How aaron levie and his childhood friends built a $2 billion business, without stabbing each other in the back — www.techrepublic

7/18/2014 How Aaron Levie and his childhood friends built a $2 billion business, without stabbing each other in the back— www.techrepublic.com
https://www.readability.com/articles/o2ghlshh 1/30
techrepublic.com
How Aaron Levie and his
childhood friends built a $2
billion business, without stabbing
each other in the back
by Rachel King • 28 min read • original
"Water," says Aaron Levie.
It's 11:00 AM on a bright October morning in Silicon Valley.
Levie, the bright-eyed young chief executive with patches of grey hair,
has strolled into a third-floor conference room at the headquarters of
Box, the enterprise software company he co-founded.
He usually arrives in the office between 11:00 and 11:30 AM, which
might raise eyebrows, but then again he spends most of the day on his
feet in his red Converse high-tops, running between meetings with
investors and employees. His head usually doesn't hit the pillow until
3:00 AM. As such, his first request, "water," might seem even more
surprising. Coffee would be the more obvious choice.
Box has grown rapidly since it was established, from offering a simple
cloud storage service to hosting an all-inclusive enterprise platform
for workplace collaboration to content management and editing. The
Los Altos, California-based business has inked deals to integrate its
portfolio with some of the biggest brands in tech including Google,
Salesforce.com, and NetSuite.

Following up the completion of its Series F round of venture capital
fundraising, which brought in another $100 million at the end of 2013,
Box is now valued at $2 billion and is one of the most highly
anticipated tech IPOs of the year.
Along with growing its public profile, financial reserves, and services
(both developed internally and through a few calculated acquisitions),
Box's workforce has grown to nearly 1,000 strong, primarily in
Northern California, but it’s increasing internationally as well.
However, just like other startups, it wasn't always that way. Almost a
decade ago, Levie's brainchild took off with just four friends doing all
the work.
Growing up entrepreneurs
Every startup has a story. Too often, as demonstrated with Facebook,
Twitter, and Snapchat, those origin stories are crammed with ego and
infighting over money and control. In contrast, the history of Box
seems refreshingly straightforward.
"I don't even remember life before Box, so that's going to be hard to talk
about," Levie told me during our first conversation in that conference
room at Box's headquarters in Los Altos, a town just south of Palo Alto
—as close as one can get to the beating heart and financial epicenter of
the Valley.
"I've been doing this as far as my memory goes back. I assume that I
was born and just got into the cloud storage industry right after that
moment. That's about where my memory trails off."

Box as a platform and company was born in 2005, but even that was
well after the establishment of the friendship between Levie and his
co-founder and Box's chief financial officer, Dylan Smith.
Dylan Smith (left) and Aaron Levie founded Box during college.
Image: Josh Miller/CNET
Smith and Levie met as classmates at Islander Middle School in
Mercer Island, Washington, a suburb southeast of Seattle, and then
went to Mercer Island High School together.
"Even back then he started getting me interested in entrepreneurship,"
Smith recalled. "He was much more interested in technology [than
business] back then."
Two other key members of the Box team were also childhood friends.
Jeff Queisser, currently vice president of Box's technical operations,
met Levie when they were in the fourth and fifth grades, respectively,
as neighbors. By high school, Queisser recalled that the two were
starting "kinda crazy businesses."
"[Levie] was a magician, and I was very much a hard core nerd and
doing programming," Queisser laughed.
Sam Ghods, now vice president of technology at Box, joined the group
in the 10th grade when his family relocated from Illinois to Mercer
Island. The same year in school, Ghods recalled that he and Queisser

became friends on the bus to school, eventually hanging out more
frequently with Smith and Levie as well and getting involved in
various business schemes.
In high school, Levie's parents' hot tub served as the discussion forum.
Jeff Queisser, Box's vice president of technical operations, met Levie in
grade school.
"We would get a call at about 12:30, and it would be Aaron, 'What do
you think about this? I think this could be absolutely insane. Like,
come over right now. I got towels, just bring shorts, come over,'"
Queisser remembers. "This would be at 12:30 and by like 12:40, we
were in his hot tub just iterating ideas."
And while he built a lot of websites in high school, Levie doesn't brag
about having a strong technical background, admitting, "They weren't
very good websites."
One example was a search engine dubbed Zizap, which Levie
facetiously peddled as "the world's fastest search engine if you have
never been to Google." Another project was Fastest.com, a website that
let people buy and sell their homes online. Levie notes sarcastically
that it "made sense as a high school senior to launch that company."
The origins of Box
These early rumblings of entrepreneurship would soon pay dividends.
Levie enrolled at the University of Southern California in 2003 to
study business, which is where the idea that was to become Box began

