Dropbox Slashes Workforce As Storage Wars Intensify

File hosting service Dropbox has cut its global workforce by 20 per cent in a brutal round of layoffs that will see 528 staff told to pack their desks.

Co Founder and CEO Drew Houston wrote to staff to say that after “careful consideration” the company was bringing out the garden shears.

“As CEO, I take full responsibility for this decision and the circumstances that led to it, and I’m truly sorry to those impacted by this change.”

Houston said Dropbox was in “a transitional period … Our FSS [File Storage Service] business has matured, and we’ve been working to build our next phase of growth with products like Dash [a way to access various apps, folders, files and system preferences using a universal search feature]. 

“However, navigating this transition while maintaining our current structure and investment levels is no longer sustainable.”

Houston demand was softening and that the company was facing “macro headwinds in our core business”.

But, he added, “external factors are only part of the story. We’ve heard from many of you that our organisational structure has become overly complex, with excess layers of management slowing us down”.

“And while I’m proud of the progress we’ve made in the last couple years, in some parts of the business, we’re still not delivering at the level our customers deserve, or performing in line with industry peers,” Houston said.

“So we’re making more significant cuts in areas where we’re over-invested or underperforming while designing a flatter, more efficient team structure overall.”

He said the market “is accelerating precisely where we’ve placed our biggest bets … we’re starting from a position of strength. Millions of customers trust us as the home for their most important files, making the leap to organising all their cloud content a natural evolution”.

“But we’re not operating on our own schedule. This market is moving fast and investors are pouring hundreds of millions of dollars into this space. This both validates the opportunity we’ve been pursuing and underscores the need for even more urgency, even more aggressive investment, and decisive action.”

All impacted employees will be eligible for 16 weeks of pay, with one additional week of pay for each completed year of tenure at Dropbox. Internationally, severance packages will vary depending on regional practices and statutory requirements.

Dropbox will share more details on “high-level changes” soon, and will host “company-wide Town Halls later this week to answer questions and discuss our plans in more detail”.