Why is Dropbox reinventing itself?

According to Dropbox CEO Drew Houston, 80% of the product’s users rely on it, at least partially, for work.

It makes sense, then, that the company is refocusing to try and cement its spot in the workplace; to shed its image as “just” a file storage company (in a time when just about every big company has its own cloud storage offering) and evolve into something more immutably core to daily operations.

Earlier this week, Dropbox announced that the “new Dropbox” would be rolling out to all users. It takes the simple, shared folders that Dropbox is known for and turns them into what the company calls “Spaces” — little mini collaboration hubs for your team, complete with comment streams, AI for highlighting files you might need mid-meeting, and integrations into things like Slack, Trello and G Suite. With an overhauled interface that brings much of Dropbox’s functionality out of the OS and into its own dedicated app, it’s by far the biggest user-facing change the product has seen since launching 12 years ago.

Shortly after the announcement, I sat down with Dropbox VP of Product Adam Nash and CTO Quentin Clark . We chatted about why the company is changing things up, why they’re building this on top of the existing Dropbox product, and the things they know they just can’t change.

You can find these interviews below, edited for brevity and clarity.

Greg Kumparak: Can you explain the new focus a bit?

Adam Nash: Sure! I think you know this already, but I run products and growth, so I’m gonna have a bit of a product bias to this whole thing. But Dropbox… one of its differentiating characteristics is really that when we built this utility, this “magic folder”, it kind of went everywhere.

TC’s Greg Epstein and Kate Clark talk mental health startups and the ‘Cult of the Founder’

Some weeks, tech ethics is in the news. And some weeks, it IS the news. This week was one of the latter,

There were so many ethically fraught news stories about technology companies over these past few days, I had trouble keeping track of them all. So I’m delighted that my latest interviewee for this series on ethics and technology is TechCrunch’s own Kate Clark, a reporter covering startups and venture capital.

Kate is one of the tech reporters on whom I rely most heavily for insight into what the hell is going on in Silicon Valley, and not just because she’s prolific, a fine writer, and so hardworking she seems to attend every VC dinner and startup product launch in Northern California (though she is all of those things).

I also turn to her (well actually, I turn to her Twitter — we’ve never met in person) because, though she would never claim to have any special training or authority in ethics, she has three of the top qualities I look for in an ethical leader: a passion for equitable inclusion; a well-modulated bullshit detector; and enough compassion for humanity to expect better of us all.

When Kate and I spoke on Wednesday afternoon, she was as harried as you might expect, at least based on her tweets.

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Image via Twitter / Kate Clark / @KateClarkTweets

Greg Epstein: I’ve been looking forward to talking to you for a while now, and I certainly picked a busy day.

Kate Clark: Not as bad as yesterday.

Epstein: I follow your work closely; it informs mine. I’m sitting here in Cambridge, Massachusetts, where I work, and I’m thinking about the ethics of technology.

Startups Weekly: Part & Parcel plans plus-sized fashion empire

Hello and welcome back to Startups Weekly, a weekend newsletter that dives into the week’s noteworthy startups and venture capital news. Before I jump into today’s topic, let’s catch up a bit. Last week, I wrote about Stripe’s grand plans. Before that, I noted Peloton’s secret weapons

Remember, you can send me tips, suggestions and feedback to [email protected] or on Twitter @KateClarkTweets. If you don’t subscribe to Startups Weekly yet, you can do that here.

Startup spotlight

The best companies are built by people who have personally experienced the problem they’re attempting to solve. Lauren Jonas, the founder and chief executive officer of Part & Parcel, is intimately familiar with the struggles faced by the women she’s building for.

San Francisco-based Part & Parcel is a plus-sized clothing and shoe startup providing dimensional sizing to women across the U.S. The company operates a bit differently than your standard direct-to-consumer business by seeking to include the women who wear and evangelize the Part & Parcel designs by giving them a cut of their sales.