to develop.
"It's not like a lightning bolt that hits you in the head, and all of a
sudden you just get so obsessed with storing files online. It was a
series of factors," he explained.
Sam Ghods, Box's vice president of technology, moved to the area in
10th grade.
The first piece of the puzzle came from the basic difficulty of getting
work done: He and his fellow students were working from lots of
computers, collaborating on projects, and accessing files from
different places, including libraries, classrooms, and dorm rooms.
"It felt unbelievably kind of painful and taxing to share data across
those different systems and with other people. It seemed like there
should be a simpler solution," Levie remarked.
A business school project in which students were asked to evaluate a
particular industry added another piece to the puzzle. Levie chose the
nascent online storage industry, and wrote a paper on flaws with
existing businesses in the market and what one could do to build a
better business effectively. It didn't take long before he realized the
massive potential.
"It was very obvious that there should be a technology category that
solved this problem," he said.
Getting his school friend Smith involved was an important early step.

"We all grew up together."
Aaron Levie
"When we were talking about just the things that we were doing and
the stuff we were working on, Box came up," Levie described. "It's very,
very early in the process, and he decided to join on board as the other
half of the business and product side. He handled the finance and
some of the early marketing stuff. That was how we started."
There might also have been another reason: "I gave him some really
bad tips that lost him some money, so I felt indebted," Levie joked.
After arriving at Duke University in Durham, North Carolina, Smith
had realized that business, and entrepreneurship specifically, was the
route he wanted to pursue.
"Aaron and I were always bouncing ideas off of each other just because
we were generating them a mile a minute," Smith said. "It was always,
'Well that's interesting, but I'm not interested in this space or why
wouldn't this company just go crush that?' or whatever else."
Despite going to college on opposite sides of the country, Levie and
Smith kept in touch frequently, primarily via email and instant
messenger. The two would meet up in person from time-to-time back
in Seattle during school breaks.
"I probably spent more time talking with Aaron than I did with my
family at that stage, so we stayed in pretty close contact when we went
off to school," Smith noted.
Box was the first time both of them were really excited about the same
idea. The two combined their intellectual as well as financial
resources, using funds earned from previous projects they had each

worked on to grow Box.
Building Box: the early years
Development for Box, then Box.net, started at the end of 2004, but
really got off the ground and went online in 2005 during their
sophomore years of college.
Levie and Smith went back to Washington that summer to build the
platform, and the company, from the Smith family’s attic. But Smith
was reluctant to dive in head first, returning to Duke — at least for the
following fall semester.
For the first version of Box, Levie wrote the front-end design and
coded out the front-end of the application, eventually drawing in some
contract work to fiddle with more back-end pieces and put servers
online.
Levie noted that this was before Amazon Web Services, "so we had a
guy in Texas that was managing our servers." Levie also labored at
bringing his high school friends Ghods and Queisser on board to run
the engineering side. Acknowledging they were "a bit reluctant," Levie
got them to join within a year.
The year after Levie and Smith packed up and shipped off to USC and
Duke, respectively, Queisser enrolled at Western Washington
University. Ghods followed Levie to USC to study engineering.
Queisser dropped out of school after a year and a half after Levie
convinced him to join in on launching Box.
"We paid ourselves essentially nothing, but we were doing commune-
style living. It came with a bed. It came with Aaron's mom's crappy
minivan, which could be shared for transportation. It covered most

things. And then it was mostly pizza for the rest of the week," Queisser
remembers.
"It was very obvious that there should be a technology category that
solved this problem.
Aaron Levie
Ghods was still feeding his interest in business and dabbling with a
few startups on the side during his first two years at USC. In February
2005, Levie approached Ghods about joining Box. By that summer,
Ghods dropped out of USC to join the growing Box crew.
However, Box had yet to clearly define its audience yet. Was it going to
serve consumers, businesses, or suffer the pitfall of trying to serve
everyone at once?
"At that time, it was very unclear what was going to happen," Ghods
said, listing all of the questions filling his head, such as "Could we
make a huge business out of consumer file sharing? Were we going to
go sell to soccer teams, conferences, and different types of
configurations?"
"Business wasn't really on the road map because none of us had ever
worked in a business. So we didn't realize that this opportunity
existed," Ghods admitted. "It wasn't until we started selling to
businesses that businesses were calling us and saying, 'We're not
paying you nearly enough for what value you're providing. This is
great!' So we started to catch on that there's this entire enterprise
market that is very available for the taking."
Levie and his team reached out to entrepreneur Mark Cuban, who
became Box's first high-profile investor (there is even a conference
room named after him on the first floor of Box's headquarters). Smith

