♪ emily: it all started with a line of code, written on a bus traveling from boston to new york. that code is now the foundation for dropbox, a cloud-based file sharing service that allows you to share and store and access any file from any device anywhere. today, dropbox is valued at $10 billion with 400 million users in 200 countries around the world. joining me today on "studio 1.0," cofounder and ceo of dropbox, drew houston. so great to have you, drew. thanks so much for joining us. drew: thanks for having me. emily: my life is stored on

dropbox. 252 gigabytes. drew: all right. emily: is that a lot? drew: it is pretty good. [laughter] emily: the criticism is it is so simple, other companies can do it, too. google, microsoft, apple, box. how do you compete with that? what makes it a good business? drew: yeah. well, i would be curious to hear why you use dropbox or why you continue to use dropbox. but for our users, i think it is a couple things. a few things. so one is the product is really easy to use. and the other is it is the most popular service of its kind in the world. and if you share things on dropbox, it is more likely that if i share something with you that you are already going to have it -- a better experience emily: dropbox has 400 million users now. who are they? where are they? drew: the vast majority are all outside the u.s. more than 2/3. and it has been that way since the beginning because people use dropbox again not just for storage, but for sharing.

that is been at the heart of how we grow. emily: you grew up outside of boston. what kind of kid were you? when did you get into computers? [laughter] drew: i think it started in a living room -- in the living room when i was maybe three. my dad had just taken this -- this big thing out of a box, and it was an ibm pc junior. my parents have pictures of me -- i was not very tall, so i had to sit in a chair and reach up and over to get the keyboard, and my parents have pictures of me trying to mash the keys. and so i think i was mesmerized from an early age by this glowing screen. my dad showed me how to write my first lines of code when i was really little. emily: he was an engineer. drew: he was an engineer. emily: and your mom kind of resisted this, right? drew: i think she was sort of puzzled. she was like, aren't kids supposed to be playing with legos and going outside? and they -- and they definitely urged me to -- or made sure that my siblings and i had that kind of balance. emily: so you went on to m.i.t. tell me about this founding story, the line of code that was written on a bus.

drew: i was on a trip to new york and i forgot my thumb drive. this was in the days before the iphone. so this was in the era where you really didn't have anything to do. right? god, i hate myself. i keep doing this. i am so disorganized. why does this keep happening? because i had a bunch of time, i just opened up the editor and started writing some code, having no idea what this would turn into. emily: why is dropbox worth $10 billion? ♪

emily: you hear entrepreneurs talk about starting companies, it is like staring into the abyss of death, i believe elon musk said. or swallowing shards of broken glass. what was it like for you? drew: i don't think it was that dramatic. [laughter] drew: you know, when i add up all the times i forgot my thumb drive, it was like days of my life were wasted, and so that is was a motivator. but you fast-forward to today,

people save a billion files on dropbox. the technical and design challenges involved in building something at that scale are really exciting for an engineer. emily: how many employees do you have now? drew: i think about 1200. maybe 1300. emily: what does the bulk of the workforce do? drew: that 1300 today is up from maybe 500 at the beginning of last year. every time i wait a few weeks, i'm like, ok, we probably have a new office somewhere. everything from the engineering of the product, design, the user interface design. people involved in the marketing. emily: how many people are focused on security, for example? drew: so we have a dedicated security team. so that is -- you know, people are really dedicated to security. a couple of dozen dedicated across the different -- there are all of these different facets of security. and more broadly, you think about the people who build our infrastructure, or are sort of responsible for the reliability of the service. it is much bigger, probably on the order of a magnitude.

