It doesn't get less sexy than enterprise storage. Yet lately, some of Silicon Valley's hottest start-ups have been fighting a turf war over the space.
A recent Wired story discussed Drew Houston's plan to transform Dropbox from a mainly consumer-facing platform to the storage service of choice for app developers. In the interview, Houston referred to Dropbox as the "spiritual successor to the hard drive." Meanwhile, Brad Garlinghouse, CEO of Hightail, formerly known as YouSendIt, did some smacktalking of his own in an interview with AllThingsD saying, "There are a lot of companies with 'box' or 'sync' or 'drive' in their name. There's a lot of blue logos and names in this space. It’s starting to get pretty homogenous."
Compared to these newcomers trying to navigate the enterprise space, 28-year-old Aaron Levie is a relative veteran. He co-founded the enterprise storage company, Box, back in 2005 while he was still in school at the University of Southern California. Since then, the coffee-chugging boy wonder has grown Box into an 850-employee company that serves 150,000 businesses and 20 million users. It's been valued at more than $1.2 billion, and according to a new study by Forrester Research released in July, it is the runaway leader in the file sync and share market. That puts it ahead of both Dropbox and Hightail, as well as more established players like IBM and Google.
As The New York Times reported Wednesday, Box is also involved in a heated race against companies like Microsoft and Google to build software that enables people to create and edit documents on their phones.
As the competition in this space heats up, I spoke with Levie about the history of the company, its inevitable IPO, and how he's preparing for battle.
Since you're relatively young, people might be surprised to know you've been running Box for almost nine years now. How have your ambitions for the company changed in that time?
The general idea when we started the company was that there's no reason why anywhere, at any time, any individual can't collaborate with contractors and partners anywhere in the world. So we started out as a very broad technology that made it easy to store and share and collaborate around your data. Every job function, every size company, every industry, every geography could use it. That was the defining characteristic.
The next stage of this is about going deeper in certain industries. How can we enable a faster manufacturing process? Instead of a sequence of events, which used to be how you did manufacturing, how can we let everyone access the same content on demand? In the healthcare industry, how do we enable access between researchers, doctors and patients? We try to hire leaders in each industry, and let them build out the strategies to make sure we're successful in that category.
Are these industries really so incapable of sharing data anywhere at any time? How do you plan on improving upon the technology they're already using?
It's easy to think the technology we see in Silicon Valley is ubiquitous, but we're actually very early on in the transformation. Most of the industries we're going into haven't experienced that transformation yet. If you think about healthcare, the way doctors collaborate around medical images hasn't changed much in 20 years. We're just beginning to see doctors pull out an iPad in the examination room. It's a small example, but it'll take years to actually manifest across the entire industry. In healthcare, life sciences, manufacturing, financial services, media, and entertainment -- each of these industries is going to rapidly change because of technology, and we want to build one of the leading companies that's going to enable that to happen.
Who do you consider your biggest competitors in this space?
If you look at where the dollars are going today, it's traditionally going into Microsoft, IBM, Oracle, and EMC for storing and sharing information. So that's where the dollars will come from, too. If five years ago, an enterprise spent $1 million with Microsoft for content management and collaboration, today they might spend $200,000 on one of these new cloud solutions. Our vision is to be the leader in that space, and so far we believe that has worked out pretty well.
What makes you think these bigger players couldn't do exactly what you're doing, then?
On paper, they could. The challenge is they're slowed down by how large they are, and in some cases they're strategically compromised. In Microsoft's case, it'll be hard to build for an Apple and Android world when they're trying to support the Microsoft Windows platform. That's a strategic tax that we don't have. Each competitor, large or small, has their version of those limitations. Our job is to either exploit those or build the much better solutions for customers and how they want to work.
What about the other start-ups encroaching on Box's territory? Dropbox is now trying to be app developers' storage platform of choice. Meanwhile, YouSendIt recently changed its name to Hightail and announced a move into the storage and collaboration space. Is there room for all of you to coexist?
I think Dropbox will always be anchored by their consumer efforts, so I think it'll be harder for them to go as deep in healthcare, financial services, and manufacturing as we've gone. I think of them as a consumer company that happens to have some business ambitions. With the company formally known as YouSendIt, traditionally they were a file-sending company, but I think it's too early for me to speak about their new strategy. I will say that as you look at the space, these companies will evolve in different ways, just as Twitter, Facebook, and LinkedIn have evolved. At one point we thought Facebook would crush LinkedIn, and Twitter would crush Facebook, but there's room for all three of those in our lives. That being said, we've been working on this problem for eight and a half years broadly, and six and a half just in the enterprise. Our roadmap is much farther along than any of our competition. We have about 850 people at Box who just think about this problem every single day.
In the past, you've mentioned plans to go public next year. Are you still on track for a 2014 IPO?
I get in trouble with my finance team when I talk about timelines. But for the most part, if you want to build a long-term company and have a currency for making acquisitions, an IPO is certainly the route to go. First we want to bring in strong individuals, who can help us avoid a lot of mistakes start-ups make going out too soon. So our VP of finance and treasury was the head of treasury at eBay. And we also have Jeff Mannie, our chief accounting officer, who was the head of accounting at PayPal.
You've made lots of other prominent hires. How do you convince these people to work for you?
We've invested pretty significantly in our executive leadership team. From our COO Dan Levin who led a major chunk of Intuit to Sam Schillace, the creator of Google Docs who's running our engineering team. So while I probably give people the perception that we have this erratic, annoying CEO, the rest of the organization is actually very strong, and it does take a lot of convincing.
What's unique about Box is we're one of the few companies that marries the enterprise software and enterprise execution capabilities with consumer grade instincts. When we think customer support, we don't think Oracle and SAP; we think Zappos. When we think product innovation, we think about Facebook and Google. But on the sales side, we don't think about the consumer players; we think about Salesforce. Our goal is to build the sort of amalgamation of these very different disciplines and hopefully the result is we have a company that looks and feels different from what anybody has ever seen before.
At 28, you've already built quite a large company. Do you anticipate Box being your life's work, or will we see you move on to a new idea in the future?
I'd certainly like it to be my life's work. We're solving the kind of problem that will never go away. There will always be new dimensions of how businesses can share information. I just got Google Glass, so I'm a certified Glasshole, and what wearable computing can do for enterprises is going to be amazing. There are all new ways that people want to store and share data from every kind of platform, and we're going to always be there for that. I'd like to be doing this for the foreseeable future, and if that means 10, 20, 30 years, I'd love that.
Solving the world's data storage problems is a fairly unusual life goal. What about it gets you so excited?
It probably had something to do with my upbringing. I had a formative experience with files. No, actually, every business in the tech industry is really solving this problem of connecting people to either other people or other information. Whether that's Oracle connecting people to enterprise resource planning information or Facebook connecting people to other people, all of these businesses are all about helping people share and connect information. We're doing that in an enterprise context. It lets businesses move forward faster, get new products to market faster. And that's what gets us excited.