characterized Cuban's $350,000 investment in 2005 as happening
"almost accidentally," being that they weren't trying to raise money yet
— at least not that much.
With that money, Box was finally able to get real marketing
momentum going by October 2005 as well as more engineers. But even
at the beginning of December 2005, Smith still seemed like he was on
the fence about where all this was going.
Less than 24 hours before Smith was going to board a plane back to
Seattle for winter break, a phone call with Levie turned out to be
decisive for both of them.
"Aaron and I were talking about it saying, 'Look, this is a once in a
lifetime opportunity, things are going incredibly well. We're skipping
half our classes anyway to work on Box. Why don't we just see what
we can do? Leave school, and do this thing, full time."
Smith added it was a "a pretty quick and easy conversation because it
felt like the right thing for both of us."
Smith packed all of his stuff into boxes, went to FedEx, and shipped it
all back home to the West Coast. Smith talked with his parents and the
university dean about his decision after the fact.
"Fortunately, they were all supportive," he continued.
Over the cliff
On a blustery afternoon in November 2013, I had the chance to catch
up with Smith and Levie and witness their camaraderie in person.
Instead of the icy stereotype in which co-founders of the most
successful startups are usually not on speaking terms outside the

office (or maybe even in the office), Smith and Levie's friendship looks
stronger than ever, with Levie comparing the decision to quit school to
jumping off a cliff.
Smith added, "It was a rational jump that we did. We saw a sort of
pattern below us."
But at the time, success was by no means certain.
"We had a lot of unsuccessful pitches in Seattle in the venture capital
community up there, and most of them turned us down," Levie
recalled. Part of this was down to timing.
"If you think about it, Seattle had gone through the bubble just like
everybody else, but they hadn't come back in the same way the Valley
had," Levie explained. "The Valley was experiencing Facebook and
YouTube and some very successful early companies. Seattle didn't
have it. People didn't rely on the same sense that there was going to be
this re-emergence and renaissance again on the Internet."
The youthfulness of the two didn't really help, either, as Smith noted,
"I think it was just a much more traditional approach to venture
capital and much more of an old school approach. A couple of 19- and
20-year-olds starting a business isn't that old school."
Many startup stories, going all the way back to the early days of Apple
and Microsoft, typically include a parent's garage. So it's fitting that
Smith and Levie first set up shop in 2005 in Berkeley, California in a
garage converted into a cottage owned by Levie's uncle near the Ashby
BART metro station.
"We tried to attack every sort of conventional way that people
thought of their information, and that's what Box sort of became."
Aaron Levie

Queisser and Ghods eventually moved in, and the four of them lived
and worked there for roughly 10 months before moving down to Palo
Alto.
The garage-turned-cottage housed a central living area with a bedroom
and small kitchen, the latter of which Queisser simply described as
"always really not in great shape."
Then there was a second cottage on the property, mainly used for
sleeping. The living room floor plan consisted of four desks pushed up
against each of the walls. The four of them would be working full-time
throughout most of the day with headphones on, communicating
vocally rarely but rather sticking with instant messenger -- even
though they were less than two feet away from each other at all times.
Queisser remembers, "This was like camp. It was the most fun thing
ever. I got to full time, just do the thing I really want to do. All day
coding, then at night not just being a developer, a software engineer,
then also being heavily involved in the strategy and the future of the
company. It was really amazing.”
"It was just a crazy roll of the dice that you had Aaron as the business
guy, the overall strategy guy. And you had Dylan as the finance,
numbers, insurance, HR, and legal guy. And then you had myself on
tech ops, and you had Sam on engineering. So it all clicked pretty
early."
After Berkeley, the Box team moved operations across the Bay into
another cottage, this time in Palo Alto at 1895 El Camino Real,
described by the founding team as a larger house with a bedroom on
the second floor, which included a loft, as well as two garages.

