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What Growthtone Looks Like




Joseph Bentzel, Platformula1

"Along the way, we've written a new playbook for business software. Our millions of users are our best sales people and have helped us acquire customers with incredible efficiency. As a result we've reached a billion dollar revenue run rate faster than any software-as-a-service company in history." Dropbox Co-Founders Drew Houston & Arash Ferdowsi

The Dropbox SI is a must read for every SaaS marketing/sales professional and startup founder on the planet. In it, the Dropbox founders make a straight-out-of-PulpFiction "bold statement" about their "new playbook for business software". After reviewing their S1 IPO filing, I would have to agree. Dropbox has successfully interwoven user-based, developer-based, partner-based, and account based marketing innovation to create a multimodal, multi-layered growth fabric with the best revenue efficiency of any "As a Service" player currently serving enterprise or SMB--And twice as revenue efficient as their nearest head-to-head competitor in the content collaboration space.

I describe this creative fusion of multiple growth mechanisms as growthtone, i.e. always-on multimodal growth dialtone. Let's look inside the S1 to see what they've accomplished and how they did it.

1. User Based Growthhacking:

The Foundation of Dropbox Growthtone

"We reach our users through in-product notifications on our website and across hundreds of millions of actively connected devices without any external marketing spend." Dropbox S1

Dropbox pioneered a method of product-centered user marketing it's alumni evangelists characterize as growthhacking. The above quote in the S1--especially the clear and unequivocal reference to "without any external marketing spend"--illustrate that for Dropbox--true growthhacking is nowhere near the same thing as the high burn, capital-subsidized user marketing I called out in "Unicorn Burnapalooza" in which SaaS marketers are burning 60/70/80+% of revenue on sales/marketing spend.

What Dropbox is teaching the world is that true product-centered growthhacking--the foundation of their growth model which drives 90% of their revenue from "self serve" customer interaction--is highly revenue efficient.

Let's examine their income statement and sales/marketing spend line.

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As you can see, Dropbox has exceptional revenue efficiency compared to many other SaaS companies serving enterprise customers, burning only 28 percent of 2017 revenue on Sales/Marketing spend. As a percentage of revenue this is less than half of what head-to-head competitor Box spends on sales and marketing.

Additionally, we can see that Dropbox--compared to the majority of "As a Service" and enterprise SaaS startups--invests more in R&D than Sales/Marketing. This is notable. Too many high burn startups have cannibalized R&D investment to subsidize their high spend growth models. This puts Dropbox in good company. In terms of recent SaaS & XaaS IPOs, only developer-focused Twilio and Sendgrid also invest more in R&D than Sales/Marketing spend.

This spend data tells you that "the Dropbox way", i.e. their celebrated approach to user marketing, is not based on any kind of cargo cult imitation of high burn B2C digital marketing vanity metrics (subsidized by investors). It's the real deal. Here's how they describe their self-service, growthhacking engagement in the S1.

"Our 500 million registered users are our best salespeople. They’ve spread Dropbox to their friends and brought us into their offices. Every year, millions of individual users sign up for Dropbox at work. Bottom-up adoption within organizations has been critical to our success as users increasingly choose their own tools at work. We generate over 90% of our revenue from self-serve channels—users who purchase a subscription through our app or website." Dropbox S1

Something else appears in between the lines of the Dropbox S1 for those who have been in the tech marketing trenches for a long time. In a very tangible sense, Dropbox sees its base of users as a "network", and has embraced and engaged its users as a creative form of "social capital" that it taps into to drive monetization of its business offering. This approach to users is very different than the kind of non-permissioned engagement we regularly see when B2B SaaS companies misapply user-based B2C digital marketing. Dropbox is doing "bottom-up" adoption that piggybacks on the user's own personal or work network.

In my 2006 book "Asymmetric Marketing" I described an earlier generation's attempt to do what Dropbox does with its product-centered self-serve approach as "inverse selling"--the change from "Buy/Use" to a "Use/Buy" in enterprise software. Since that time, Dropbox has taken the notion of inverse selling to entirely new levels as we can see from this statement in their S1.

