Drew Houston founded Dropbox nearly two decades ago at age 24, eventually becoming 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 43, Houston is ready to do something else. He's informing staffers on Tuesday that he'll be transitioning into an executive chairman role after an initial period sharing the co-CEO title with Ashraf Alkarmi, who is being promoted from product chief. Alkarmi will eventually take over the top job on his own.

By almost any measure, Houston has had a great run at Dropbox, helping pioneer the cloud storage market, competing head-to-head with Google and Apple and building a net worth of more than $2 billion, thanks to substantial ownership in his company. But in the land of outsized expectations, Houston has overseen a company that peaked too soon and never became a generation-defining brand.

Dropbox's current market cap of just over $6 billion is down by half from the high price on its first day of trading in 2018, and is below the $10 billion valuation it was ascribed by private market investors in 2014. Meanwhile, Airbnb, another early breakout hit from Y Combinator, has a market cap of close to $80 billion, and CEO Brian Chesky is credited with upending the hospitality industry.

Houston, who created Dropbox due to a "personal frustration" with constantly losing USB sticks when he was in college at the Massachusetts Institute of Technology, brushed off the Airbnb comparison.

"I think my 18-year-old self would be high-fiving me," Houston told CNBC in an exclusive interview, noting that Dropbox is "something that a percentage 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 over the past two years and declined slightly in 2025.

The company's perpetual challenge has been to distinguish itself from the swarm of competition, which includes Apple and Google as well as Amazon and Microsoft. Then there's longtime rival Box, which is still run by founder Aaron Levie and faces similar obstacles. Box is valued at just over $3.5 billion.

The latest hurdle for Dropbox, and the whole category of subscription software, is artificial intelligence, which has swept across the tech industry over the past three-plus years. The software space has been hammered due to concerns that foundation models from OpenAI and Anthropic will enable simpler tools that displace existing products.

Dropbox shares have held up better than many in the enterprise space. The stock is down less than 5% in the past year, while companies like Monday.com, HubSpot and Asana have lost more than 60% of their value.

"Whenever there's a new technology, people extrapolate very quickly," Houston said. They make assumptions that may be "directionally correct" but take years or even decades longer to play out than they predict.

Regarding "this concept of SaaS Apocalypse or whatever," Houston said he's "never met a Dropbox customer who's like, 'I'm just using so much ChatGPT I'm going to cancel my Dropbox subscription.'"

John Lovelock, an analyst at Gartner, sees parallels between the current AI era and the early days of cloud computing, when companies like Salesforce ballooned at the expense of legacy vendors like Oracle and SAP. The traditional players didn't collapse but saw growth slow as they tried to pivot to the cloud, despite businesses spending more on technology.

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

"AI is going to bring more value, therefore there's going to be more money spent," Lovelock said. "Where everybody seems to get very excited is who's going to make that money and that, in some ways, is the unanswerable question right now."

Analysts at Monness, Crespi, Hardt & Co. wrote in a report earlier this month after earnings that Dropbox is "making progress," highlighting its AI-powered Dash feature that customers can use to more easily search and interact with documents and messages across third-party apps. The analysts, who have the equivalent of a hold rating on the stock, said the AI opportunity and the company's valuation are two reasons that "value investors may be drawn to Dropbox."

Dash lets users quickly query and manipulate content that goes beyond text and into video and audio.   Houston said advancements in AI models mean that "suddenly we can build the version of this that I would have loved to build 10 years ago."

Houston now plans on building something in AI, just not at Dropbox.

"I'm not going to be racing sailboats," said Houston, who's also a board member at Meta, joining in 2020.

Houston said he wants to do something entrepreneurial in AI because "there's never been a more exciting period to be building things."

"It's all cliche, right?" Houston said. "AI is reshaping every aspect of how we live, and I'm sure that I'll have no shortage of ideas and stuff to work on."

Along with Houston's planned move, Dropbox said on Tuesday that Mike Torres is joining the company from Google as chief product officer in July. Torres is currently vice president of product for Google's Chrome.

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

"Part of me has always thought, oh yeah, I'll be the CEO of Dropbox until my last gasp of my career," he said. "There's never a perfect time, there was no part of me where I was like, 'oh, this date is the date where it's going to happen.'"

Since Alkarmi joined Dropbox from Vimeo in late 2024, the company has "become a lot more responsive to our customers and is taking bigger swings on innovation," Houston said.

"I trust the right leader," he said. "The company's in the right place."

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