Ghods said, "Our first thought seeing the garages was, 'Oh, we could
live in the garages, and we could let the main space be for work.'"
Queisser and Levie shared one garage, and Ghods got one for himself.
Smith nabbed the actual bedroom.
The living room on the second floor served as the "boardroom,"
decorated with Ikea tables and sometimes hosting senior executives
from Dell, Hewlett-Packard, and other major companies.
"What happened is these meetings, of course, would also be at 9:00
AM, so they'd be meeting and then we'd wake up around then and
think, 'Gee, we really have to use the bathroom.' But the bathroom is
down there. You have this conflict of wanting to wait it out, but if you
just walked downstairs it was very awkward because it was very clear
we were up there the whole time, which nobody knew," Queisser said.
Consumers, freemium, and the enterprise
The challenge at the time was to persuade customers to choose online
storage over a USB stick in their pocket. "We had to convince people
that there were actually benefits to having your information securely
stored online, which is that you could share it," Levie said. "You could
lose the USB stick and go to any computer and find a file. Now it's kind
of super obvious."
Within a few months of launching, Box netted a few million users,
including thousands who paid for Box services.
But by March 2006, Box wasn't growing at a rate that its leaders
thought the platform could be competitive without a free plan. Thus,
the option of 1 GB of free space was introduced.

The common room at headquarters sports Box blue.
Image: Box
"That's when we decided to launch that 'freemium' service, and that
was really pretty unheard of at the time. That was just not a
distribution model that anyone was really familiar with," Smith
recalled. "But it worked incredibly well, being able to rise above the
noise and attract a lot users to the platform really quickly."
"It was that sort of thing that was an innovation at that point," Levie
asserted. "All of the other services had this concept of you would email
a one-time sort of link to people to your file. We just said, 'Why don't
you just have a URL that you can share with anyone at any time that
stays available as long as you want?' It was just these basic sorts of
things of questioning the conventional wisdom of how you should be
able to store and work with your files. We tried to attack every sort of
conventional way that people thought of their information, and that's
what Box sort of became."
Box had already raised a small amount of capital from angel investors
in Seattle, but Smith characterized Cuban as Box's first "real angel
investor." Draper Fisher Jurvetson (DFJ) soon joined as the first major
Silicon Valley-based venture capital firm to invest, leading Box's
Series A round, pulling in $1.5 million by the time it was completed in
October 2006.
Gradually, businesses became an important part of the customer
strategy, as Levie already saw the writing on the wall that tech giants
such as Google and Apple were going to be able to offer storage to

consumers at a much lower cost than Box could as an independent
startup.
"Yet, on the opposite end of the spectrum the competition was more
like Microsoft, IBM, and Oracle," Levie argued. "We felt that they were
companies that were too slow, and they didn't have the DNA to build
amazing software. And, there were massive budgets that enterprises
were using to spend on technology."
The initial corporate clientele included Crocs, Procter & Gamble, and
Sony. But, Box was still going through growing pains from honing its
vision from a consumer company to an explicitly enterprise software
company.
"That was harder for investors to credibly buy into, given our
inexperience and given how early we were," Smith said. "That was
really hard, when they understood and grokked to the vision, but it
wasn't something that you could believe would actually work because
of the skills and resources that we had at the time."
Mamoon Hamid, who at that time was just launching his career in
venture capital, recalled that he first learned about Box in 2006,
primarily for "consumer file sharing in the cloud." It wasn't until the
following year that he started looking to actively invest.
Getting into the enterprise tech market at relatively young ages, both
Levie and Hamid had something to prove, indirectly forging a
professional bond.
Hamid clearly remembers his first meeting with Levie in a conference
room at the offices of U.S. Venture Partners on Sand Hill Road in 2007.

"I remember specifically because within the first few minutes, I
wanted to invest with him," Hamid recalled, adding he near-instantly
thought, ‘This guy is a winner, and he knows what he's talking about.’
It made too much sense. This level of clarity of thought from a 21-one-
year-old was like gold."
Hamid's first memo from that meeting read: "I really like Aaron Levie.
He has terrific acumen and a great sense of product."
But much like Levie and Smith, Hamid had his work cut out for him in
proving to his bosses that Box was worth the investment. For starters,
Hamid noted that enterprise software like this wasn't on the radar yet.
Additionally, Hamid jokingly lamented that Box actually had
"revenue" back in 2007, which he explained wasn't a "great" word
during the peak of the Web 2.0 era.
But perhaps most importantly, Box wasn't alone in what it wanted to
do.
"There were 50 other companies doing something similar to Box.
That's not hyperbole."
Mamoon Hamid
"There were 50 other companies doing something similar to Box.
That's not hyperbole," Hamid asserted. As a junior member at U.S.
Venture Partners, it was Hamid's responsibility to prove Box wasn't
just one out of 50 companies. Hamid conducted the arduous task of
going through each company and comparing them feature-by-feature,
testing 49 products with due diligence. Going through this process
only deepened Hamid's confidence in the company.