Here’s how it works: Ambassadors sign up to receive signature styles from Part & Parcel, which they then share and sell to women in their network. Ultimately, the sellers are eligible to receive up to 30% of the profit per sale. The out-of-the-box model, which might remind you somewhat of Mary Kay or Tupperware’s business strategy, is meant to encourage a sense of community and usher in a new era in which plus-sized women can facilitate other plus-sized women’s access to great clothes. 

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“I bought a brown men’s polyester suit and wore it to an interview,” Jonas, an early employee at Poshmark and the long-time author of the popular blog, ‘The Pear Shape,’ tells TechCrunch. “I was that kid wearing a men’s suit.”

Clothing tailored to plus-sized women has long been missing from the retail market. Increasingly, however, new brands are building thriving businesses by catering precisely to the historically forgotten demographic. Dia&Co., for example, raised another $70 million in venture capital funding last fall from Sequoia and USV. And Walmart recently acquired another brand in the space, ELOQUII, for an undisclosed amount. Part & Parcel, for its part, has raised $4 million in seed funding in a round led by Lightspeed Venture Partners’ Jeremy Liew.

The startup launched earlier this year in Anchorage, “a clothing desert,” and has since grown its network to include women in several other underserved markets. Given her own history struggling to find a fitted woman’s suit, Jonas launched her line with structured pieces, including suits and blouses — though the startup’s biggest success yet, she says, has been its boots, which come in three different calf width options.

“Seventy percent of women in this country are plus-sized,” Jonas said. “I’m bringing plus out of the dark corner of the department store.”

This week in VC

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Image: Bryce Durbin / TechCrunch

Must read

TechCrunch’s Megan Rose Dickey published a highly anticipated deep dive on the state of sex tech this week. The piece provides new data on funding in sex tech and wellness companies, analysis on sex tech startup’s battle for public advertising and responses from industry leaders on how we can destigmatize sex with technology. Here’s a short passage from the story:

Cindy Gallop sees a market opportunity in every type of business obstacle she encounters. That’s why All The Sky will also seek to invest in startups that tackle the infrastructural tools needed to fuel sextech, like payments, hosting providers and e-commerce sites.

“I want to fund the sextech ecosystem to maintain and sustain a portfolio for All the Skies, to create a bloody huge sextech ecosystem and three, to monopolistically build out the ecosystem to be a multi-trillion-dollar market,” Gallop says.

On my radar

I swung by Contrary Capital‘s Demo Day this week, in which a number of startups gave a 4- to 5-minute pitch. Next on my list is Alchemist‘s Demo Day in Menlo Park. The accelerator welcomes enterprise startups for a six-month program focused on early customer adoption, company development and mentorship.

Also on my radar is Females To The Front. The event began this week in Palm Springs and if I were based in SoCal, I would have swung by. Led by Amy Margolis, the event is said to be the largest gathering of female cannabis founders and funders to date. Here’s how the group describes the event: “Females to the Front Retreat will mix immersive and hands-on workshops, pitch training, investment deck preparation and business skill set education with investor meetings and plenty of shared meals, pool time, yoga, connections, rest and rejuvenation. Every workshop is built to directly engage attendees instead of powerpoint and panels. Be prepared to return home inspired, engaged and with so many more tools in your toolbox.”

For the record, I don’t advertise events in my newsletter just wanted to give props to this one because it’s a great development for the cannabis tech ecosystem.

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Time to Disrupt

We are just weeks away from our flagship conference, TechCrunch Disrupt San Francisco. We have dozens of amazing speakers lined up. In addition to taking in the great line-up of speakers, ticket holders can roam around Startup Alley to catch the more than 1,000 companies showcasing their products and technologies. And, of course, you’ll get the opportunity to watch the Startup Battlefield competition live. Past competitors include Dropbox, Cloudflare and Mint… You never know which future unicorn will compete next.

You can take a look at the full agenda here. And if you still need convincing, here’s five reasons to attend this year’s conference from our COO himself.

And finally… #EquityPod

This week, the lovely Alex Wilhelm, editor-in-chief of Crunchbase News, and I gathered to discuss a number of topics including WeWork’s IPO and Uber’s attempts to bypass a new law meant to protect gig workers. Listen here.

