- When Dropbox closed its San Francisco offices, it also lost its famously posh cafeteria.
- Insiders say the loss of the cafeteria was emblematic of how remote work has upended its culture.
- Without lavish office perks, it’s become harder for Dropbox to keep employees around, insiders say.
One of the biggest draws for prospective Dropbox employees was the company cafeteria, a standout even among Silicon Valley’s famously lavish employee perks.
Known as the Tuck Shop, it employed chefs from Michelin-starred restaurants and served up dishes such as artisan pizza, bulgogi, barbacoa tacos, hibachi-grilled fish balls, sautéed shrimp, and beef tataki sushi — all free for Dropbox employees. Many of the ingredients were locally sourced, and the kitchen even grew its own microgreens, aged its own meats and cheeses, made its own ice cream, and served its own wine.
Dropbox’s San Francisco headquarters itself had a state-of-the-art Equinox-like gym, a full coffee bar with freshly roasted beans, a karaoke studio, an arcade, a yoga and
room, and a regular slate of events — including happy hours, dessert hours, and wine tastings.
The perks reflected a company with its star once more on the rise after a period of cost cutting in 2016: “This was a super-exciting, hot company,” said Rishi Jaluria, an analyst at RBC. He added that Dropbox was one of the fastest cloud-software companies ever to reach a billion dollars in revenue.
The pandemic changed everything. In October 2020, Dropbox announced it would turn all of its offices into flexible, WeWork-like coworking spaces. Dropbox called the approach “virtual first,” saying that letting employees come and go from offices as they pleased was “the future of work.” The building housing Dropbox’s San Francisco headquarters sold last year for $1.08 billion.
While employees at many companies, including Apple and Amazon, have publicly agitated for this kind of flexibility, the decision to revamp the offices — including closing the Tuck Shop and cutting most of the other on-site perks — rankled a significant chunk of Dropbox’s workforce, insiders said.
“It’s emotional support for a lot of employees, in addition to access to good food,” a former Dropbox employee who left in late 2020 said of the Tuck Shop’s closure. “The removal, I think, had a psychological effect on people.”
Insider spoke with five former Dropbox employees, all of whom left within the past year, as well as one additional former employee who left toward the end of 2020. They asked not to be named out of concern for their future career prospects, but their identities are known to Insider.
Altogether, the former employees said, the closing of the Tuck Shop was emblematic of a radical change to Dropbox’s culture. Casual office get-togethers in the arcade or karaoke room became things of the past, undermining the openness and social connections that made Dropbox employees want to stick around.
To be sure, these employees didn’t leave because a canteen was closed. The former employees who spoke with Insider also cited the lack a clear product strategy and some high-profile executive departures that dragged down the mood among employees.
But many had chosen to work at Dropbox over other tech companies for the benefits of working from its offices. With virtual first, they felt like the rug had been pulled out from under them. Whereas in the past they might have stayed for the culture, now it had less pull on them, they said.
Those changes led them and many of their peers to ultimately seek the exits — especially in the current red-hot tech job market, where tech titans and hot startups are paying big bucks for talent. In mid-2021, the company circulated to some managers an internal projection anticipating that the combination of the shift to remote work and a more competitive labor market could result in employee turnover of as much as 50% for the year, a person with direct knowledge of the matter said.
Dropbox said its actual turnover rates in 2021 were “well below” that number and in-line with its peers. Dropbox had 2,760 employees by the end of 2020, the last time it publicly shared its head count with investors. The company is expected to provide an updated figure when it releases its full-year earnings report for 2021 on February 17.
“At Dropbox we pride ourselves on building a great place to work, and we’re committed to investing in our culture and talent to bring that to life,” a Dropbox spokesperson said in a statement. You can read its full statement below. “Despite the competitive talent environment that we, along with all of our peers, have experienced, our rate of hiring has increased.”
Dropbox insiders say remote work is a ‘veneer’ for cost cutting
Dropbox said it initially closed its offices because of public health and safety requirements, and its decision to go virtual first allowed for the flexibility to work remotely and have “meaningful in-person connection.” The company also said that “internal surveys show current employees value the flexibility this model offers.”
“Obviously the company wants to spin it really positively,” a former employee who left in 2021 told Insider about the shift to virtual first.
“It’s a really flexible way of working, but it’s not really as flexible as the company makes it seem because there are still people who enjoy going into the office. They took away that option with virtual first.”
