Box Joins The Establishment

Box was once the intrepid upstart, but its recent announcements underscore the company’s growing maturity. By our measure, the publicly traded company is now clearly a member of the enterprise establishment.

In the last few weeks, Box has formed close partnerships with the sort of companies its CEO Aaron Levie once made fun of — Microsoft and IBM. Yet these partnerships are not merely a foot in the door of these establishment companies. They give Box partial access to the vast resources each of these organizations controls — and that may provide the smaller firm an opportunity to accelerate its growth trajectory.

Box took heat during its pre-IPO phase because of the tremendous amount of money it spent scaling its sales and marketing operations. When box filed its first S-1 pre-IPO  paperwork in March 2014, it showed growing revenues, but larger-than-expected losses as well.

While the company’s newly announced partnerships could help Box bolster its growth, they could also allow the firm to find new revenue at a lower per-dollar cost, by using partner resources to limit the pressure on the firm to pay for everything.

Becoming The Company You Used To Ridicule

There is a long, rich history of corporations saying one thing, and then doing something quite different years later (see Ellison, Larry). Salesforce was infamous for its derision of Microsoft, before it became a rather large and important partner. You can supply your own favorite example.

In short, you either die a startup, or you hope to live long enough to see yourself become IBM.

In short, you either die a startup, or you hope to live long enough to see yourself become IBM.

In the case of Box, we have seen it partnering with the very set of firms that it was created to disrupt. It’s akin to growing into your parents’ politics as you get older. But instead of sayings and traditions, Box is picking up channels and partner networks to sell into.

Box has made its reputation as the content management industry irritant, and it played its role well, forcing the more traditional players to move to the cloud, focus on the user and simplify their products. Box too has had to make moves toward its rivals as illustrated by its recent governance tools announcement and the Box Enterprise Key Management product it introduced earlier this year.

Box is growing up, and as it matures its leaders can see that to get to the next level (and the next), it can’t do it alone.

It’s Always About The Money

Box grew its revenue by 74 percent in its last fiscal year. The company, at the conclusion of the period, indicated that it expected to grow around 30 percent this year.

Less than a month ago, Box reported its fiscal first quarter performance, during which it boosted its revenue guidance from the anticipated 32.16 percent to the much larger 34.01 percent delta. The firm expects current fiscal year revenue of between $286 million and $290 million. In its last year, the firm recorded total intake of $216.4 million.

This barrage of numbers illustrates an important point: It’s harder to grow in comparison to your former performance, given the law of large numbers; and, Box is doing better than it first thought that it would, at least so far this year.

Even given all that, for the price that Box pays for growth, the company could always do better. The trick to that is improve sales efficiency, which comes from new buckets of potential clients. Say, the sales channels of deeply established enterprise firms that already have the relationships that Box has worked so hard to create.

But potential channel access is only part of the equation. With the IBM deal, for example, Box can also be a better version of itself. By snagging access to IBM’s datacenter infrastructure, the smaller firm can sell its Box-In-A-Box product, called Developer Edition, around the world more easily, without having any sort of tenancy issues. So, with IBM’s help, Box can sell its extant products faster.

That smells like revenue growth, and potentially cheaper revenue, and thus improved margins.


You join the establishment by degrees. When Box first landed its deal with General Electric — which you’ve likely heard of, since the firm brings it up just about every other word — and certainly its public offering was also a key moment of maturation.

But the establishment truly embraces you when it doesn’t look at you as a challenge, or at least not all the time. Instead, it’s when the establishment wants to leverage your technology and customers to help themselves. And for Box, that time is now.