How Dropbox, Nike, Salesforce, MailChimp, Google and Pepsi welcome their new hires

The first day of work at a new job can be very stressful. The unfamiliar surroundings and onslaught of new material can cause new hires some degree of discomfort. But sometimes the atmosphere at the new company can be welcoming and can help counteract the stress.

Different companies have their own traditions to help make this transition period more comfortable and memorable for new hires. Some of these traditions include:

  • Team-building day trips for new hires
  • Breakfast with the CEO
  • Tours of the best cafes, parks, and other spots in the neighborhood
  • Office “quests” (or some other gamification of onboarding)
  • Personalized onboarding programs or interactive company academies

Usually, only employees can experience these traditions. But there’s one new-hire tradition that has become extremely popular and often highly publicized: the “welcome kit”.

Welcome kits usually contain a hodgepodge of items that employees will need on the job (pens, notebooks, books, etc.) and things to make employees feel welcome (clothing, stickers, water bottles, or more unusual items — often with the company name or logo on them).

To get a sense of how different companies handle their kits, we talked to four successful startups about their welcome kits in the article below, followed by our look at a dozen more:

Table of Contents:

This article is based on the personal welcome kit collection of Vladimir Polo, founder of AcademyOcean. AcademyOcean is a tool for interactive onboarding and training (and Vladimir Polo is a fan of welcome kits).

Dropbox

Fresh out of Y Combinator, Tandem lands millions from Andreessen Horowitz

Tandem, one of the most sought after companies to graduate from Y Combinator’s summer batch, will emerge from the accelerator program with a supersized seed round and an uncharacteristically high valuation.

The months-old business, which is developing communication software for remote teams after pivoting from crypto, is raising a $7.5 million seed financing at a valuation north of $30 million, sources tell TechCrunch. Airbnb investor Andreessen Horowitz is leading the round.

Tandem and a16z declined to comment for this story. The round has yet to close, which means the deal size is subject to change. Y Combinator startups raise capital using SAFE agreements, or simple agreements for future equity, which allow investors to buy shares in a future priced round at a previously agreed-upon valuation.

We’re told several top venture capital firms were vying for a stake in Tandem. One firm even gifted the founders a tandem bike, sources tell TechCrunch, resorting to amusing measures to sway the Tandem team. But it was a16z — which has an established interest in the growing future of work sector, evidenced by its recent investment in the popular email app Superhuman — that ultimately won the coveted lead investor spot.

Tandem provides a virtual office for remote teams, complete with video-chatting and messaging capabilities, as well as integrations with top enterprise tools including Notion, GitHub and Trello. The service launched one month ago and has signed contracts with Airbnb, Dropbox and others. The company claims to be growing 50% week-over-week.

“Every company is a remote company,” Tandem chief executive officer Rajiv Ayyangar said during his pitch to investors on day two of Y Combinator Demo Days this week. “You have salespeople in the field, [companies with] multiple offices, people working from home. Tandem isn’t just building the future of remote work, it’s building the future of work.”

Ayyangar was previously a data scientist at Yahoo before joining Yakit, a startup seeking to simplify ecommerce delivery, as the director of product. Co-founders Bernat Fortet Unanue and Tim Su are also Yahoo alums.

We’re told Tandem’s fundraise was nearly complete before it pitched to investors Tuesday afternoon. Startups that participate in YC are often flooded with offers from VCs throughout the three-month program. Firms are hungry for the batch’s Airbnb, Dropbox or Stripe — graduates of the program — and will pay premiums on startup equity for their chance to invest in a future ‘unicorn.’

As a result, the median seed deal for U.S. startups in 2018 was roughly $2 million — a record high — with typical pre-money valuations hovering north of $10 million. Tandem’s seed financing represents both a trend of swelling seed deals and valuations, as well as a tendency for VCs to dole out more cash to fresh-from-YC companies amid heightened competition amongst their peers.

