Launching rockets into space may not seem like an obvious use of Dropbox, but with an ambitious remake to the service’s online storage product, the file sharing company is hoping to at least play a part in the next giant leap for mankind—or, more accurately, the mundane employee workflow related to it.
On Wednesday, the San Francisco-based firm announced an evolution of its core product, now called Dropbox Spaces. Previewed earlier this summer, Spaces is an interlinking between the folders that Dropbox users have become long familiar with. And more importantly, it aims to grow the company beyond the little online folder on where people stuff their bottomless collections of corporate proposals and PowerPoint slides.
But the bigger change to Dropbox may be its new desktop app, which functions as a digital hub where workers can collaborate with colleagues on projects that require access to digital files. Dropbox wants this app to become the be-all and end-all corporate service where workers spend their waking, productive day.
The launch of Dropbox Spaces and its accompanying app marks a significant change for the company, a former Silicon Valley unicorn startup that gained prominence for its simple and free service that let people store digital files in the “cloud,” thus saving space on their hard drives. Since its debut in 2007, Dropbox has turned its attention to businesses instead of consumers. In 2016 it migrated the bulk of its corporate infrastructure off of Amazon Web Services to its own data centers. And in 2018 the company went public.
Yet since it began trading on Wall Street, Dropbox’s shares have tumbled more than 30%. Investors are concerned that while Dropbox is still growing, it isn’t booming like it once did. Recently, slower-than expected growth in the service’s number of paid users caused its share price to drop nearly 14% the day after its numbers were reported.
Dropbox clearly needs a jolt to excite concerned investors weary that the company may have lost its spark. Not coincidentally, the Dropbox Spaces product announcement coincides with Work In Progress, the company’s first conference about the future of work, being held on Sept. 25 at San Francisco’s Pier 48. The event marks one of Dropbox’s first steps in publicly detailing its heightened focus on workplace productivity, and it includes an appearance by former First Lady Michelle Obama.
Facing increased competition from giants like Microsoft and Google, as well as upstarts including Wall Street newcomer Slack, Dropbox co-founder and CEO Drew Houston believes that the company’s overhauled offerings, intended to help employees deal with the every-growing number of corporate apps they use each day, will give the company a competitive edge.
“Everyone needs a more sane working environment,” Houston tells Fortune. “Our job is to make it more obvious.”
Drop in to the new Dropbox
Although Dropbox is not shedding its classic shared folders that users can access via their computers or smartphones, the company is emphasizing its new desktop app as the cornerstone of its service—which is free to Dropbox’s existing customers.
Keeping track of all of users’ shared folders, the desktop app also displays information like who accessed a certain and file and when, comments on files, and extra features including letting people sign off on tasks related to the content—like signifying when a business proposal is ready to be sent to a prospective client. In this way, Dropbox’s new app acts like a project management tracker similar to Atlassian’s popular Trello app, except all of the employee’s activity is centered around the actual files related to a project.
Perhaps the most noteworthy feature is that Dropbox’s app is being wired to work with other popular products like Slack, Google Docs, and the video conferencing tool Zoom. Dropbox users can now create Google and Microsoft Office documents directly within the app and share them with the appropriate teammates, who can then leave comments. By the end of this year, Trello users will be able to connect their files stored in Dropbox to their Trello cards. And later next year, a Slack integration will let people connect their Dropbox folders to Slack channels, so they can chat about projects in real-time. A Zoom integration is also in the works, allowing users to start video conferencing calls directly inside the Dropbox app.
Tethering everything together is a custom-built search engine that can help Dropbox users find their Dropbox files. According to CTO Quentin Clark, Dropbox also built its own artificial intelligence-powered image-recognition technology, so that users can search for documents and files containing certain images.
Dropbox decided to develop its own A.I. tools instead of using the services from cloud providers like Google and Amazon because it believes it can save money—especially since the company now operates its own data centers, which is necessary for powering the data-crunching tools. The machine learning tools will also presumably show users the most relevant documents they need to access, based on the projects they’ve been working on.
Ultimately the goal of the new Dropbox and its desktop app is to help the company “move from the background to the forefront” of people’s computers and work life, says Sequoia Capital Bryan Schreier, a long-time Dropbox board member who invested in the company’s initial funding.
“It’s only natural for Dropbox to evolve to bring all the cloud services, files, and intelligence to help you find things more easily,” Schreier says.
Wall Street wants skyrocketing growth
To hear Dropbox’s Houston tell it, the company is making this big change to help deal with all of the “noise” that comes from the ever-increasing number corporate apps that people deal with each day. It also helps the company position itself as more than just a cloud storage company—or more formally, a file-sync-and-share player.
Houston remembers a conversation he had with an engineering director for Elon Musk’s SpaceX, in which he asked what workplace tools the aerospace company used.
Houston says the engineer looked at him “like I had three heads” and replied with a joke: “What will it take to put someone on Mars? A lot of emails and a lot of files.”
That resonated with Houston, who says he realized that “the struggle of the rocket scientist is the struggle of the knowledge worker.”
And in that gap lies opportunity, the likes of which Wall Street investors are constantly pushing for in technology companies, to maintain their skyrocketing growth. After all, claiming that your company is the king of cloud storage limits your total addressable market, especially as giants like Microsoft and Google can undercut those businesses on price.
Dropbox’s closest competitor, Box, is facing a similar challenge. Activist investor Starboard Value recently bought a 7.5% stake in the company and said that it believes Box’s shares are undervalued, and that it needs to make some changes. Box CEO Aaron Levie, recently told an audience at a TechCrunch conference that Box has “to do a much better job at educating the market” about what the company does.
As Morgan Stanley analyst Keith Weiss tells Fortune regarding the dilemma facing enterprise software companies, “You have to expand your vision to be able to consolidate a broader portion of demand in the marketplace.”
Additionally, as Dropbox repositions itself to be the core way people spend their days working, it will have to muscle in on other companies, like Slack, that aim to be the nucleus of work. Although Dropbox and Slack are partners, they also compete with one another, making them so-called “frenemies” in enterprise software.
“We differentiate ourselves by having a more focused, less noisy experience,” Houston says. “We are giving you workplace primarily for your content.”
As for the tech giants like Google and Microsoft that dwarf both Dropbox, Slack, and all other upstarts, Houston claims Dropbox’s ability to work with their products makes it more attractive for customers who typically use their tools.
“You are not going to see the Google Docs support in Office anytime soon,” Houston says.
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