emily: what does the office of the future look like? drew: well, i think there is a lot more freedom. in the old days, you know, you would show up at work, and they would issue you a laptop and a phone and they say you must use these things. and now, as we all know, we have a lot of choice. right? and people are using all kinds of different devices. and so people -- i think that has become a basic expectation of -- anybody at work wants to have choice, and dropbox is instrumental to that, because we support all of the different platforms. the other thing is people expect to work on their own terms. so they want to be mobile, not tied down to any one environment. and a big part of what people love about dropbox is they can be free to work anywhere. all this choice means that there is a lot more fragmentation. you have stuff in your calendar, you've got stuff in your e-mail, and stuff in your dropbox, so it is kind of a mess. the big thing we think about is how can we tie together all these different things that you use? i think that expectation of freedom and seamlessness is something that is really

important and a big area of our focus. there are a lot of things we can make easier. emily: those 400 million users -- how many of those are paying customers? drew: most people are using the product for free. and if you need more space, you can buy more. now, dropbox is in 8 million businesses. that is up from 4 million a year and a half ago, two years ago. and we have 100,000 business customers. emily: who are the biggest fortune 500 companies you signed up? drew: the vast majority of the fortune 500 are using us in some capacity. but there are a lot of household name companies using dropbox -- the under armours of the world hyatt hotels. every quarter, we are adding big new customers. emily: what has been the biggest challenge in terms of penetrating the enterprise? drew: i think that, you know, businesses -- every technology goes through this curve where in the beginning, people are unsure

about it. and i think in the last couple of years it has started to flip, where actually people realize it is actually safer to have our information in services like dropbox and in the cloud in general, the same way that, you know, we don't put our cash under our mattresses anymore and the bank does a pretty good job of taking care of that. emily: what is the value proposition to a business to choose dropbox? as opposed to box, which focuses entirely on business. drew: anybody can provide storage. more and more it is about -- ok, of course, my stuff will live in the cloud. organize it for me. help me search it. help me share with other people. help me collaborate. and storage is just an ingredient. emily: another big part of your strategy is building apps on top of that. so you have mailbox for e-mail, you have carousel for photos. how are those products doing? drew: good. each of those is a new kind of adventure. emily: dropbox has 400 million users. how many users do those services have? drew: we don't break them out separately, but they have been growing, too. we want to make sure the product is right before we spread our new apps throughout the network. emily: why is dropbox worth $10

billion? drew: we are in 8 million businesses now. there are orders of magnitude greater in the world. there is a ton of room for us to grow. even at 400 million users, there are still billions of people on the internet. you look at how valuable that problem is. i mean, you look -- the things people put in their dropbox are the most important possessions. right? the stuff in your dropbox is stuff that if your house were burning down, you would go get. right? and for a company, making their team productive, having a safe place for their most important information -- these are extremely valuable problems we solve. we are shipped on most samsung phones out of the box. we just partnered with microsoft last year to build dropbox support natively into office. so there's a lot going on, and investors see the potential here. emily: you always said dropbox is a standalone company. do you have that same conviction today that you had two years ago, three years ago, eight years ago when you started this? drew: for sure. and i think it is important that we are -- being independent

allows us to support all of the different platforms equally. you see as the other companies try to move in this space, they tend to favor their native platform kind of at the expense of the others. so that is something that is really core. that sort of switzerland approach is really valuable to us and valuable to our users. emily: how do you weigh the decision to go public versus raising more money in this environment? drew: well, we -- fortunately we have been able to do a lot in the private markets. and so we were able to raise money that we have not really needed. so our -- emily: why take it if you don't need it? drew: i think we want flexibility. right? we do everything from investment infrastructure -- we have made a ton of acquisitions. having a stronger balance sheet gives us flexibility to make big, long-term investments. emily: do you have the cash right now you need to reach your long-term goals? drew: for sure. and we have control. the important thing for us is not to generate a ton of cash,

it is to keep investing. emily: so could you go public without raising any more money? could you get to that place? drew: for sure. because raising this money means we are not forced to go in any particular direction and we can stay focused on building and growing our audience. emily: so what are your plans to go public? drew: we don't have any right now. and again, that is what we get with the flexibility from raising this money. emily: what have you learned from box's ipo? it has gotten hammered. drew: one thing i take away is i am really happy we have our approach of having -- our sales force of hundreds of millions of people means we don't have to spend the kind of money that others do on sales and marketing. emily: are you profitable? drew: we don't break that out right now. but again, our investors are happy. things have been going well. and -- and our focus is really not on profitability right now, it is really on investing and growing. emily: marc andreessen has warned about burn rates and founders and companies burning

