Aaron Levie, Box co-founder and CEO
The first thing you notice about the 28 year-old, multi-millionaire, serial entrepreneur Aaron Levie, is his shoes. Considering that the firm he co-founded is almost exclusively targeting enterprises, rocking up to his own conference in red trainers – albeit paired with a sharp suit – is a brave move.
Levie may only be 28, but he’s clearly got more than just youthful energy. Arriving at a London user conference for the firm he co-founded, Box, he joked that he had "taken all sorts of pills" to stay awake after a long flight. Curiously, Levie doesn’t eat a thing during an extended press luncheon, and drinks only a few sips of water. This is not out of character: Levie is known to eat only at dinner time, and his sleeping patterns are said to be just as unusual: he usually works through until 3am, and gets up to start another busy day at 10 the next morning.
The other thing you notice about Levie is that he seems to be existing at about twice the speed of us mere mortals. He is constantly fidgeting, talks twice as fast as most people and at about twice the volume, too. But he is anything but arrogant or precocious: he apologises for arriving ten minutes late, apologises if he is too tired to make sense, takes the time to say a proper hello and welcome to each and every member of the press, and comes with an easy, self-deprecating sense of humour.
And so it starts
Aaron Winsor Levie grew up in Seattle and then went to the Marshall School of Business at the University of California. By this time he’d already launched a number of small web companies, the first, he says, when he was just 12. He didn’t bother finishing his studies though, because he had a rather good idea for another company by 2005. Turns out he was on the money.
He’d been doing a project for his studies on data storage, and realised there was an opportunity to come up with a simpler, more ubiquitous approach to file and data storage. He gave up his studies and founded a company, first called Box.net, with his pal and now Box CFO, Dylan Smith. This was in 2005. But while a hosted storage service idea was certainly prescient, they didn’t get it completely right first time. They had focused on consumers, which offered relatively skinny margins and a competitive environment that was going to turn into a race to the bottom: it was all about who offered the most free storage and then the lowest cost per megabyte after that. And the firm was competing with brand names like Yahoo.
But with the writing on the wall, Levie and Smith changed lanes and started to focus on the enterprise space instead. Box was born again, becoming the first hosted storage and collaboration firm focused on the enterprise space. This was 2007. Fast forward to today and 92% of the Fortune 500 use Box to collaborate, access and their share content across multiple platforms including Android, BlackBerry, iOS and Windows. Box has more than 14 million users around the world, including 140,000 active businesses. Though privately held and so not subject to reporting requirements, it’s thought the company made about $60m revenue in 2012, up 150% from a year earlier.
As for Levie, he was named one of Fast Company’s Generation Flux Leaders. Fast Company also placed Aaron on their Most Creative People in Business list for 2011. Inc. Magazine called Aaron one of the Top 30 Entrepreneurs Under 30. He’s received numerous other honours and accolades, while Box itself was one of the San Francisco Business Journal’s Fastest Growing Private Companies in 2010 and 2011. The company was also named a leader in the report "Forrester Wave: Strategies of Online Collaboration Software Vendors, Q3 2012."
In Gartner’s "MarketScope for Enterprise File Synchronization and Sharing" report published this February, Box was one of only three vendors rated ‘strong positive’, out of 11 – the others being Citrix and Accelion. Gartner said, "Box combines simplicity and usability with enterprise-specific features."
So what does Levie himself put the firm’s success down to? "We’re benefiting from the confluence of a lot of trends that basically support our business model," he tells me. "That’s how we grew revenue around 150% last year."
But Levie doesn’t just want to offer file hosting. He wants to build a broader platform that third party application developers and ISVs can use to build additional capabilities and apps on top of. "One of the things that we’re seeing, is that you’re starting to see an enterprise app economy," he explains. "This is very obvious in the consumer space where you have things like Angry Birds and all of the mobile games that make tons of money. We haven’t really seen the same kind of volumes in the enterprise before. Our view is that for customers we can build channels and avenues for developers to reach businesses globally. You’ll see more around this throughout the year – we’ll be introducing some optimisation programmes for third-party developers and ISVs.