"I found most of the other companies didn't just have the product look
and feel," Hamid said. "I remember calling a few other companies, and
those guys would talk and think about photos and videos. Aaron had a
broader mindset. It's about all your content. Your work stuff, PDFs,
Excel files, the stuff you tote around on a USB stick for work."
Hamid admitted that Box had difficulty raising funds for about a year
and a half, offering the simple explanation that "2008 happened."
"I was the only one on Sand Hill Road to raise my hand," Hamid
remarked. He revealed that Levie even mulled over selling to another
private company.
In the end, words and statistics about revenue turned out to be a
saving grace.
"For me, it was a bunch of numbers. You can convince a bunch of VCs
with numbers," Hamid explained. "The churn was low. The revenue
was up. Talking to the customers, the sentiment was that this could
grow within their companies. There was a huge market with cloud-
based file sharing with both consumers but also enterprises."
That shift toward the enterprise also helped elevate Box above the
crowded startup field. Timing didn't hurt either.
In 2007, the consumer market was still the target at Box. But by 2008,
individuals were using Box's file storage and sharing services for
business. In 2009, groups started using Box products within their
companies. In 2010, Hamid said that "whole departments moved onto
Box," with entire businesses joining in more wholeheartedly in 2011. By
2012, the CIOs finally realized (or admitted) that hundreds of
employees were using Box, essentially forcing their hands to get
involved.

"In 2013, I think yes, Box is that company that provides those files and
folders. It has the potential to touch every single employee all over the
world," Hamid posited. He concluded that Box is now signing "seven-
figure deals" with large corporations worldwide.
Even years later, both Smith and Levie look back at jumping over the
Series B hurdle with humility.
"We've raised a few different rounds... and in each case we've been in a
pretty fortunate position of having that trajectory, and having really
good data as well as the forward-looking vision," Levie said.
Box brought in $6 million more when it closed the Series B round in
January 2008.
Levie points to the recession of 2008 as a significant turning point,
asserting that many businesses were looking at legacy vendors and re-
evaluating what they needed to grow. Levie added that Box was "very
fortunate in that scenario," while acknowledging that at the time such
choices weren't obvious given the challenges the country was facing.
"It turned out that all businesses still needed a way to store and share
their files," Levie stated. "What happened was during the recession
companies looked towards more efficient and more cost-effective and
lighter-weight solutions to solve their problems. Instead of signing up
for the big multi-million dollar, very slow, very cumbersome types of
software that they used to be spending money on. They actually went
to more efficient solutions."
Enter the iPhone and the iPad
An unexpected but major catalyst for Box was Apple's debut of the
iPhone in 2007, and its unveiling of the iPad in 2010.

"There's no device that truly captured our imagination of what would
be possible with your content until the iPhone."
Aaron Levie
"When you finally have a powerful device that was so separate from
your traditional technology model of your computer, and the computer
network that you work from, we sort of theorized that mobile was
going to be important just because it was just a term," Levie said.
"There's no device that truly captured our imagination of what would
be possible with your content until the iPhone. What the iPhone did
was it said 'Okay, I can finally be untethered from my computer, and I
want to be able to get to all of my information.'"
After the iPhone, all bets were off when it came to legacy technology.
"You had to have a new set of tools that could help you work with your
files and your information," Levie said. In regards to the iPad, he
further suggested that was the first time where a new device category
wasn't just a consumption tool but actually a tool on which people
would do work.
"The consumerization of IT is driven by consumer devices, but you
still have to have enterprise applications on those devices," Levie
explained. "What we found was the best mix was the iPad, the new
form factor that could let people do entirely new things in the
enterprise that weren't possible before. A doctor can pull up a medical
image, a construction worker can pull up the plans for the
construction site, and we realized they would need new types of
software to make that happen. That consumer grade software wasn't
going to be enough to allow them to really pull out the kinds of
workflows and business scenarios that they needed."
"What the iPad, and mobility in general, has done has really just
opened up an entirely new set of challenges and opportunities for

