The CEO of Dropbox explains the one thing that's worse than having your startup fail: becoming a 'zombie startup'

REUTERS/Beck Diefenbach

Dropbox CEO Drew Houston.

• At Business Insider's Ignition conference, Dropbox CEO Drew Houston explained the one thing that's even worse than a failing startup: a "zombie startup."
• A zombie startup is a company that's neither "succeeding nor dying."
• Houston said focusing on growth is the best way to avoid "zombie mode."

Turns out, there might be one thing even worse than a startup that's failing: a "zombie startup."

In a conversation with Business Insider's editor-in-chief, Alyson Shontell, and Y Combinator's Paul Graham at Business Insider's Ignition conference in New York on Monday, Dropbox CEO Drew Houston described how having a "zombie startup" can sometimes be even worse than heading up a company that's failing. 

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"I felt like in my first company which I bootstrapped, it's very easy to get into this 'zombie mode,' where your startup is neither truly succeeding nor dying," Houston said. "This is actually worse than failing."

Read more: The rise of Dropbox CEO Drew Houston, who just made the Forbes 400 after taking his company public

For many startups, growth is often one of the surest metrics of measuring a company's success early on, and Houston said that one way to avoid "zombie mode" is to keep that focus on growth, even as the company scales.

"You can't fake growth," Houston said. "[Growth] is just a measure of: do you have customers? Are they happy?"

You can watch the full conversation here: 

Ignition is Business Insider's flagship conference featuring the biggest names in business, tech, and media. You can check out the agenda and who to expect right here.