The previous YC batch, which wrapped up in March, included ZeroDown, Overview.AI and Catch, a trio of companies that pocketed venture capital ahead of demo day. ZeroDown, a financing solution for real estate purchases in the Bay Area, raised upwards of $10 million at a $75 million valuation before demo day, sources told TechCrunch at the time (months after demo day, Zero Down announced a whopping $30 million financing). ZeroDown was an outlier, of course, as the company’s founders had previously co-founded the billion-dollar HR software company Zenefits.

As for the summer batch, we’re told Actiondesk, Taskade and Tandem are amongst the startups to garner the most hype from investors. Some even forwent the demo day pitch altogether. BraveCare, which is creating urgent care clinics intended just for kids, raised $4.1 million ahead of demo day, we’re told. The company opted not to pitch to additional investors this week.

You can read about all the company’s that pitched during demo day one here and demo day two here.

UnitedMasters releases iPhone app for DIY cross-service music distribution

Alphabet-backed UnitedMasters, the music label distribution startup and record label alternative that offers artists 100 percent ownership of everything they create, launched its iPhone app today.

The iPhone app works like the service they used to offer only via the web, giving artists the chance to upload their own tracks (from iCloud, Dropbox or directly from text messages), then distribute them to a full range of streaming music platforms, including Spotify, Apple Music, Tidal and more. In exchange for this distribution, as well as analytics on how your music is performing, UnitedMasters takes a 10% share on revenue generated by tracks it distributes, but artists retain full ownership of the content they create.

UnitedMasters also works with brand partners, including Bose, the NBA and AT&T, to place tracks in marketing use across the brand’s properties and distributed content. Music creators are paid out via PayPal once they connect their accounts, and they can also tie-in their social accounts for connecting their overall online presence with their music.

UnitedMasters

Using the app, artists can create entire releases by uploading not only music tracks but also high-quality cover art, and by entering information like whether any producers participated in the music creation, and whether the tracks contain any explicit lyrics. You can also specific an exact desired release date, and UnitedMasters will do its best to distribute across services on that day, pending content approvals.

UnitedMasters was founded by former Interscope Records president Steve Stoute, and also has funding from Andreessen Horwitz and 20th Century Fox. It’s aiming to serve a new generation of artists who are disenfranchised by the traditional label model, but seeking distribution through the services where listeners actually spend their time, and using the iPhone as manage the entire process definitely fits with serving that customer base.

Corporate travel platform TripActions quadruples valuation with $250M Series D

Venture capital investors Andreessen Horowitz, Zeev Ventures, Lightspeed Venture Partners and SGVC have valued TripActions, a travel booking service tailored for large enterprises, at $4 billion with a $250 million Series D.

The round, announced this morning, brings the business’s total raised to $480 million.

TripActions co-founder and chief executive officer Ariel Cohen tells TechCrunch the company’s revenue is growing 5x year-over-year but declined to disclose 2018 revenues. Currently, it has more than 2,000 customers, including WeWork, Zoom, Dropbox and Robinhood.

Founded in 2015, TripActions is out to replace antiquated travel booking systems with a platform that integrates company HR and expense systems. Using TripActions, business travelers can arrange flights, hotels and transportation, with 24/7 global support from the startup’s staff.

“We are going after a really big industry,” Cohen said. “We are replacing something people don’t like. They don’t like the tools corporates are giving them today to book business trips.”

TripActions plans to use the cash to accelerate its international expansion. Only 18 months ago, it operated just one office out of its headquarters in Palo Alto. Today, the company has 700 employees with offices in London, Sydney, Amsterdam and more.

Co-founder and chief technology officer Ilan Twig says once they brought on large enterprise customers like Box, for example, they had no choice but to better craft the service for markets located outside the U.S.

“In a year we went from a startup with an office in Palo Alto to having more than 100 employees in Europe,” Twig tells TechCrunch. “We need to meet users where they are … We need agents and operations in the various [geographies] that we are serving. And then of course sales and marketing in all of these [geographies].”