"We analyze usage patterns within our network and run hundreds of targeted marketing campaigns to encourage paying users to upgrade their plans. For example, we prompt individual subscribers who collaborate with others on Dropbox to purchase our Standard or Advanced plans for a better team experience. In 2017, over 40% of new Dropbox Business teams included a member who was previously a subscriber to one of our individual paid plans. We believe that a large majority of individual customers use Dropbox for work, which creates an opportunity to significantly increase conversion to Dropbox Business team offerings over time." Dropbox S1

If all Dropbox did was outstanding, highly efficient user growthhacking, they would earn a place in the software IPO hall of fame. But the Dropbox folks didn't confine themselves solely to user-centered marketing innovation in their journey to IPO. They also engaged developers, partners, and large established landscape incumbents--creatively piggybacking their growth on the "landscape capital" of both established players and new app builders. This is the second layer--the second marketing modality--of Dropbox growthtone. I think of it as "developers & Incumbents as a Channel".

2. Landscape Based Partnering:

Developers & Incumbents as "Channel"

"As of December 31, 2017, Dropbox was receiving over 50 billion API calls per month and over 500,000 developers had registered and built applications on our platform. In addition, more than 75% of Dropbox Business teams have linked to one or more third-party applications." Dropbox S1

In addition to being a pioneer in "direct to user" growthhacking, Dropbox enables 3rd party developers to embed Dropbox API functionality inside their apps, systems, solutions, and experiences. That makes Dropbox an upstream XaaS building block player as well as a downstream end user SaaS player.

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On top of its developer outreach via DBX, Dropbox has also established various kinds of product-based partnerships with leading incumbents who benefit from close integration of Dropbox functionality into their apps and experiences.

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In the case of the Microsoft partnership back in 2014, what's important to note is that Dropbox succeeded in leveraging its "sync" value proposition into fully embedding itself as a "partner at the core" of the MS Office 365 user experience. This is an approach I describe as "Getting Grounded" on the landscape topography (i.e. pre-existing customer base) of incumbent vendors. By doing this, they piggybacked their growth machine onto the Microsoft "basehacking" machine. No small feat.

Dropbox "gets" the importance of landscape context--a lesson lost on far too many Bay Area startups that take the NIH or go-it-alone path. Here's how they see it.

"We know people will continue to use a wide variety of tools and platforms. That’s why we’ve built Dropbox to work seamlessly with other products, integrating with partners from Google and Microsoft to Slack and Autodesk. More than 75% of Dropbox Business teams have linked to one or more third-party applications." Dropbox S1

This embedded "as a service" functionality mindset is transforming Dropbox from a standalone "app" into a high value digital ingredient for major tech incumbents like Autodesk and others.

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This kind of symbiotic alliance flows from what I call "XaaS distribution" streetsmarts. As Dropbox proceeds down this partner-based path as a public company with expanded resources, I'd love to see the company emerge as an entirely new center of market gravity in enterprise tech--A new center of gravity much needed by the next generation of startups seeking to win on incumbent-led landscapes.

3. Account Based Selling:

Dropbox as Enterprise "Basehacker"

"Our market opportunity has grown as we’ve expanded from keeping files in sync to keeping teams in sync." Dropbox S1

The third part of the Dropbox growth approach runs through what has come to be known as account based selling.

Categories naturally evolve in tech based on what I call "landscape tectonics", i.e. the ongoing head-to-head rivalry of dominant incumbents who commoditize emerging markets to lock out competitors. This point of view is differentiated from those that see VC-subsidized "disruption" as the only or primary driver of new category emergence.


Dropbox has successfully made it to IPO on a high tectonics landscape in which major cloud superpowers have entered the market they created. That they got here is no small achievement.

