Dropbox CEO Drew Houston is stepping down after 19 years as a cloud pioneer

Drew Houston was founded Dropbox nearly two decades ago at the age of 24, he finally became a household name in Silicon Valley and the first tech entrepreneur to take a company from the Y Combinator incubator program all the way to the public market.

Now, at age 43, Houston is ready to do something else. He informed employees on Tuesday that he will move to the role of executive chairman after initially sharing the CEO title with Ashraf Alkarmi, who has been promoted to chief product officer. Eventually Alkarmi will take on the top job on his own.

By almost any measure, Houston has had a great run at Dropbox, helping to pioneer the cloud storage market, competing Google again an apple and building a net worth of over $2 billion, due to majority ownership in his company. But in a land of high hopes, Houston has overseen a company that has risen too quickly and never became a generation-defining brand.

Dropbox’s current market valuation of just over $6 billion is down from half the high on its first day of trading in 2018, and well below the $10 billion estimate private market investors had in 2014. Meanwhile, Airbnbanother early hit from Y Combinator, it has a market cap close to $80 billion, and CEO Brian Chesky is credited with boosting the travel industry.

Houston, who created Dropbox out of “personal frustration” with constantly losing USB sticks while in college at the Massachusetts Institute of Technology, dismissed the Airbnb comparison.

“I think my 18-year-old self is going to hate me,” Houston told CNBC in an exclusive interview, noting that Dropbox “is something that 100 percent of the planet still uses.”

In its latest quarterly earnings report, Dropbox said it has more than 18 million paying users, and the service remains popular with media professionals, graphic designers, architects and others who share files and photos as part of their daily work.

Dropbox topped $1 billion in annual revenue in 2017 and surpassed $2 billion four years later. But revenue is roughly flat in the past two years and will drop slightly in 2025.

The constant challenge of this company has been to distinguish itself from a lot of competitors, including Apple and Google Amazon again Microsoft. Then there’s the long-term rival The boxstill run by founder Aaron Levie and facing similar obstacles. A box worth just over $3.5 billion.

The latest hurdle for Dropbox, and the entire subscription software category, is artificial intelligence, which has taken the tech industry by storm over the past three-plus years. The software space is focused on concerns that the underlying models from OpenAI and Anthropic will enable simple tools that displace existing products.

Dropbox shares have held up better than most in the business space. The stock is down less than 5% in the past year, while companies like it monday.com, HubSpot again Asana lost more than 60% of their value.

“Whenever there’s a new technology, people move out very quickly,” Houston said. They make ideas that may be “straightforward” but take years or decades longer to play out than they predict.

Regarding “this SaaS Apocalypse concept or whatever,” Houston said he “has never met a Dropbox customer who was like, ‘I’m using ChatGPT so much I’m going to cancel my Dropbox subscription.’

John Lovelock, an analyst at Gartner, sees similarities between the current era of AI and the early days of cloud computing, when companies loved it. Salesforce balloon at the cost of estate agents as The Oracle again SAP. Traditional players did not fall but saw growth slow as they tried to scale up, despite businesses spending more on technology.

The market is trying to predict how things will go with AI, Lovelock suggested.

“AI is going to bring a lot of value, so there’s going to be a lot of money spent,” Lovelock said. “When everyone seems so happy who will make that money and that is, in a way, an unanswerable question right now.”

Analysts at Monness, Crespi, Hardt & Co. wrote in a report earlier this month after earnings that Dropbox is “improving,” highlighting its AI-powered Dash feature that customers can use to easily search and share documents and messages across third-party apps. Analysts, who have an equal holding rating on the stock, say the AI ​​opportunity and the company’s valuation are two reasons why “value investors may be drawn to Dropbox.”

Dash allows users to quickly query and control content from text to video and audio. Houston said advances in AI models mean “suddenly we can build a version of what I would have wanted to build 10 years ago.”

Houston now plans to build something in AI, not just Dropbox.

“I’m not going to race boats,” said Houston, who is also a board member Metato join in 2020.

Houston said he wants to do something entrepreneurial in AI because “there’s never been a more exciting time to build things.”

“It’s all cliche, isn’t it?” Houston said. “AI is reshaping every aspect of how we live, and I’m sure I won’t be short of ideas and things to work on.”

Along with Houston’s planning, Dropbox said Tuesday that Mike Torres is joining the company from Google as chief product officer in July. Torres is currently Google’s Chrome product vice president.

As for when and why Houston made the decision to leave, he said there was no specific reason for the delay.

“Part of me kept thinking, oh yeah, I’m going to be the CEO of Dropbox until I take my last breath in my career,” he said. “There was never a perfect moment, there was no part of me where I was like, ‘oh, this day is the day it’s going to happen.’

Since Alkarmi joined Dropbox from Vimeo in late 2024, the company has been “very responsive to our customers and making big changes in innovation,” Houston said.

“I trust the right leader,” he said. “The company is in the right place.”

WATCH: Dropbox CEO Drew Houston on AI-powered subscribers and tools.