With the latest round, TripActions is sitting on a mountain of cash. The founders tell us they’ve yet to spend a dime of their $154 million Series C. Closed in November, the financing valued the company at $1 billion, cementing its position in the unicorn club.

“We want to make sure we are equipped to take the market,” Cohen said. “Do we need the entire amount of money we’ve raised to date? The answer is no. But do we want the means to seize the opportunity in the long term? The answer is hell yes.”

Ray Dalio, Niantic, Adobe, Dropbox, remote work, Northzone, and Slack

Ray Dalio on the Extra Crunch stage at Disrupt SF 2019

This year at Disrupt SF, we will be hosting a special Extra Crunch stage focused on the issues that confront startup founders in building their companies.

I am pleased to announce that Ray Dalio of Bridgewater fame will be sitting down for a fireside chat on the Extra Crunch stage to discuss his Principles, and how to build a startup culture. Building a strong culture early on is the hallmark of almost all successful startups, and it is great to have such a leading figure to chat on this critical topic.

For tickets and more information, head over to our Disrupt SF event page.

A chat with Niantic CEO John Hanke on the launch of Harry Potter: Wizards Unite

Niantic dominated the mobile gaming world with its Pokémon Go augmented reality game. Now, the company is coming back for round two with the launch of its wizards-and-Hogwarts-themed game, Harry Potter: Wizards Unite.

Three years after moving off AWS, Dropbox infrastructure continues to evolve

Conventional wisdom would suggest that you close your data centers and move to the cloud, not the other way around, but in 2016 Dropbox undertook the opposite journey. It (mostly) ended its long-time relationship with AWS and built its own data centers.

Of course, that same conventional wisdom would say, it’s going to get prohibitively expensive and more complicated to keep this up. But Dropbox still believes it made the right decision and has found innovative ways to keep costs down.

Akhil Gupta, VP of Engineering at Dropbox, says that when Dropbox decided to build its own data centers, it realized that as a massive file storage service, it needed control over certain aspects of the underlying hardware that was difficult for AWS to provide, especially in 2016 when Dropbox began making the transition.

“Public cloud by design is trying to work with multiple workloads, customers and use cases and it has to optimize for the lowest common denominator. When you have the scale of Dropbox, it was entirely possible to do what we did,” Gupta explained.

Alone again, naturally

One of the key challenges of trying to manage your own data centers, or build a private cloud where you still act like a cloud company in a private context, is that it’s difficult to innovate and scale the way the public cloud companies do, especially AWS. Dropbox looked at the landscape and decided it would be better off doing just that, and Gupta says even with a small team — the original team was just 30 people — it’s been able to keep innovating.

Meet your new chief of staff: An AI chatbot

Years ago, a mobile app for email launched to immediate fanfare. Simply called Mailbox, its life was woefully cut short — we’ll get to that. Today, its founders are back with their second act: An AI-enabled assistant called Navigator meant to help teams work and communicate more efficiently.

With the support of $12 million in Series A funding from CRV, #Angels, Designer Fund, SV Angel, Dropbox’s Drew Houston and other angel investors, Aspen, the San Francisco and Seattle-based startup behind Navigator, has quietly been beta testing its tool within 50 organizations across the U.S.

“We’ve had teams and research institutes and churches and academic institutions, places that aren’t businesses at all in addition to smaller startups and large four-figure-person organizations using it,” Mailbox and Navigator co-founder and chief executive officer Gentry Underwood tells TechCrunch. “Pretty much anywhere you have meetings, there is value for Navigator.”

The life and death of Mailbox

Mailbox, a mobile email management system, was responsible for many of the features both Apple Mail and Gmail use today, including swipe to archive or delete.

It launched in 2013, as mentioned, to quick success. At the time, Apple’s App Store was much newer and there were few available options for mobile email, especially ones that prioritized design and efficiency, as Mailbox did.

As a result, Mailbox, created by a venture-capital backed Palo Alto startup by the name of Orchestra, exploded. Mere weeks after its launch, it attracted 1.25 million people to its waitlist. Shortly after that, it hit another milestone: It was acquired.