businesses."
Dylan Smith
Smith said the entire enterprise cloud services market would be "less
developed" without the iPad.
"What the iPad, and mobility in general, has done has really just
opened up an entirely new set of challenges and opportunities for
businesses," Smith declared. "It's not like, 'Oh, well SharePoint can do
this well enough, or my private servers do this well enough.' It literally
can't get the job done. You just can't extend that content outside of
your business onto an iPad."
Smith said it is here where Box has been able to solve a burning pain
point that CIOs across all industries are trying desperately to remedy.
Slowly but surely, there has been a noticeable shift toward more
willingness, even "excitement and energy," as Smith puts it, among
businesses in moving to the cloud. Smith maintained a somewhat
conservative analysis though, saying we're still in the early stages of
seeing adoption, and that there are still "always" going to be many
slower-moving IT departments and CIOs, especially when it comes to
regulated industries like healthcare and financial services.
Competitors plus partners
Regulated industries was an opportunity that Box seized upon much
faster than its competitors, large and small. Box started tackling
healthcare industry needs first, including becoming HIPAA-compliant
at the end of 2012.
"It's something that we wouldn't have thought of five years ago, that
this would be the use case for people using Box," Smith admitted. "But
we've been pretty intentional around going after that opportunity and

making sure that we're going down this list and doing everything that
we needed to do to be successful."
In covering government-mandated compliance certifications along
with integrating dozens of third-party healthcare software
applications, Box already has some high-profile medical organizations
as clients across the country. Stanford Hospital in Palo Alto rolled out
Box corporate accounts to 20,000 users. Box has since moved on to
providing similar services for legal firms and agencies. Beyond that,
Box executives remain tight-lipped about the next target.
"We have success in a ton of different industries. But most of them,
they're not as regulated, so we don't talk about them in the same way
that we talk about healthcare," Smith followed up, adding that Box has
a strong footprint across everything from high-tech to retail to media
and entertainment.
That doesn't mean the management team have grown too comfortable.
Success has also brought Box to the attention of a new set of powerful
rivals.
"We remain sort of paranoid, and as a startup, you never want to
assume you have won," Hamid advised, immediately singling out
Microsoft SharePoint as a competitor, or rather the "300-pound gorilla
in the room."
Famous for publicly jabbing at SharePoint, Levie said, "We talk to
Microsoft very actively [about] more ways to partner even though
we're going to be competing with them directly in some areas."
Smith has a different view about feeling pressure from Microsoft,
notably Office 365.

Screens at Box headquarters share data points with employees.
Image: Box
"We do think about Microsoft as really being the gorilla in the space
we're running into most often," Smith replied. "They're also a great
partner. We work really, really well with Microsoft and [are] always
having conversations about how to even deepen that relationship,
which is why it's such an interesting space."
"What Box is trying most to do is fulfill the promise of Microsoft
SharePoint," observed Frank Gillett, vice president and a principal
analyst at Forrester Research, highlighting Box's approach has always
been to offer a solution that’s simpler and easier-to-use. Gillett
acknowledged there is some overlap with Google Docs, but he insisted
there isn't a strong comparison there given that Box "comes from a
deeper place and focus on collaboration than Google Docs."
Looking at how long Box's strength will endure in the long run, Gillett
suggested a few different roadmaps, including the possibility of being
acquired by a larger enterprise software provider (perhaps even a
player at the level of an SAP or a Salesforce.com) after an IPO. He also
hinted that Box's current strategy of focusing on the enterprise, which
is arguably its biggest differentiator from the likes of Dropbox and
other growing cloud storage services, might not be enough.
"I do think Box needs to address the consumer in the long run. But for
now they're doubling down on enterprises," Gillett said. He continued
that the imaginary digital borders between enterprise and consumer
software will eventually evaporate. Gillett pointed toward another

growing software company, Evernote, as an example of a cloud
business that likely already has a steady handle on satisfying both
worlds.
Google arguably could instill fear in just about any company given its
seemingly limitless base of financial and intellectual wealth.
Remembering a scoop in The Wall Street Journal in 2007, Hamid
speculated that Google Drive was reportedly on track to be launched
then.
"It gave us pause for concern because Google can just eat your lunch,"
Hamid said plainly. Smith also recalled when Google was working on a
storage service around the same time Box held its Series A round,
remembering the project codename as "Platypus."
Timing might have proved to be on Box's side once again, because
Google Drive didn't emerge as the evolution of Google Docs until 2012.
Hamid also noted that Box works closely with Google Apps, describing
the relationship as possibly "the least competitive" and more
cooperative.
Setting Google aside, if Microsoft is the gorilla, then the elephant in the
room must be Dropbox. Hamid acknowledged that Dropbox is "close to
our heritage," albeit with a few differences.
Dropbox has largely been focused on the consumer market from the
beginning and is now delving deeper into the business world. While it
shares similar roots in consumer tech, Box's path has largely gone in
the other direction. Both companies have also benefitted greatly from
the emergence of smartphones and tablets and the technological
revolution those mediums have birthed. But Hamid broke down how
the strategies differ.

