Unpacking the Box IPO

Box, the closely-watched cloud company, had a successful IPO on Friday, pricing its offering above the filing range at $14, raising approximately $170M, and seeing its shares pop over 60% on its first day of trading, closing at $23.23 per share. A huge congratulations to lead founder and CEO Aaron Levie (@Levie) and Series A lead investor Josh Stein (@dfjjosh) of DFJ. Box has taken many twists and turns along the way, including an aborted IPO run in mid-’14, but the company’s perseverance and focus paid off on Friday.  A few interesting things to highlight about Box and its IPO from which other high-growth and SaaS companies can learn:

  • Perseverance Pays – Going Long is a long-term game.  For high-profile, VC-backed tech companies, momentum is an important ingredient of success. One needs momentum with investors, employees, customers, partners, and the press. It’s difficult to incur a public misstep, as Box experienced mid-2014 when it scuttled IPO plans, because the benefits of momentum can quickly fade. Rather than fold, Box redoubled its efforts – the company raised fresh equity capital, kept the key team in place, and continued to sign new business – and was able to regain strong momentum despite their IPO setback. This perseverance is a good muscle to exercise before an IPO. Inevitably,  hurdles and challenges arise once a company goes public. Box is now prepared for these roadblocks, having already faced a big one and overcome it.


  • Metrics-Based Selling – Aaron and team did a good job on its IPO roadshow educating investors about various business metrics. Although there was initially a lot of skepticism from public investors due to Box’s aggressive spending and lack of profitability, the company showed investors attractive revenue growth in various customer cohorts, the rise in cohort profitability over time with scale and retention, and the operating leverage in the model experienced to date. These analyses swayed opinion and helped public investors understand the fundamental opportunities for Box long-term. Interestingly, in all the press the company received, both positive and negative, leading up to the IPO, there were no mentions of these types of metrics, yet these are what drove the IPO. That won’t be the case any longer. Investors will want to see the updated results of these metrics frequently going forward, and these items will become part of the dialog regarding Box in the future.


  • Wall Street Audition – In the lead up to the Box IPO, I chatted with over 10 friends who run hedge funds and long-only funds in technology. These are smart, experienced folks with different strategies. One positive theme that emerged from those conversations: Box has great customer retention,  growth metrics and a large market to pursue. One concern also emerged: Box is still burning meaningful cash and, despite having a big cash war chest, may need to come back to market for a large secondary offering at some point to raise more money. As I’ve mentioned before, all management teams, when they go IPO, start the clock on setting their reputation in the eyes of public investors. With each passing quarter of strong performance and expectation management, confidence builds among investors.  Given that Box will possibly need more money down the line, this is even more of an imperative for Box’s leadership.


I couldn’t be happier for Aaron, Josh and the several other folks I know who’ve invested in the company.  I only wish I was smart enough to have joined the party back in the Series B in 2008 when Josh introduced me to Aaron!

Leave a Reply