As Box Stock Soars 70% At IPO, CEO Aaron Levie Is Already Looking Ahead
Box CEO Aaron Levie is craving a slice of pizza.
After ringing the opening bell at the New York Stock Exchange with his cofounders and making the rounds to discuss his company’s first day of trading, Levie’s earned an IPO snack, but won’t have time to get it. For today, he’s the toast of Wall St., with his enterprise collaboration company’s stock trading at $24.24 in the mid afternoon, up a whopping 73.12% from its list price.
“We are incredibly excited and amazed to be a public company,” Levie says. “But I am delighted we can go back to work.”
For now though, Levie can’t just work on Box and over his junk food diet. He’s got to answer important questions, like will he keep tweeting as a public CEO? (Answer: Unless they shut off Twitter, yes.) Then there’s his business to discuss, too.
Levie’s had to keep quiet as enterprise tech investors and entrepreneurs alike have watched, and discussed, Box’s public offering at length. Part of that is because the company had an eventful nearly ten years just to get to this point, part because of its off-again on-again IPO process dating to last year adding more drama and tough lessons on market responses to tech companies. But also because until today, there was still no consensus about how public investors would actually respond to a high-spend, high-growth enterprise company like Box.
One day of trading won’t prove anything, but so far, the response has been strong in favor of what Box’s selling. Levie still can’t say too much. But he says he wasn’t surprised by the early investor split. “Some investors will understand the disruption playing out, and others don’t. There are more cash-flow oriented investors, but their companies aren’t growing at similar rates as these kinds of startups,” Levie says. Sales and marketing will remain key, Levie says, to bringing in upfront customers, who at a 130% retention rate become more valuable over time.
Tech experts watching the IPO told Forbes in the run-up that one point to watch would be Box’s role in creating a new category of enterprise centered around collaboration. On Friday, Levie described the trend a bit differently. To Levie, Box is one of the first enterprise software companies to go public with a “consumerization model,” meaning its user experience and products are organized around what an individual user wants even as the software is sold to the company’s centralized IT. “While we are part of this next generation of cloud companies defining the enterprise IT stack, we do focus on making sure we have incredibly easy end user functionality.”
That means Levie’s primary mission hasn’t changed: Acquire more and bigger customers, and then encourage them to put more of their work on the cloud. “I think of our business right now as still in Phase One,” says Levie. In that phase, Box gets big companies to deploy it and store its data securely. Over time, Box can help the company save money–and make more money itself–encouraging those customers to more ways to use and interpret that data. The CEO points to Box’s acquisition of medical imaging company MedXT as an example of one field, healthcare, where Box is pushing that migration. Box will also continue to focus on machine learning as an investment area as it specializes its product for each industry.
One subject does make Levie a bit touchy even on a celebratory day: analysts and talking heads who doubt the company because of the supposed specter of Amazon. Levie has heard the argument that Amazon cutting storage prices puts pressure on Box’s business. He argues the opposite is true.
“I wouldn’t mind if people understood what we are selling to customers,” he quips. “Every time Amazon lowers their prices, that benefits us. It improves our infrastructure cost. That’s not a competitive pressure we are focusing our business on.”
So what is the real pressure? The race for the IT budgets of large enterprise looking to transform their infrastructures for the cloud, Levie says. Each one will do it in a big way only once, at least for a time. “We have to address those audiences and it will be competitive, because dollars will go away from some sets of players.”
Levie sees a future where Box is one of a cohort of newer players in the enterprise cloud, alongside established companies like Netsuite, ServiceNow and Workday. Industry peers hoping to join are lining up to agree, at least for today. “I’m thinking about ordering champagne at lunch,” jokes Yorgen Edholm, secure file sharer Accellion’s CEO. “This IPO proves that the enterprise is not a laggard, it’s getting with it! And Box is the first company that’s big on enterprise getting to the cloud. This is their story.” At Egnyte, CEO Vineet Jain tipped his hat to an “outstanding start.” The pressure’s on now, Jain says, “to keep the energy high around tech and sustain this exuberance will into the future.”
But while those good feelings are felt across enterprise tech today, the exuberance should really belong to Levie, who had to sacrifice a lot to get to the NYSE podium. Early funding rounds when Box was struggling diluted him so much that his worth is now tens of millions, not billions. And after ten years, he’s re-upping for another decade after the praise and market attention settles down.
“This is an important milestone, we can’t possibly diminish this at all,” Levie says. He can still try. “But we are focusing on a long-lasting company, and we have a big vision of where we want to go. So it’s a signpost we’re passing through.”
Knowing Levie, don’t bet on there being time for a bite to eat on the other side.