Dropbox, after greater than a decade, lastly went public this morning — and the inventory soared greater than 40% in its preliminary buying and selling, making it a marquee success for one of many authentic Web 2.zero corporations (at the least for now).
While we nonetheless have to attend for the mud to settle, it’s been a really lengthy highway for Dropbox. From beginning off as a file-sharing service, to hitting a $10 billion valuation in the course of a large hype cycle, to expectations dropping after which the announcement of a $1 billion income run fee. Dropbox has been a rollercoaster, however it’s one other massive second this afternoon: it’s Y Combinator’s first massive IPO. And Y Combinator nonetheless has a really deep bench of startups which might be, to date, apparent IPO candidates down the road like Airbnb and Stripe.
That isn’t to remove something from the work of CEO Drew Houston and the remainder of Dropbox’s crew, however Y Combinator’s job is to principally take a bunch of pictures at midnight based mostly on good concepts and doubtlessly savvy founders. Houston was one of many first of a agency that now takes in a hundred-odd founders per class. Founder and associate Jessica Livingston was there for the beginning of it, recalling again to the day that Houston rushed to her and Paul Graham to indicate him his little aspect venture.
We caught up with Livingston this morning forward of the IPO for a brief interview. Here’s the dialog, which was frivolously edited for readability:
TC: Can you inform us a bit bit about what it’s prefer to lastly see the primary Y Combinator firm to go public?
JL: I really feel like 13 years in the past, it was simply this dream of ours. It was this seemingly unattainable dream that goes, ‘maybe one of the startups we fund could go public someday.’ That was the holy grail. It’s an thrilling day for Y Combinator. It exhibits what an extended sport investing is in early-stage startups. I do really feel type of validated.
TC: How did Y Combinator first find yourself in contact with Houston?
JL: He utilized as a solo founder. We had met Drew the summer season earlier than. Back then, we have been so small that we at all times inspired folks to carry associates to a Y Combinator dinner. [Xobni founder Adam Smith] introduced [Houston], and we met him then and talked it by. When he utilized, we invited him to come back to an interview, and Paul [Graham] earlier than the interview reached out to [Houston]. He mentioned, “I see you’re a solo founder, and you should find a cofounder.” Three weeks later Drew confirmed up with [co-founder Arash Ferdowsi]. It was a fantastic match that labored nicely.
TC: As Dropbox has grown, what’s stood out to you essentially the most throughout adjustments available in the market?
JL: They’re a traditional instance of founders who’re programmers who constructed one thing to unravel their very own downside. Clearly, it is a excellent instance of that. Drew will get on the bus, he forgets his recordsdata, and he can’t work on the entire journey down. He then creates one thing that may enable him to entry recordsdata from all over the place. At the time, when he got here on the scene with that, there have been quite a lot of corporations doing it however none have been excellent. I really feel like Dropbox, no matter market dynamics, from the very starting was at all times devoted to eager to do nicely by constructing a greater resolution. They wished to construct one that truly works. I really feel like they’ve caught to that and that’s been driving them since. That’s been their guidepost.
TC: What was your first assembly with Houston like, and do you suppose he has modified up to now 10 years?
JL: When I first met him, he was younger — he was very younger — and he was at all times a superb hacker, and really earnest. During Y Combinator he was very targeted on constructing this product and was not distracted by different issues. That’s when there have been simply two folks. He’s actually developed through the years as an unimaginable chief. He’s grown this firm and he’s navigated by all totally different components of his life cycle. I’ve witnessed his progress as a pacesetter and as a human being. He’s at all times been a fantastic individual. It’s type of thrilling to see the place he’s now that he’s come a good distance, it’s actually cool.
TC: Houston and Ferdowsi nonetheless personal important parts of the corporate even after elevating quite a lot of enterprise capital. Do you suppose Y Combinator had any impact on corporations searching for extra founder pleasant offers?
JL: I feel when Y Combinator began, our purpose in some ways was to empower founders. It was to degree the taking part in discipline. You don’t need to have a connection in Silicon Valley to get funding. You simply have to use on our web site. You don’t need to have gone to an Ivy League faculty. We [try to tell them], don’t let traders make the most of you since you’re younger and have by no means achieved this earlier than. In normal, instances have modified over the previous 15 years. Hopefully Y Combinator performed a small function in a few of these adjustments in making issues a bit extra discovered pleasant.
TC: What’s certainly one of your favourite tales about Houston?
JL: He was at all times very calm, cool, and picked up below strain. I do not forget that was positively a top quality about him. His feathers didn’t get ruffled simply. One of the issues I keep in mind most clearly is from that summer season once we had demo day. Back then it was, like, 40 folks tops. Still, there was quite a lot of strain. I keep in mind Paul [Graham] got here up with this concept that, ‘hey, Drew, during your demo day you should show people how well Dropbox actually works by deleting your presentation live and restoring it through Dropbox.’ That’s type of dangerous, proper? To delete your presentation. You’re simply standing up there with out something. And he did it and he nailed the presentation. It sounds a bit gimmicky, however it actually labored and confirmed his product labored. I keep in mind considering, like, wow, he’s fairly calm. If it have been me I don’t suppose I might hit the delete button in entrance of those folks. That’s an necessary high quality in somebody, to not get flustered.
By the best way, we funded them in 2007. If you requested me in 2008 how have been they doing, I might say, nicely, they’re making progress. But it wasn’t like we funded them and lets say, ‘this is gonna be a great one.’ We simply knew, yeah they’re making progress, however it’s at all times arduous to know there.
TC: Back then, what have been you simply anticipating? M&A? Did you even anticipate an IPO?
JL: As we have been formulating the thought, the hope was moderately than going to work at Microsoft — I take advantage of them for instance as a result of that was the corporate again then — and moderately than going to get a job out of school, why not construct an organization and make Microsoft purchase you to get you to work for them? We had low expectations again then. We have been hoping there’d be some small acquisitions. But sure, the hope was at all times acquisitions, however possibly sometime in our wildest desires there’d be an IPO. We didn’t even suppose YC would work once we began, folks didn’t imagine in YC’s fashions for a few years.
TC: Looking again, what would you say is without doubt one of the largest stuff you’ve realized all through this expertise?
JL: What an extended highway it’s for startups. When we began YC again then, it wasn’t a well-liked factor to do a startup. Now, thank goodness, extra individuals are beginning them, and extra kinds of individuals are beginning them. It’s not simply tremendous high-tech corporations. That’s thrilling, however what I feel lots of people don’t notice is how arduous startups are. You say, yeah, I understand how arduous, however folks don’t notice how tough they’re and the way lengthy the dedication is. If you’re profitable, it takes such a very long time. For [someone like Houston] to make it to that time, they’ve dedicated quite a lot of their life and power and all their mental capability to creating this work. To me, that’s so thrilling, however I feel it might shock folks to know realistically how lengthy that would take.
TC: What would you inform startups with the hindsight of what occurred with Dropbox’s valuation hype cycle?
JL: I’ll say, with startups, generally you simply have to stay to what you’re doing. There’s quite a lot of stuff occurring round you, particularly now with social media and issues like that. With a startup, you simply need to maintain shifting ahead with constructing an organization and constructing a fantastic product.
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