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Analyzing the Mailbox Dumpster Decision by Dropbox

The thing that all techies fear: the app you use most is getting tossed in the trash!  Dropbox just announced that it is killing off the Mailbox app that they bought for $100M in 2013.

As an experienced technology leader, innovator and engineer, I'd like to share my thoughts about what Dropbox did right and wrong with this product acquisition!

1. Harnessing huge momentum and user base

There were millions of reservations to get signed up to use  the Mailbox app.  After all, this was the "new app" on the block that took advantage of gesture based input in an effective way.  Even though Mailbox was in a sticky situation, they turned it into gold in one of the industry's greatest shake-up acquisitions based on the huge consumer response.  Dropbox paid a premium to buy it, but after they have digested the tech and learned what they wanted from it, how can they utilize the gigantic user base to their benefit ?

It certainly is NOT by killing the app and leaving all the users behind.  They have a thin website that gives some tips to users who now need to migrate to another app, but in my opinion is far from acceptable.  The net result is that potential paying Dropbox users feeling abandoned, and they now have a place to direct their displeasure! Considering the meteoric rise of Mailbox, it sure feels like a disservice that it is being trashed.

Thats a -1 to Dropbox.

2. Positioning the tech to their advantage

One of the reasons the acquisition happened in 2013 was apparently because of good product-market fit, and that appealed to Dropbox.  How has Dropbox really used it to their advantage ?  Honestly, I'm not sure.  Yes, they wanted to learn to handle attachment handling better from the tech, which maybe they did for their primary dropbox product, but what else ?

Microsoft integrated OneDrive with the new Outlook Mail
For $100M invested, they sure should have gotten some more signage out of the app at minimum!

The more important thing that could have been done was find meaningful ways to merge or bind the technologies.  Look at what Microsoft has done with the Outlook web and mobile apps (which were also an acquisition), and how they have meaningfully integrated other Microsoft services, particularly OneDrive (their Dropbox competitor!).

Mailbox could have easily integrated with Dropbox more outwardly, and maybe even switched its use for paid Dropbox accounts, both reducing overhead of leachers and building loyalty to paying customers.

This was a HUGE missed opportunity, which has most likely handed business directly to their competitors.

Thats another -1 to Dropbox

3. Keeping Focused

Dropbox is looking to prove its dominance over Box, so they are making hard decisions.  Kudos for that, companies can typically only be good at one or a couple things unless you have a massive footprint like Microsoft of Google, and even then, they can arguably STILL only be good at a few things.

Dropbox is deciding that they don't want to be in the mobile email business.  Fair dinkum. That decision seems true and reasonable, but the decision is only part of the process.  The more important part is the execution of that change.  I would argue that "trash can" positioning is probably not the best way.

There are UNKNOWNS here though:

  • How much was Mailbox costing them in staff, infrastructure, support, etc. ?
  • How much is/was the customer base worth?
  • Were there terms of the acquisition that made these choices difficult?

The biggest rule for startup companies is to keep focused at all times, but with $1.1 billion in funding, and a $10 billion valuation, Dropbox isn't a startup.  Thats enough resources to be smart about managing your acquired tech.  If expenses were the issue, they probably should said so, and they would have earned respect and had a positive market spin in the process.

I'll give Dropbox a +1 for being smart enough to change and focus on their core offering.  

4. Trash < Saving Throw

What amazes me is the lack of communication as to why such a large investment is being tossed in the dump.  This isn't the first time we've seen massive tech being dumped.  Microsoft dumped the Nokia tech it acquired, and took it as a $7 billion write-off.  Google handled things a little differently with their Motorola acquisition.  They paid $12 billion for Motorola Mobility in 2011, and then sold off the business to Lenovo for about $3 billion, keeping the patents in the process (what they wanted anyway).  If there is anything to be learned from Google about their transaction is to be ok selling part of the assets if you don't want them anymore.

Once again we have unknowns here, largely because Dropbox just hasn't communicated enough detail to know their decision making process.  In the absence of arguments, we can only assume there are no good reasons that Dropbox didn't try to find a buyer for the substantially large user base and intellectual property tied up in Mailbox.  I would think that even a modest sale of $1M could be feasible, which would more than cover legal costs and yield a positive story for Dropbox.

So, for "only negative news" and no real effort to sell the tech, Dropbox gets another -1 in my book.


Overall score: -1, -1, +1, -1 == -2

After re-reading my notes, I sure seem critical of Dropbox.  Actually that isn't really true overall.  I think Dropbox has a great product and they have done a good job of delivering it to the market and growing over time.  My criticism is really around the irresponsibility of throwing around acquisition dollars and playing with end users like they are legos.  If Dropbox thinks that this will boost customer loyalty and give them a better image to their customers, I think there are flaws in their strategy.  Even if they appease investors, having an investor-focused decision making process is a recipe for losing market share, not gaining it.

I'd love your feedback/comments/hackling/etc. Hit me up on twitter @aschwabe

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