Dropbox bets the house on AI – is this another Metaverse moment?

Five hundred Dropbox staff are clearing their desks today, the latest tech workers to find themselves being put out of work by AI. However, this isn’t a case of human jobs being replaced by machines. At least, not yet. Dropbox is betting the house on AI and now it’s looking to reshape its workforce, bringing in staff with the skills to develop the “next generation of AI-powered products”.

It all sounds eerily familiar to the transformation Facebook announced when we were told the metaverse was the next big thing a couple of years ago. “We are at the beginning of the next chapter for the internet, and it’s the next chapter for our company too,” wrote Mark Zuckerberg in 2021.

“The AI era of computing has finally arrived,” wrote Dropbox CEO Drew Houston yesterday. “We’ve believed for many years that AI will give us new superpowers and completely transform knowledge work. And we’ve been building towards this future for a long time, as this year’s product pipeline will demonstrate.”

Facebook has been quietly creeping away from its metaverse mission in recent times, though. “Our focus this year is on artificial intelligence,” Tom Alison, head of Facebook, wrote in March. Will Dropbox’s shift towards AI prove to be another passing fad, or does AI have more sticking power?

Dropbox’s AI vision

How Dropbox plans to build AI into its product line isn’t super-clear from Houston’s blog post, but it’s obvious the company has been spooked by the industry’s sudden focus on artificial intelligence.

“The opportunity in front of us is greater than ever, but so is our need to act with urgency to seize it,” Houston wrote. “Over the last few months, AI has captured the world’s collective imagination, expanding the potential market for our next generation of AI-powered products more rapidly than any of us could have anticipated. However, this momentum has also alerted our competitors to many of the same opportunities.”

Much like Google rushing out a half-baked Bard to compete with Microsoft’s ChatGPT-powered tools in Bing, Dropbox is clearly wary of being left behind. And though Houston hints at AI products in “this year’s product pipeline”, he also makes clear that “our next stage of growth requires a different mix of skill sets, particularly in AI and early-stage product development”. Early stage being the operative words.

It’s not the first time Dropbox has attempted to diverge from its core file-sharing competence to attack what’s perceived as an outside threat. Dropbox Paper, for example, provides real-time document editing tools that are very similar to those offered by Google, Microsoft and others, but it’s struggled to gain traction. Visit the Dropbox homepage today and you’ll do well to find mention of it.

Hard truths

Perhaps products such as Paper are what Houston is referring to when he says the company must “acknowledge some other hard truths”.

“In some areas, investments that showed promise before the downturn have more limited potential today,” he wrote. “In others, we haven’t been executing consistently or managing performance as tightly as we need to. So we’ve made more significant cuts in these areas in order to free up investment in our future growth.”

The markets are yet to be convinced shifting focus to AI is the answer. The company’s share price is down around 5% after yesterday’s announcement, compounding a long-term tumble in its stock since the peak of the pandemic.

“We’ll need all hands on deck as machine intelligence gives us the tools to reimagine our existing businesses and invent new ones,” Houston concluded. Sadly, there will be at least 500 fewer pairs of hands on Dropbox’s deck by the end of the day.