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Box: An Enterprising Cloud Company

Matt Harvey, Stanford University February 4, 2011

Aaron Levie is a young man with some very big ideas on improving how enterprises share and work with information. Levie started out of his college dorm room, upon realizing fellow students shared his need for cheap and accessible online storage. Along with identifying this pain point, he also recognized major changes occurring in business and computing. With data storage efficiency continuing to improve at a rapid pace, and greater calls to enhance data access for remote workforces, Levie saw a serious opportunity he needed to jump on before someone else did. In this video from Levie’s visit to the ETL speaker series, he discusses the decision to make the leap.

Constantly Changing Business Models

According to Levie, Box’s business model would go through nearly constant changes in the early days. The young company examined numerous ways to build revenue and grow their customer base. At the company’s inception, users were charged for online space, a model that had some initial success. Box also considered sponsorship agreements with media companies, an idea that was met with little interest. The company even considered licensing the technology, allowing partners to rebrand the service as a white-label product. But Levie and his team were also focused on finding ways to reduce friction and increase product adoption. The successful answer, as Levie explains in the following video, was the introduction of a “freemium” model.

Deciding to Focus on the Enterprise

Once Box saw huge increases in their customer base, the company needed to drill down on where they could best compete in the burgeoning “cloud” computing space. Looking at the major companies that were entering the space, or would have the resources to do so at any moment, caused a question to arise. Would Box have better chances of success staying as a consumer offering, or becoming a targeted service for the enterprise market? Box settled on enterprise, based on a number of factors that Levie shares in the video below. The most interesting of these was Box discovering they could out innovate much larger competitors by releasing product iterations at a much faster rate than industry-standard three-year product cycles.

Compete Through Product Iteration

Levie believes the success of a startup is directly tied to an organization’s ability to try many things on the market, and to quickly shut down the ones that don’t work. Beyond this concept of “failing fast,” Levie believes startups need to find ways to compete that are impossible for bigger competitors to accomplish. In this space, for a company such as Microsoft, they would need to cannibalize multiple revenue streams to better compete, according to Levie. Of course, this option may not be possible for a large firm, so Box can take advantage of this situation by maintaining focus on their product, and staying agile to respond to future threats. While the use of cloud computing continues to blossom across many industries, this agility may be Box’s most competitive advantage. In this video, Levie explains this competitive position.

Watch CEO Aaron Levie’s entire ETL seminar at eCorner.