"We want to make sure there’s a really great ecosystem that they can take part in. The only real way you know you have a platform is if there is an economy around it where people can make money by being able to sell to enterprises. We have a pharmaceutical customer where their entire use-case for the use of Box was driven by using another application that happened to store data in Box. That’s a way that we can go and address different kinds of markets," Levie says.
"A big part of our expansion, particularly in Europe, is around alliance partners, and that’s everything from how do we get distributed, also how do we get implemented and how do we make sure we can be integrated with the systems that customers already have. So we’re talking to all of the leading entities that you’d expect, all the way from Accenture and Cap Gemini to the more niche consulting firms like Appirio," he adds.
But the firm is not without competition, and despite its fast growth it’s also burned through a lot of venture capital money: around $300m to be precise. "I’ve done all of the series," Levie confesses, referring to the fact the last round was a series ‘E’. Does it get harder and harder to keep raising money? "No, actually what’s funny is that our hardest round to raise was $80,000 and that was our ‘C’ round," he says.
The companies with deep enough pockets to buys Box would be the likes of EMC, IBM, or Oracle. But would those same companies not be cannibalising their own on-premise storage and collaboration products if they were to buy Box? "They have to make that jump," says Levie. "I think they’re going to be forced to do it. We’ve already seen some acquisitions in the space. EMC bought a product called Syncplicity." Is he worried about the competition? "I’m always worrying," he says. "But I think they’re like Band-Aid solutions, not solutions that act as a real platform like Box."
Is an IPO more likely than a trade sale? "Our goal is to build an independent company, and so the most likely outcome is an IPO," Levie tells me. With reports of revenue around the $70-$100m mark and rapid growth, how early could that be? "We’re talking quarters, not years," is all he will say.
Of course, while cloud is brilliant for getting content onto all sorts of devices and so making access pretty ubiquitous, there are times when cloud is less desirable. A lot of data is still inside the firewall, and box has limited ability to tap into this, unlike rival Egnyte, which can hook into repositories on a storage area network and then synch to the cloud for remote access.
But Box isn’t resting on its laurels either. It recently announced that it will bring the Box experience and its suite of collaboration and management features to other leading enterprise applications, with a new HTML5-based embeddable framework, called Box Embed. By extending Box to other cloud services, as well as software developed in house by Box customers, the new technology provides enterprises with a secure, central content layer across all of the applications they use to power their businesses. Ten partners have committed their support for deeper technology integrations with Box to deliver Box Embed, including Concur, Cornerstone OnDemand, DocuSign, Eloqua, FuzeBox, Jive, NetSuite, Oracle, SugarCRM and Zendesk.
Besides, Box is clearly doing something right. An IPO is widely anticipated either this or early next year – those VCs will be wanting a return on that $300m some time soon (by comparison, Egnyte has only raised around $30m in VC funding). All in all, Levie and Dylan’s rise to fame has been startlingly fast and clearly well deserved given his late-night work ethic.
But of course, sometimes founders, especially young founders like Levie, step aside at some stage to bring in a CEO that has more experience of running a larger company, and possibly of taking a company public. Does Levie entertain such thoughts? "You mean like an Andrew Mason moment?" Levie jokes. Mason was the founder and CEO of Groupon who was ultimately fired by his own board after disappointing results.
"I haven’t been back to America in seven days so anything could have happened," Levie continues. "I’m probably a little bit different to some of the technical people you may be used to, I’m actually a product and business-oriented person. I’ve been doing start-ups and things since I was 12. So while this is unexplored territory in terms of the size of the organisation, I’ve always been pretty interested in business.
"I think the only way you build an organisation of this scale is by hiring good people so that’s really the answer to these kind of situations," he tells me. "Our COO was a pretty big GM at Intuit. Whitney Bouck was the GM at Documentum and CMO of EMC’s information group. We have Sam Schillace, VP of engineering, who is the creator of Google Docs. So it’s really through the assembly of a world class team that allows us to keep scaling and allows me personally to maintain my position and keep scaling. So far it’s gone pretty well. But I’ll let you know if that changes when I get back to the US!"