In its initial public offering, shares in online file storage company Box were trading at $24.24 on Friday afternoon, 73 percent higher than its IPO price of $14 a share. With that impressive opening morning, the start-up company caught up to the $2.4 billion valuation that it garnered in its most recent private financing round last summer, possibly allaying concerns among investors that the company had been overvalued.
In a video presentation to investors Friday, Box co-founder and CEO, Aaron Levie, said that his company was at the forefront of "a once-in-a-generation shift" in storage. Among the company’s clients are General Electric and the drug maker AstraZeneca.
Launched in 2005, Box (formerly Box.net), has adopted a freemium business model, and offers 5 GB of free storage for personal accounts. But it has also gone after business clients, focusing on enterprise collaboration and workflows. Competitors such as Dropbox, on the other hand, have concentrated on the business-to-consumer market.
Aimed at Companies
Box has set itself apart by its variety of deployments of API (application program interface) technology. For instance, its Box View feature is an API that converts Microsoft Office and PDF documents to embeddable HTML5, allowing developers to create custom experiences around content.
The company defines its flagship product as a cloud platform that helps companies securely store, share and manage all their files. Box’ selling points are secure confidential business information, development of custom mobile applications and simplification of paper-based office processes.
Box had planned to go public last spring, then postponed that event as the tech IPO market softened and questions began surfacing about the company’s financial health. What’s more, its original core product, online file storage and sharing, faces loads of competition from companies, including Google and Microsoft, offering cloud storage services for little or no cost.
The challenge for Box has been separating itself from the pack by offering services other than simple data storage. It has done so by developing tools targeted at the needs of specific industries, such as health care, media, and retail. Box has also tried to make itself a destination for collaborating on documents, using software such as its Notes app, a cross between instant messaging and Google Docs.
Another factor that makes Box’ successful IPO interesting is that while it competes with Microsoft, the company also depends on Microsoft to an extent. To go head-to-head with Microsoft as the software platform of choice for business, Box and similar storage companies must integrate with the tools businesses are already using, including Microsoft Office. One way Box has done that is by offering such products as Box for Office.
Other providers of cloud-based storage are in a similar fix. Dropbox said 35 billion of the files stored on its service are Office files.