Dropbox paid $100 million to bring Mailbox and its 13 employees on board, including Underwood and his co-founder Scott Cannon. Dropbox CEO Drew Houston, still years away from leading his company through a successful IPO, told The Wall Street Journal his plan was to “help Mailbox reach a much different audience much faster.”

“That was a very special time,” Underwood said. “There were still a lot of opportunities for improvements for how email was being used on these tiny little devices.”

Two years later, in 2015, the worst happened. Dropbox made the unpopular decision to shut down Mailbox, despite its cult following, in order to focus more on its own core product and the development of other new productivity tools.

“That was a hard time for us and Mailbox users,” Underwood said. “It was a tough decision for Dropbox as well … Ultimately, Mailbox didn’t meet the focus criteria for Dropbox and I understood the decision. It was in every sense their right to do with it what they thought was best.”

Act two

About a year later, in 2016, the Mailbox team had licked their wounds and begun work on an entirely new venture.

Much like Slack disrupted the frequency and efficiency of workplace communication, Navigator hopes to reimagine meetings, an essential element of business that’s often dreaded the most.

“What we saw with Mailbox was that really great processes were an effective way to help teams be creative; yet, lots of teams don’t make use of great processes,” Underwood explained. “After Mailbox, we really wanted to find a way to help teams be more effective and Navigator is a teamwork assistant whose job is really to help teams basically make the most of working together.”

According to Doodle’s 2019 state of the meeting report, 71% of working professionals lose time every week because of unnecessary meetings, most often because those meetings are ineffective or poorly organized. This is a cause of frustration and a loss of time and money; in fact, Doodle estimates nearly $400 billion is lost annually as a consequence of botched meetings.

Still, meetings aren’t going away. Workers in corporate America spend roughly five hours per week in meetings and another four hours per week preparing for meetings. Managers spend double that. There’s a big opportunity here to leverage technology to improve, even eliminate, this pain point.

The video conferencing business Zoom, for example, is hyperfocused on refining the video meeting, specifically for the remote worker. Its recent initial public offering and subsequent performance on the public markets has proven its value and the demand for technology that makes doing business easier. Slack’s direct listing today, which saw the business tripling in value at its debut, is further proof of the market opportunity for productivity tech.

Similar to Slack, which began as an artful online game, Aspen has prioritized design in building Navigator, the first of many products it plans to launch.

“We approached the problem of helping teams work together as a design problem,” Underwood said. “We tried over 200 different prototypes of different ways to encode and distribute best practices within a team. The concept of a virtual teammate was the one that finally began to show signs of working.”

Underwood says nothing was directly imported from Mailbox, aside from a dedication to human-centered design.

“We are solving a different problem but the way we are going about solving it, in trying to build something that resonates with people, is certainly consistent,” he said. “As a team, we seem to gravitate toward these ubiquitous, uncomfortable, painful problems, like teams and meetings, and try to build solutions that transform people’s experiences of them.”

Making meetings suck less

Navigator focuses on team meetings and one-on-ones, requesting information from meeting attendees before and after the meeting takes place.

First, it learns the topic of the meeting from participants and organizes them into a clear agenda complete with discussion topics. During the meeting, workers can use Navigator to quickly capture key takeaways that are later shared with every member of the meeting afterward. Later, the assistant checks in with attendees to learn whether they’ve completed their tasks.

It’s sort of like a chief of staff focused on helping meetings run effectively,” Underwood said. “It helps people show up. They feel invited and welcome and like their voice is valued, which changes how it feels for them to enter that room.”

Currently, Navigator works with Google’s G suite, Microsoft’s Office 365 and Slack. Soon, it will offer task integration with Asana, Jira, Trello and others. 

For now, it comes without a cost as the team continues to work out bugs with its first cohort of customers. Underwood says later this year they will begin to incorporate subscription-based feeds for the product.

“Navigator is another teammate, not another tool,” Underwood said. “It’s about turning meetings from painful, expensive wastes of time, to effective, meaningful moments of deep collaboration. They have that potential. When done well, they can be exceedingly powerful.”