This is why it is natural--in its journey to IPO--that Dropbox will continue to evolve from its original personal file sync value prop for iPhone & Android app users to a content collaboration focus that puts distributed enterprise teams at the top of the food chain. The timeline below from the S1 shows that the company has been on an enterprise trajectory since 2011, focusing on its Teams API, Dropbox Business, Dropbox Integrations, and new offerings like Dropbox Paper.

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Additionally, Dropbox has VERY WISELY decided to invest in its own infrastructure to control its market destiny, given the fact that leading cloud infrastructure players are coming for their customers.

And as it evolved its category in the context of teams, Dropbox has leveraged both its user-based growthhacking expertise and landscape-based partnering streetsmarts to drive an enterprise sales "land and expand" approach in key accounts where it has traction. Here's how they put it in the S1.

"We complement our self-serve strategy with a focused outbound sales effort targeted at organizations with existing organic adoption of Dropbox. Once prospects are identified, our sales team works to broaden adoption of our platform into wider-scale deployments." Dropbox S1

I describe this continuous upsell/cross-sell engagement among existing users as "basehacking". And Dropbox has a lot of "base" to hack. Here's what I mean.

"Of our 11 million paying users, approximately 30% use Dropbox for work on a Dropbox Business team plan, and we estimate that an additional 50% use Dropbox for work on an individual plan, collectively totaling approximately 80% of paying users. As of December 31, 2017, approximately 92% of Fortune 500 companies had paying Dropbox users within their organization, and approximately 56% had at least one paying Dropbox Business team. We had more than 300,000 paying Dropbox Business teams as of December 31, 2017." Dropbox S1

These numbers speak for themselves, and prove that there is a lot of installed base growth to come for Dropbox in the enterprise. And based on their impressive revenue efficiency track record, Dropbox should be able to keep up this momentum in enterprise without breaking the bank or joining the unicorn burnapalooza subsidized adoption club.

Takeaway: The Full Spectrum "Flywheel"

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"As users create and share more content with more people, they expand our global sharing network. This network allows us to gather insights and feedback that help us create new product experiences." Dropbox S1

In their S1, Dropbox describes the above quote in terms of a "flywheel effect", i.e. a user-driven virtuous cycle of adoption that feeds new products and new growth. I suspect that in large part this Dropbox user network "flywheel" is responsible for much of the company's exceptional revenue efficiency, i.e. low sales and marketing spend relative to revenue.

But I would also respectfully submit that going forward--Dropbox would be selling itself short if it chose to think of its flywheel effect solely in terms of user-to-user networking. The actual Dropbox flywheel conveyed in the above graphic (and derived from data and management comments in the S1) reflects multiple marketing modalities and multiple layers of marketing engagement that serve to optimize both revenue growth and revenue efficiency for Dropbox. From an enterprise software POV, it's a full spectrum flywheel.

And the term "growthtone" (that I'm using metaphorically as a way to frame and convey a multimodal growth model) implies that startups should think pragmatically about both their "path" to adoption and the always-on mechanisms needed to enter that path--flexibly--based on conditions on the ground.

I've seen companies go user first and win. I've seen companies go developer first and win. I've seen companies go partner first and win. I've seen companies go account first and win. But here's the truest truth about "as a service" startups. Path dependence matters.

Its really really hard to grow an "as a service" enterprise startup with sub-30% sales/marketing spend at IPO. Salesforce didn't do it. They never got below 50% of revenue allocated to sales/marketing spend.

Dropbox' team should be proud, very proud....of what they have achieved with their "new playbook" and their highly efficient multimodal path to category leadership. Dropbox is what growthtone looks like.


If I was competing with them in the market, I'd get the hell out of the way of that flywheel.

Joseph Bentzel is the founder and senior consultant at Platformula1.

If you'd like to learn more about Landscape Based Marketing (LBM) and build a Partner1st startup or enterprise digital initiative that capitalizes on non-stop landscape tectonics, contact him at or follow us on Twitter @Platformula1