"Box was all about moving the files you need into the cloud and having
them available from any device," Hamid said. Dropbox's angle, he
argued, was syncing content. As for those other file storage startups in
the early days of 2007 and 2008, Hamid admitted he isn't even sure
which (if any) of those 49 companies still exist.
Constant vigilance
Despite plenty of glowing coverage of Box over the last few months
highlighting billion-dollar valuations and successful fundraising
rounds, Levie also remains vigilant. When asked about giants such as
Google and Salesforce.com as well as private software vendors
Evernote and Dropbox, Levie responded, "Every company you just
mentioned I can name a scenario of how they compete with us, how
they can become more competitive with us, and how we need to
become more competitive with them."
Yet at the same time, Levie replied that we're moving to a world that
will be fundamentally more heterogeneous, allowing for mixing and
matching of tools and capabilities.
Booths at Box headquarters are made for collaboration.
Image: Box
"I think we're just moving to a different type of ecosystem where you
compete aggressively on some dimension, and you differentiate
aggressively on some dimension," Levie explained.
"For us, it's combining security and simplicity to build a very unique
type of way of working with information."

A major common trend for software companies scaling its platform
and customer bases is to hold a conference of some sort, whether it be
for sales reps, developers, or both.
These days, Bay Area calendars are often booked up between the last
week of August through Thanksgiving with one-day summits to week-
long expos sponsored by the likes of everyone from tech news sites
such as TechCrunch to software and service providers like Evernote
and Oracle. Box held its first event of this kind in 2010 with the cloud-
friendly moniker Altitude, targeting IT executives and influencers.
The exponential growth of this now-annual occurrence (which has
been renamed BoxWorks) mimics the rapid scaling that Box has
experienced in the last three years. In 2011, the one-day summit packed
in just about 300 attendees into an oversized conference room
crowded with tables at the Hotel Nikko in San Francisco. Fast forward
to September 2013, BoxWorks has grown 10 times in size.
Approximately 3,000 attendees filled out the ballroom at the opening
keynote of the three-day powwow held at the Hilton Union Square.
"As soon as you get to a certain scale in the enterprise software world,
you have enough large customers that want to hear from both other
customers, as well as other Box employees, and see your vision,
roadmap, and strategy," Levie posited. "Then you wrap it all in a bunch
of great industry content around how do you innovate more in your
business, and how you develop better IT strategies. Then you put all
that together and you throw in a blink-182, and you have yourself a
customer conference. That's what we do."
While clarifying that BoxWorks is a "customer and developer event,"
Smith hinted that Box might be adding a specific developer event to
the mix as soon as this year.

"I think it has been an incredible experience," Smith said. "We
obviously continue to feel that we are still at the very start of a new
experience, and that is sort of ongoing. You constantly feel that no
matter what stage you get to, we are ready to continue on the journey."
Enterprise software that doesn't suck
Box currently employs roughly 180 engineers with another 60 to 70
people on technical operations. Box continues to incrementally move
toward embracing the concept of being both a platform and an
infrastructure. Queisser argued that the shift is going more toward a
"platform-oriented model," explaining this as something that can be
used internally, and then selling it as a standalone offering.
Neither Ghods nor Queisser would talk specifics as to which other
companies they might be challenging with this particular roadmap, but
Ghods said that Box could deliver a platform that is "super easy" for
developers to get started on.
"What we do is bring this strategy of enterprises, to have all of the
productivity and flexibility and velocity of consumer products and
organizations without paying the cost for the security and compliance
and all that stuff they need," Ghods asserted.
"You can call it enterprise software that doesn't suck," Queisser joked.
Ghods laughed along, "Yes, and so next we want to build an enterprise
platform that doesn't suck."
Then there is the increasing task of driving the business forward
overseas. Box has been steadily building out its footprint in Europe,
starting with a sales office in London followed by some roots being
planted in Berlin. The next scheduled stop is Asia, starting in Tokyo.