through cash too quickly. what is your view on that? drew: well, i think, you know, it has to start with your business model. right? i think we are fortunate that our model has not changed that much since 2008. we have been largely funded by our users, not investors. emily: how do you balance between the fancy office and the company perks and making sure you are being responsible? drew: so we have a great office space, and we invest in things to make our employees' lives easier. but as far as -- you will not see super expensive paintings or other, like -- we really make sure it does not look opulent. one danger companies can run into is giving everybody this impression that we have made it. and so we have tried to be balanced. emily: one of the things i have heard -- and this is just word on the street -- is that dropbox is losing some talented engineers. how hard is it to keep good people? drew: i think that is all part of the war on talent, is sowing information like that. [laughter] emily: ok.

so it is not happening? drew: no, no, we've -- certainly, people -- it is kind of like the circle of life. people don't join any company and expect to stay there for their entire lives. our recruiting numbers have been better than ever. emily: really? how so? drew: we are building the engineering team faster than ever. our close rate -- we look at -- we monitor close rates and things like how many engineers are joining. we don't break that out, but that is another thing about building a great engineering team is they all have friends and people they worked for at previous companies, and if you get a core of great people, it makes it easier to recruit the next round of great people. if you program in python, we have the creator -- you will be sitting next to the creator who wrote the python language. we're building this amazing roster of people, and it makes it really exciting for those that consider joining. emily: what is dropbox's moonshot? drew: i think our hands are pretty full. [laughter]

drew: building structure for the world's information. what companies like google have done for the world's public information, we are trying to do for the world's private information. emily: uber is working on self-driving cars. airbnb is going into cuba. what is dropbox going to do? is there a stretch goal? drew: take something like carousel, for instance. and, like, ok, here is a photo app from dropbox. but when you step back, we are like, ok, i have this problem of, like, my photos are in 100 different places. in the future, you should be able to have every photo you've ever taken with you wherever you are and in your pocket. you multiply that times hundreds of millions of people and you are like, this is one of the largest collections of human memories ever assembled. we want to completely reimagine how people work. we want to completely reimagine how people remember their lives. and so those are going to keep us busy for a long time. emily: how much do you think about building your own servers? is that something you would ever do? drew: well, i mean, we invest a

ton in our own infrastructure. we also rent a bunch of infrastructure from amazon. so we are really big amazon web services customers. and i think for a lot of our infrastructure, we can get a lot out of just commodity servers or commodity hardware. and, you know, there may be additional gains by trying to bring some of that in-house, but there are already companies all over that do a good job of that. emily: meeting steve jobs. how did that happen? what was that like? ♪

emily: you are 30 -- drew: 32. emily: 32 years young. what is the hardest lesson you have learned as a ceo? drew: well, i think the hardest challenges are really around people. you know, you bring 1300 people together and get them all pointed in the same direction. in any kind of group, there are going to be people who are unhappy.

so how do you get people to collaborate even if they have different backgrounds? emily: i know you are friends with mark zuckerberg. what kind of advice has he given you? drew: so he has given me a lot of advice just on company scaling. you know, how do you organize people? you know, how do you set up systems? with scale, you have to be a lot more thoughtful about how do you compensate people, how do you think about mundane things like their titles or how they advance. how do you decide where to place bets? you have early stage things, have more merger products, a portfolio. how do you keep that running when the challenges are so different at either end of the spectrum? so it is a lot of things like that. emily: your cofounder arash -- i read that it was like married at first sight at the beginning. [laughter] drew: something like that. emily: you got along famously. how has your relationship changed over the years? drew: i think it has been pretty steady. i think we -- we have kind of grown up together doing this.

