Words don’t seem to mean anything these days. Dropbox CEO Drew Houston this week told employees he takes “full accountability” as he announced a round of layoffs affecting 500 employees. He is, as far as we can tell, remaining on as CEO and continues to hold a multiple-billion dollar ownership stake in the cloud storage company.
“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,” wrote Houston according to The Register.
“I know this is incredibly difficult and unwelcome news. To everyone leaving Dropbox, I’m deeply grateful for everything you’ve done for our company and our customers.”
Employees affected by the cuts will receive a minimum of sixteen weeks’ pay and their stock grants for Q4 2024 will vest. They can also keep their work computers. Dropbox cut 16% of staff in 2023 amid a wave of cuts across the industry following years of overgrowth during the pandemic. Revenue growth has been slow at Dropbox, in the single-digits more recently.
Dropbox started as a sleek and easy way to back-up files online, but has not quite been the major success story that was once hoped. To be sure, it has a market value of over $8 billion. That’s impressive but not the level of homerun that investors and employees hope for when they sign up to join a fast-growing tech company. Dropbox’s stock is down 10% in 2024, which is bad for workers at these companies as their pay is often heavily-weighted towards shares.
Leaders often claim that they are taking accountability when they screw up—and they should, as CEOs like Houston are the ones who mismanaged the company to the point of requiring layoffs in the first place. But rarely does “taking accountability” actually amount to much of anything. The most notable recent example is perhaps that Microsoft CEO Satya Nadella asked the company’s board to reduce his pay in light of the major Crowdstrike hack. But in that case, his overall compensation still increased for the year by $30 million. Just, a little less up.
Houston as a co-founder of Dropbox holds around 20% of the equity in the company, and can’t so easily be removed. But for other leaders, one argument made to support these large compensation packages is that their jobs require taking the brunt of tough decisions, and that they would be in high demand at other companies. Meta’s Mark Zuckerberg took a lot of flak after creating a bloodbath at his company during the pandemic, cutting large swaths of the organization. You have to wonder if some other CEOs would actually be in such high demand though. Maybe Nadella or Zuckerberg’s compensation is justified but it’s harder to say Houston would fetch a high mega-package elsewhere.
Dropbox for years has been outgunned by its bigger rivals that similarly offer cloud storage but at a much larger scale. It also faces increased competition in productivity software from the likes of Google and Microsoft, which have been investing heavily in AI that is supposed to help people work more productivity (the jury is still very much out on whether it’s helpful).
It’s hard for a company like Dropbox to compete against the big guys, but it’s been investing in its Dash AI search tool that’s supposed to make it easy to search across various productivity apps.
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