In the case of someone who grew up in a big enterprise software
company, Box chief operating officer Dan Levin touted that younger
hires help the senior management better understand what's going on
with the latest cutting edge stuff and how to think about the ways the
next generations of workers are going to behave.
"I think one of the things that people don't always appreciate about
Box is that we have all the trappings of sort of the sexy, young
company," Levin remarked during a lunch break interview at
BoxWorks 2013 in September. "We've got the slide in the lobby. We've
got people riding around on scooters."
Box is now a multinational company, and its London office embraces
local flavor.
Image: Box
Levin acknowledged that "culture is a very overused word," but he
stressed its importance as a key to success and attracting the right
talent among a highly-competitive pool of A-List brands constantly
clamoring and aiming to outbid each other for the best engineers and
developers. Levin also pointed out a common problem — especially for
the Valley — that hiring enough people is easy. It's hiring enough of the
right people, he argued, that's hard.
"It just boils down to the rules that we choose to adopt for how we're
going to interact with each other, how we're going to treat each other,"
Levin explained." Those people want to work in an environment that's
fun, that's stimulating, that's challenging, that's engaging."

But as Box gets bigger, it's finding itself trying to recruit the same
engineers and developers who are interviewing and receiving enticing
offers from the likes of Facebook and Twitter as well as other still
private but growing tech brands like Pinterest and Square, just to
name a few.
Box senior vice president of engineering Sam Schillace said that the
"best way" in recruiting against Google, for example, is a single word:
Microsoft.
"Basically just tell them, Google is turning into the next Microsoft. It's
becoming very bureaucratic," Schillace observed. "A lot of bright
people, a lot of interesting projects, a lot of good intent. But it's very big
and very heavy now. It's pleasant to be there in the sense of you get
paid well, and you get to eat well, and all that other stuff. It's not that
pleasant and satisfying to be there as an engineer."
Despite Box's obviously younger workforce, Schillace said this
approach actually works better with more experienced, older hires.
This is because younger engineers just out of college or graduate
school, he said, are usually a bit "starstruck" by these bigger companies
with lots of perks, but they've never been burned by a job either.
Still, Schillace admitted that his hiring pattern has skewed toward the
younger set, but he's been trying to move the needle to more
experienced engineers.
"When we compete for engineers now, we're not competing with
random, 'you've never heard of them' startups or crappier companies,"
Schillace remarked. He boasted a solid track record with eight of the
last eight offers he made being accepted, at the time we spoke with
him.

The IPO
The expectation of Box going public has been widespread since Levie
revealed in an interview with Bloomberg in January 2013 that an IPO
was the goal in 2014.
The icon of Box headquarters is the slide in the lobby.
Image: Box
In October 2013, Levie told me that the IPO climate is a "very good kind
of market right now for enterprise software companies," pointing to
recent successful debuts by the likes of Workday, Splunk, and Palo
Alto Networks.
"IPO is sort of the natural path that companies take on, and we're
building a company that we think can be robust enough and successful
enough that it makes sense as a public company," Levie explained.
"We're at a period right now where we are growing internationally.
We're growing in new verticals. We're going after a lot of new
segments."
Once again, Smith was more measured in his evaluation, noting that an
IPO should serve as "another milestone in what is going to be a very
long game for us."
"I think the biggest thing is just setting expectations appropriately, not
just with investors, but, even more importantly, with employees,"
Smith asserted. "Educating people early on, getting them visibility into
why we're doing this, what it's going to look like."
Youthful wisdom

"We all grew up together," Levie reminded. "We've done lots of
different businesses and projects, some technology, some other,
throughout high school. Then we kind of went our separate ways, and
decided to regroup for the cloud industry."
The fact that Box has been able to maintain its core leadership team
through all of its success, funding rounds, and now heading toward
IPO is one of the things that distinguishes the company.
"One thing that strikes me is that these two co-founders, Aaron and
Dylan, are very young but unbelievably wise beyond their years. It's not
like they just had a great idea and brought in senior management to
run it. It's still very much them running the business," said Peter
Goldmacher, managing director and a senior research analyst covering
software with the Cowen Group.
An IPO should serve as "another milestone in what is going to be a
very long game for us."
Dylan Smith
In an empty meeting room amid the hubbub of the first day of
BoxWorks 2013, Levin took a moment to ponder the future history of
the company.
"I think someday the story of Box is going to be written, and what's
going to be written is that we were able to, not only envision a pretty
amazing future, but actually make it happen," Levin said.
"So many companies in Silicon Valley struggle with the execution part,
the actual doing of it. They've got this amazing, visionary leader, or
amazing bunch of people, or amazingly cool bits of technology. They
can't sort of put the whole package together, or they can't keep that

package together when it's growing 100 percent year-over-year, for
year, after year, after year. We've been very fortunate to be able do
that."
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How aaron levie and his childhood friends built a $2 billion business, without stabbing each other in the back — www.techrepublic

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