What the Competitors Didn't Get

Y Combinator’s application form asked, “What do you understand about your business that other companies in it just don’t get?” This is the first sentence of Drew Houston’s answer in his 2007 application; YC funded Dropbox that summer. Houston knew the market was crowded: an earlier answer lists sync tools, backup services like Carbonite and Mozy, and upload sites like box.net, “but there’s no good integrated solution.”

By the wrong layer, Houston meant the “online disk drive,” which looks like part of your computer but lives on the internet and fails offline. By making the user think and do things, he meant anything built on emailing or uploading files by hand, which he called “basically doing version control in your head”: remembering which copy of a file is the latest. Elsewhere in the application he laughs at the results, documents named things like “proposal v2 good revised NEW 11-15-06.doc.” With Dropbox, you save as usual “and everything just works.”

While he was applying, Houston posted a demo video on Y Combinator’s forum, Hacker News. A commenter replied that for a Linux user, “you can already build such a system yourself quite trivially” by mounting an FTP account as a drive and adding SVN, a version control tool. Houston’s reply reads like his application answer: “many people want something plug and play,” and even an easy-to-set-up online drive is slow and useless offline, so Dropbox kept a local folder and synced it in the background.

Eric Yuan made a similar case about video calls, against a product he had helped build. He was one of WebEx’s first engineers and, after Cisco bought the web meeting service, a vice president there. Customers kept complaining to him about poor quality and a horrible mobile experience. WebEx had started as screen sharing, with video added later, and Yuan wanted to rebuild it around video. He was asked why he would “cannibalize WebEx,” replacing a product Cisco already sold, and in 2011 he left to start Zoom from scratch. Zoom’s 2019 IPO filing faults rivals that “add video to an aging, pre-existing conference call or chat tool” and promises a product that “just works.”