Several summers ago, an MIT student named Drew Houston showed up for an internship at Bit9, a Waltham network security company. After graduation, he landed a job there as a software engineer, but left in May 2007 to do his own start-up.
Since then, Bit9 has had a pretty good run. It has grown to 150 employees and set up sales offices in Europe and Asia. Among the customers it helps protect from hacker attacks are the Air Force, 7-Eleven, and Toyota Financial Services. Last Monday, it announced a fresh round of venture capital funding: $34.5 million, bringing the total amount Bit9 has raised to more than $70 million.
But the business that Houston started in 2007, Dropbox, has proven to be a rocket ship. Dropbox helps more than 50 million people store and synchronize digital files so the latest version can be accessed from any device. Investors have pegged the San Francisco companyís current value at $4 billion. Steve Jobs, the late Apple chief executive, tried to acquire it. Dropbox has raised $257 million in venture capital ó some of it from Sequoia Capital, the same Silicon Valley venture capital firm that just put money into Houstonís old employer, Bit9.
Has there ever been a summer intern who has done so much, so quickly? (Forbes estimates Houstonís net worth at $400 million. He is 29.) And how did Houston become the latest product of the Bay State to become an entrepreneurial rock star in California?
Here's a bit of "bonus material" related to the column, including one of the first demo videos Houston created for Dropbox. Would you have invested if you saw this?
- Here's my report from Y Combinator's 2007 demo day in Cambridge, where Dropbox first presented publicly.
- Here are some excerpts from an e-mail exchange I had last week with Todd Brennan, Bit9's founder, who first hired Houston as a summer intern... and was the only person I could find locally who'd invested in Dropbox.
Todd Brennan: We (Bit9 co-founders) initially hired Drew as one of our MIT student summer interns at Bit9. He was an extraordinary contributor there, and it was obvious to me that he was destined for greatness. We all have many, many fond memories working together. Drew graciously let me invest in his very first seed round (after YC). Drew is brilliant and I only offered some advice and discussion from time to time.
Scott Kirsner: Would it have been the summer of 2005 that Drew was an intern?
TB: Summer 2004, I believe? I'd have to check...
SK: Did you see him initially (that summer) as someone destined for entrepreneurial greatness ... Or was he still pretty "unformed" then?
TB: He was already a very good entrepreneur. He had already been in a couple other startups before Bit9. By the end of the first summer, I joked "Be nice to Drew, we'll all be working for him someday." I saw it that summer. Amazing. He also worked with us a lot after that summer.
SK: Were you the person who hired Drew as a summer intern?
TB: Yes. I got his contact info, solicited him, interviewed him, made the offer, etc...
SK: And are you aware of anyone else from Bit9, or the Boston scene, who invested in that first seed round?
TB: No. It's a short list. I got Preferred A-1 (pre-A) certificate number 6. :)
I did get to know Drew as he was launching DropBox. He demo'ed a very early version of the product as a Side Dish at WebInno11 in March 2007 prior to doing the Y-Combinator program later that summer. I vividly recall him sharing his vision about making it a completely seamless experience to access storage in the cloud directly embedded from folders within the Windows OS, but the first incarnation was certainly raw.
- From a phone interview with Jeff Fagnan of Atlas Venture, the partner there who knew Houston best, and who had invested in Bit9:
Drew from the beginning was special. You'd walk into the company [Bit9], and Drew would come up and say, "Hey, you got time for coffee?" He made it clear early on that he had a lot of outside thoughts and interests. People at Bit9 knew he was working on something else.
...Drew has taught me more about VC than any other entrepreneur. At the time, he really wanetd to develop this better shared folder. At the time I was like, Google and Microsoft are going to do it. He just came back to, "I'm going to do it better. It's going to be easier, less friction, more elegant."
To be completely candid, one of the reasons we have the seed strategy program we have now is because of Drew. We want to be able to bet on first-time entrepreneurs who want to do something better. We now have the ability to very easily do less than $1 million investments, without a lot of friction. At the time, Drew wanted several hundred thousand dollars to hire a couple of developers to get going. We weren't able to do that at the time.
I was disappointed when Drew went out west. We screwed up. When you see somebody of Drew's ilk, you should fund them if they're doing SteakKnives.com. I was sold on Drew. It was a huge freaking miss for not keeping this guy part of Atlas and part of Boston.
- Forbes: "Dropbox: The Inside Story of Tech's Hottest Startup" (including how Steve Jobs tried to buy the company)
- Wall Street Journal: "How I Built It" (interview with Dropbox co-founder Arash Ferdowsi)
- TechCrunch: "How Dropbox Started as a Minimal Viable Product" (by Eric Ries)
- Here's an earlier Globe column that I wrote in August 2011 comparing the strategies of Dropbox and Carbonite.
About Scott Kirsner
Scott Kirsner was part of the team that launched Boston.com in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.
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December 9: Web Innovators Group
Demos of new mobile apps and web ventures at the Royal Sonesta Hotel in Cambridge. Free admission; cash bar.
December 10: Fintech Demo Day
Short demos from startups in the financial technology realm.
December 11: Unpitch
Entrepreneurs and investors sit down for lunch, advice, and feedback. Entrepreneurs must apply to participate.