network to enabling wiping the app remotely when users lose their phones.

There are some technical things like encryption that we do to keep users’ information safe.

We have a lot of smart friends from MIT working on this problem. We have a track record of many years of protecting millions of users’ information.

What do you think about Snowden’s comment about Dropbox being hostile to privacy?

What he is effectively saying is don’t use anything, don’t use Gmail, don’t call anyone, don’t text anyone, don’t surf the web, because these companies steal the information for you. He mentioned Dropbox, but that’s his point.

One thing that we’ve done is we publish the details of exactly what kind of inquiries we’ve gotten around the world from government institutions requesting access to people’s Dropbox.

If we are compelled by law, then we obviously respect the requests, but we feel it’s important to be transparent and let people know that governments are asking us and the circumstances under which we do or don’t disclose the information. If there’s anything that we think is improper about the request, then we fight it in court.

We’ve been called out by the Electronic Frontier Foundation, which is a privacy group, rating different companies’ approach to privacy on four dimensions and they rated us at the top of the rankings for all four dimensions, the highest possible score.

And they say that there are completely unfounded allegations about not just Dropbox but other companies and their ties to security agencies.

Just to be very clear, we were never part of PRISM, which is what some books have been referring to. We’ve never been part of PRISM or collaborated with the National Security Agency in any way. We think it is important that everyone understands this.

Many Koreans tend to use N-Drive and cloud services provided by their telecom carriers like SK Telecom, KT and LG U+, as most of them connect to cloud service via smartphones. In this sense, Korea seems like a somewhat closed market.

From Dropbox’s point of view, what kind of market is Korea? What kind of business strategies do you have to further boost Korean market penetration?

Korea is a top mobile market. We just announced the next step in our growing partnership with Samsung, and we’re always open to and are actively pursuing relationships with other companies here.

What is interesting about Korea is that it is very advanced in mobile communications with the highest speed bandwidths and one of the highest smartphone penetration rates.

For us, the vast majority of our users are mobile users in Korea, and that’s not true outside of Korea, where it’s more mixed and balanced between PC and mobile and we have six million users not really doing much.

So we are just exploring the business in Korea. It could be very interesting as we grow as a company and I think it’s a service that really works because many people have more than one device in Korea.

We are surprised that Korea is so advanced in a lot of ways, but we found that people aren’t using any of these cloud services and it’s great. We have an opportunity to make things better for a lot of people and it’s a big open market for us.

Dropbox opened an office in Australia and announced that it would open one in Tokyo soon. When are you coming to Korea? How many users come from the Asia-Pacific region?

The overall Asia-Pacific market is extremely important to Dropbox. We don’t have anything new to announce right now, but we are looking to grow and scale globally at speed - especially in APAC.

Do you have any advice for young Korean start-ups?

As you have successful founders for KakaoTalk and a few other companies, now they are starting venture capital, starting to invest, advise and mentor the next start-up founders, which is exactly the situation you had in Silicon Valley in the early days.

That was exactly what was appealing to me about moving from Boston where I grew up to California because there are all these founders who had done it before and investors who thought it was totally normal to give a 23-year-old millions of dollars, which I have never seen in Boston.

So, the advice would be to get started, whether you are in the U.S. or in Korea or anywhere in the world. I think entrepreneurs have the same kind of mind-set and spirit, and they want to help.

Now, it is easier to get started than it was five to 10 years ago. Know that it’s possible, and that there’s a lot of resources.


BY KIM JUNG-YOON, KIM JI-YOON [kjy@joongang.co.kr]

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