Houston co-founded Dropbox in 2007 after developing the idea while waiting for a bus in Boston. He recruited Arash Ferdowski to help build Dropbox, which was a late entrant to the competitive online backup and storage market. Dropbox took a unique approach by storing files locally on users' devices and updating the cloud in the background. In 2008, Dropbox received $1.2 million in funding from Y Combinator. By 2012, analysts estimated Dropbox had millions of paying customers and was generating $120-240 million in annual revenue. Recommendations included segmenting Dropbox's diverse user base by creating a "professional" version or separate product for small/medium businesses to drive future growth.