so our values have really shaped by going through this experience together. emily: you went through the y combinator program. i know you pitched paul graham in the early days. one thing that he told us on your first application is you would sell dropbox for $1 million. [laughter] drew: that is right. emily: obviously, that has changed. drew: i am glad no one was willing to offer us $1 million. there wasn't really an opportunity. emily: it was good you did not get that offer, right? [laughter] drew: then and today what motivates us is building something people love. emily: meeting steve jobs. how did that happen? what was that like? drew: it was interesting. so apple became aware of dropbox early on. and they were curious -- it started out well below -- it wasn't steve who first learned about it. we had some conversations with their team because they were curious about how we managed to put the little green icons on the files.

it turns out that to do that was actually a pretty tough technical challenge. and so what we kind of had to do was open-heart surgery on the finder, on code we didn't write, and their team understood that this was some pretty crazy acrobatics and then something no other company had done. eventually, it ended up steve reached out and wanted to talk to us. and so we were like -- you know, we had repeatedly said look, we're not interested in selling the company. we are still not interested in selling the company. we want to be respectful of your time. but, you know, if you want to hang out, sure. [laughter] drew: and so -- it was wild. you know, we would get up in the morning, and we had the zipcar. and we were like, okay, we have to get to 1 infinite loop, oh, it is already in the phone. the iphone. i think we talked for -- i think the formal part of the meeting maybe 15 minutes. where it was pretty clear they were interested in buying the company, but we were having fun

building it and weren't interested in selling. emily: he said i want to buy you? drew: he -- in so many words. sure, yeah. we didn't talk about a number. it is important for me -- i did not want to get too far down that path. and we spent the rest of the time just talking about -- i had a lot of questions about, you know, why he came back to apple, and why cupertino. and, you know, he had different advice for us. he spent a lot more time than he needed to with us. because, you know, we were pretty clear that we weren't going to sell the company, but he was also taunting us a little bit. he was like look, we are going to have to come after you. emily: they did. they unveiled the icloud. [laughter] emily: how do you think that has worked out for them? drew: i think different products solve different problems. what people love about dropbox is it is so much easier to use. you are not locked into any one platform.

emily: apple had a huge problem. icloud was not hacked but people's passwords were hacked. you know, how do you make sure that does not happen to dropbox? drew: we have teams, account security teams of people who think about what can we do even if you are kind of sloppy with your passwords or reuse things, we try to proactively identify suspicious behavior. and things -- we go at it from a whole bunch of different angles. emily: how has your personal life changed now that you are rich and famous? [laughter] drew: i think people would be surprised. it is not -- it is not actually that different. i mean, i still spend most of my waking hours thinking about dropbox. emily: you have been on "silicon valley," an hbo hit show. drew: yes, i had a very important role -- just standing there at a cocktail party. [laughter] drew: it is fun. i think -- i look at all of this as kind of a new whole series of interesting experiences. emily: what is next for drew houston? drew: we have got a lot work to do.

[laughter] emily: what do you want your place in silicon valley history to be? drew: well, i think arash and i both -- the two things we really care about are, one, we want to create, like, a great company, and a place where people can do their best work. you know, and our culture is a little bit -- we admire all of the other companies, but we have our own distinctive culture, and there is a handful of aspects we really want to preserve. for me, it is we are a pretty big scale now. what does it mean to get to 10x that? or, you know, we solve a lot of problems for people today. what are ways that we can go even further? and, you know, build this kind of treasure. like, this home for everybody's most important stuff is something that matters to a lot of people. emily: at any point, have you ever regretted not selling? not selling to steve jobs? drew: no. no. it's, you know -- there are good times and hard times, but it is all -- it is all part of the adventure. emily: all right.

drew houston. thank you so much for joining us. this was awesome. drew: thank you. emily: great to have you here. ♪

♪ emily: i am emily chang and this is the best of "bloomberg west," where we bring you the top interviews from the week in tech. in boston, we have been diving into the biotech and startup scene. we will kick off with comments from mayor marty walsh about ge .n boston an