Dropbox CEO Drew Houston to investors: Don't expect us to build out our sales teams (DBX)

Drew Houston, Founder, Dropbox

Dropbox has no intention of growing its sales efforts, Dropbox CEO Drew Houston told investors Thursday.
The company is on a quest to grow its paid users. They are the key to profitability for the $12 billion company, and analysts are obsessed with paid users as a metric of Dropbox's success.
But 90% of Dropbox's revenue come from users who "self-serve," the company said.
This means free Dropbox users are deciding to pay for enhanced services on their own, without the help of a sales person.

Dropbox is on a quest to grow its paying users — but don't expect the company to start building out its sales team.

In call with investors on Thursday, the $12 billion company doubled down on the "freemium" model that made it a viral sensation, and made clear that it doesn't intend on shaking things up any time soon.

"Success for us is not just about hiring a huge salesforce," Dropbox CEO Drew Houston told investors.

This is because around 90% of Dropbox's revenue comes from what it calls "self-serve users" — customers who decide to pay for Dropbox without the help of an outbound sales team.

Many of those users start out as free subscribers to Dropbox's introductory service, according to the company. So why bother hiring sales people to do what Dropbox already gets done for free?

"Our sales and marketing efficiency is considerably higher than many of our peers in SaaS," Chief Operating Officer Dennis Woodside said on the call.

Dropbox had 1,858 employees at the end of last year, but the company does not disclose the size of its sales team.

Analysts want to see Dropbox grow its paid subscribers

Paid user growth was a huge metric of concern for analysts going into Dropbox's first ever earnings. The 11-year-old company still isn't profitable, but investors are banking on the promise that it can reverse that trend by building out its paid products and services.

Dropbox now has a total of 11.5 million paying users, compared to 9.3 million for the same period last year, the company revealed in its Q1 2018 earnings report. So whatever Dropbox is doing is working — at least for the time being.

"Organizations will self serve up to 100 seats before we have a sales person call into the account," Woodside said, adding that any outbound sales efforts it makes are based on leads from the self-serve business.

This means that the customers they do reach out to are already interested in paying for Dropbox's services, and are more willing to scale.

"We have accounts that have gone from 20 seats to 30,000 seats over a couple of months," Woodside said.

"They start that enterprise sales cycle marathon on mile 20," Houston added.

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