The loss of office perks exacerbated other frustrations, the former employees said.
In March 2020, Dropbox temporarily paused its recruitment process amid the uncertainty of the early days of the pandemic, as Insider reported at the time.
Even after hiring resumed, in many cases over the past two years, the company stopped replacing employees who left, the former employers said. Its popular health-insurance plan, which had paid for 100% of premiums, was tweaked to require the payment of copays. The Dropbox spokesperson said the company offered a “highly subsidized, generous benefits plan,” and that the company sometimes chose not to backfill certain roles to reallocate resources elsewhere.
In January 2021, the company went through what sources described as a morale-crushing layoff of 11% of its workforce. Drew Houston, Dropbox’s CEO, said at the time that the layoffs were a necessary move to free up resources to reinvest in the company’s products and boost its “operational excellence” as it looked toward “its next stage of growth.”
At the same time, COO Olivia Nottebohm announced her departure from Dropbox, only about a year after joining from Google Cloud. A few months prior, in November 2020, CTO Bharat Mediratta had left after spending only a year in the role himself.
“I think it unsettled a lot of people,” one former employee who left in 2021 said of the layoffs. “It triggered a lot of people to start looking for positions. For the people who left on my team, they left for better jobs.”
The former employees said the executive departures reflected a larger strategic confusion at the company, and that the company reallocated resources away from its products for businesses, such as the Dropbox Paper word processor, in favor of searching for ways to goose growth in its core cloud-storage business.
“As all companies do, we continue to be thoughtful about investments in our product portfolio,” a Dropbox spokesperson said. The spokesperson added that Dropbox also invested in HelloSign and DocSend, two products it acquired through acquisitions in recent years.
The company’s stock growth has also stagnated over the past few years as it sees tougher competition from the likes of Microsoft, Box, and Google. That makes many employees’ equity-based compensation less valuable than they were at the time they joined.
The changes to Dropbox’s culture, and the consequences for the company, highlight the concerns that come with remote. In a remote-first world, Silicon Valley is grappling with new challenges around how to incentivize and retain talent, especially when the newfound push for remote work renders much of the traditional approach to pampering employees obsolete.
It also shows the difficult position in which the pandemic placed companies such as Dropbox: It closed its offices and embraced remote work as a necessity of the situation, but in so doing, it gave up much of what its employees felt set it apart from its peers in the tech industry.
A hot job market is hurting retention at Dropbox
Generally, former employees praised Dropbox’s culture, calling it the “best culture” they’d ever seen,” “the best days” of their lives, “pretty friendly,” and “laid-back.” The former employees said the culture was a big reason they stuck around for as long as they did, even amid the company’s previous stumbles.
But with the company seen internally as slashing perks to save cash, and the realization that their favorite office perks wouldn’t be there after the pandemic, the former employees said they wanted to take advantage of the red-hot talent market to find a better place to grow their careers and make more money. The former employees said that many of their Dropbox teammates now work at highly valued startups, including Figma and Notion.
Prominent examples include Nottebohm, the former COO who’s hiring from Google was a coup for Dropbox in February 2020 before she left a year later to become Notion’s chief revenue officer. Mediratta, Dropbox’s onetime CTO, is now an engineering fellow at the cryptocurrency exchange Coinbase. Additionally, in early 2020, CFO Ajay Vashee left and is now a general partner at IVP. And Yamini Rangan, the chief customer officer, left for HubSpot around the same time.
“Dropbox was one of those startups that had raised a lot of money,” a former employee said. “You have dreams of becoming a millionaire, and it’s still a good place to work. It was a great startup, but an IPO already happened at Dropbox. That’s why I left: to be part of a faster-growing nonpublic company. That’s probably true of a lot of people.”
Below is Dropbox’s full statement:
“At Dropbox we pride ourselves on building a great place to work, and we’re committed to investing in our culture and talent to bring that to life. Despite the competitive talent environment that we, along with all of our peers, have experienced, our rate of hiring has increased. In fact, over the last two years, we’ve found that our Virtual First operating model has contributed to positive trends in hiring across all of our teams, and internal surveys show current employees value the flexibility this model offers. We’ve seen a 126% increase in offer accepts YoY (2020 vs 2021), the number of candidates per open role nearly double, and an uptick in ‘boomerangs’ (employees who leave Dropbox and then return within a year), which are at an all-time high. In addition, a majority of candidates expressly cite Virtual First as a significant draw when applying for roles at Dropbox.“
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