Box Chooses MS, CS, and JPM for Its IPO

Eddie Braverman's picture
Rank: The Pro | 21,198

Had enough tech IPO's yet? Well you'd better have room for one more, because here comes Box, and they're looking to raise $500 million at IPO early next year. To that end, the company has announced that they've chosen Morgan Stanley as dealrunner, with Credit Suisse and JP Morgan Chase batting cleanup as syndicate partners.

The enterprise cloud company is something of a tech darling among investors, and its last round of financing was oversubscribed by $25 million, valuing the company north of $1.2 billion. So there's no telling what the ultimate valuation will be at IPO, but somewhere on the order of $3-5 billion isn't outside the realm of possibility (if you're willing to use the Twitter IPO as a measuring stick).

Box has been hitting all the stations of the cross on its way to an IPO. Earlier this year, CEO Aaron Levie confirmed to AllThingsD that the company is on track to exceed $100 million in revenue this year. And while he also admitted that Box's burn rate is typically in the "seven figure per month" range, Levie states that the company's biggest expense is the sales and marketing people who can, as he put it, "get enterprise deals done." In January, Levie predicted that Box would have 1,000 employees by the end of 2013, and I just heard from a source today who said that, as of October, it was already north of 900.

The thing that surprises me is that Box is essentially a Dropbox knockoff, and there are a ton of them these days. So where are the sky-high valuations coming from? What I mean specifically, is what is Box doing differently from everyone else in this space? At this point, cloud storage is pretty much a commodity. With minimal downtime across the board, the only arrow you have in your quiver is price - and any salesman worth his salt will tell you that you never want to compete solely on price.

Don't get me wrong: the company is making a lot of smart moves and they have revenues (remember when producing revenues used to be a thing?). But I just don't get why you would pay 20 or 30 times those revenues when the self-storage place down the street (which provides essentially the same service on a brick-and-mortar basis) would be lucky to sell for three time revenues. Let's face it: storage is storage.

So I guess it's hats off to the three banks that'll be collecting fat fees on this deal. Otherwise, I really don't get it.

Comments (17)

Nov 14, 2013

The value add of the Box's and Dropbox's of the world is that they have a mobile platform. The Sharepoint's of the world are not worth their weight in shit once you move to mobile.

Nov 14, 2013

I wouldn't say Box is a ripoff of Dropbox. Box focuses more on enterprise storage and collaboration while dropbox focuses more on the common consumer. I honestly think Box has a much better business model than dropbox. I think the freemium model is BS.

Nov 14, 2013

much rather pay $4B for box than snapchat. i'm impressed with box in many ways.

Nov 14, 2013

Wtf is Box, damn am i out of the tech loop.

Nov 14, 2013
HFFBALLfan123:

Wtf is Box, damn am i out of the tech loop.

basically enterprise version of dropbox. better monetization concept than dropbox's freemium concept, although i don't know if the number support my beliefs.

Nov 14, 2013

If he doesn't know Box, he probably does not know Dropbox either.

@HFFBALLfan123 Basically, cloud storage.

Nov 14, 2013

Dropbox is literally cloud storage. You upload something, it stays in folders in the cloud. That's pretty much it.

Box's platform is much more powerful. Multiple users, more advanced sharing options, collaboration/task options, exploding share links, sorting options, etc. I would think of it as leaning more towards project management vs. storage. You pay per user as opposed to per account. So your company could have a 10TB account, but a firm with 50 users and 10TB pays more than a firm with 5 users using 10TB.

Disclaimer: my firm pays big $$$ to Box.

Currently: future psychiatrist (med school =P)
Previously: investor relations (top consulting firm), M&A consulting (Big 4), M&A banking (MM)

    • 1
Nov 14, 2013

Here's where I'm getting lost.

I was recently hired by a mature (20+ years old), mid-sized consulting firm to help transition the company to the cloud (email, communications, collaboration, storage, the whole 9 yards), so of course Box was part of the initial conversation. But I just couldn't find enough of a differentiation to tip the scales in their favor. So maybe I'm missing something. They call themselves enterprise, and maybe that's it: you need 10 petabytes of cloud storage for them to be the clear winner. But for a mid-size enterprise there just wasn't any difference from Dropbox, or even really Carbonite (obviously that's not really a solution, just saying), and there certainly wasn't the suite of productivity apps like Google Apps or Office 365.

Nov 14, 2013
Edmundo Braverman:

Here's where I'm getting lost.

I was recently hired by a mature (20+ years old), mid-sized consulting firm to help transition the company to the cloud (email, communications, collaboration, storage, the whole 9 yards), so of course Box was part of the initial conversation. But I just couldn't find enough of a differentiation to tip the scales in their favor. So maybe I'm missing something. They call themselves enterprise, and maybe that's it: you need 10 petabytes of cloud storage for them to be the clear winner. But for a mid-size enterprise there just wasn't any difference from Dropbox, or even really Carbonite (obviously that's not really a solution, just saying), and there certainly wasn't the suite of productivity apps like Google Apps or Office 365.

It depends on whether you're looking for storage or collaboration. Dropbox doesn't offer anything in terms of collaboration - you upload files and they sit there. There's no version control, no commenting system, no sharing, etc. My firm was running off two Dropbox accounts (1TB each), but since we were syncing from all 20 of our computers, we would overwrite each others' files, folders would disappear when someone accidentally deleted it from their desktop sync, etc. Dropbox is great for personal storage (I used to myself for years before I switched to Google Drive), but for a large group of people who have need for collaboration, it's horrible.

That said, Google Apps gets my vote any day. Blazing fast, super simple, liberal on the space.

Currently: future psychiatrist (med school =P)
Previously: investor relations (top consulting firm), M&A consulting (Big 4), M&A banking (MM)

Nov 14, 2013
chicandtoughness:

That said, Google Apps gets my vote any day. Blazing fast, super simple, liberal on the space.

That's what I ended up recommending.

Nov 14, 2013

Universities pay BOX big stacks too.

Nov 14, 2013

+1. My school got 10 gig box accounts for every student. Must have cost us a pretty penny (also probably why my tuition went up this year...)

Nov 14, 2013

Box is absolutely legit. Dropbox is nice for consumers, but enterprise is where the $$$ is, and their system is much more sophisticated. They've been hyping their security, and hopefully the BBs will adopt. Be nice to work in the cloud instead of that remote log-in shit, and their collaboration tools, if up to snuff, would be a god-send.

Nov 14, 2013

with what gdrive offers i dont know how other cloud storage companies can continue to exist much longer

WSO's COO (Chief Operating Orangutan) | My Linkedin

Nov 14, 2013
AndyLouis:

with what gdrive offers i dont know how other cloud storage companies can continue to exist much longer

This. And additional storage is stupid cheap. With Microsoft sunsetting Exchange Server 2003 next April (and don't kid yourself: thousands of companies are still on XS 2003) Google Apps is going to explode just for the Gmail interface alone.

Nov 14, 2013

Skydrive integration across all Microsoft products is the shit.

I only use Skydrive.

Nov 14, 2013
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