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Box S-1 Filing
- deleted 13y ago[deleted]
- jackgavigan 13y agoInteresting to note that Aaron Levie owns just 4.1% of the company at this point: http://www.sec.gov/Archives/edgar/data/1372612/000119312514112417/d642425ds1.htm#toc642425_16 http://www.sec.gov/Archives/edgar/data/1372612/0001193125141...
- Oculus 13y agoThat's actually a very interesting point. I know Mark Zuckerberg owned a really big chunk (~30%) of FB when they IPO'd. Anyone with insight know if the norm is closer to Zuckerberg or Levie?
- avree 13y agoIt's closer to Levie. It's very rare for founders to be able to maintain strong control of their company through multiple funding rounds.
- _delirium 13y agoIt's not too common, but larger amounts aren't unprecedented: two big ones that had even larger ownership were Microsoft (Gates still held 49% of Microsoft at the time of IPO) and Amazon (Bezos & family held 52%, with Bezos himself holding 42%). The Google founders also owned a combined 32% (16% each). Those companies were rather more successful than Box, though.
- mckee1 13y agoI think that's generally the rule. The more successful the startup, the larger the stake the founder maintains due to being in a better position in regards to VC rounds.
- oijaf888 13y agoHad Microsoft raised much funding before the IPO?
- Tloewald 13y agoMicrosoft had so much cash lying around they were using t-bills (or some other kind of bond) as bookmarks (don't remember which Gates bio I read that in -- Hard Drive maybe). When Microsoft IPOed it was basically owned by its founders. It never wanted for cash.
- tanzam75 13y agoThe only VC with an investment in Microsoft was David Marquardt's Technology Venture Investors. At the IPO, TVI owned 6.1% of Microsoft. The remaining 93.9% belonged to the founders, the Board, the employees, and friends and family. Everyone listed on the S-1, with one exception, took a bit off the top but held on to most of their shares. The one exception was Bill Gates's sister's trust fund, which owned 20,000 shares -- 0.1% of the company. She could've been a hundred-millionaire if she'd held on to it, but her trustee sold it for $400,000 and moved on.
- 001sky 13y agoZuck is a huge outlier. FB had a $15b valuation by 2009. People were throwing money at him, so he took very little dilution. Also, his control provisions are way more favorable.
- Oculus 13y agoYes, I remember that though his ownership might be ~30%, his voting counts for >50%.
- btrautsc 13y agoBox comes from a very different situation from the astronomic growth and beast that was pre-IPO FB. Realize they've raised at least $414M that has been reported. At many of those rounds it was likely possible for founders/ early employees to cash out options. FB/ Mark had enormous leverage because it was an unstoppable growth machine. Box is a great company, but still has to battle to grow sales into revenue/ profits, as is evidenced by the S-1. (http://www.crunchbase.com/company/box http://www.crunchbase.com/company/box)
- OWaz 13y agoWhat would be a normal percentage for a founder to keep in their company?
- PeterisP 13y agoIf you keep bleeding money and needing more cash influx to extend the runway - then the achieved (and appropriate) percentage rapidly goes to zero.
- deleted 13y ago[deleted]
- adventured 13y agoIt varies pretty widely, but Levie's number is on the low side historically for tech companies, particularly for such a relatively young company. Gates had 45% of Microsoft the day after their IPO. Larry Ellison still owns ~20% of Oracle. Google's founders still have ~10%. David Filo even still has around 9% of Yahoo (Yang & Filo had closer to 20% at the time of the IPO if I recall). Bezos still has around 18% of Amazon. When Dell IPO'd, Michael Dell still owned a huge percentage of the company at IPO, over 40% if I recall (he sold most of it high, which is why before they took Dell private, he was nearly worth more than the company).
- deleted 13y ago[deleted]
- Matt_Mickiewicz 13y agoHow much does that leave for the avg. employee, many who probably took pay cuts for the promise that their equity would be worth millions?
- jackgavigan 13y agoOne of the reasons Levie has so little equity is because of the equity that was allocated to the employees' options pool. I expect the average employee will be quite happy.
- antr 13y agoOn the IPO: Nice gross profit margin growth from 67% to 79%, but now we know where vc money went: sales & marketing. Profitability seems very very very far away, and in my opinion Box is not a buy for the average Joe. It seems to me that revenues are extremely dependent on marketing, as per "50% of the net proceeds in sales and marketing activities". Now that we can hear cloud storage war drums from afar I don't see this expense item going down any time soon. This IPO isn't going to be cheap, at whatever valuation CS, MS and JP come up with. On the VC/Tech industry's double standards: Funny how an investors ask and drill down startups on their customer acquisition costs, customer lifetime value, user & customer numbers, etc. and none of that information is made available on the S-1, the document that should really be the "bible" for any investor. I guess the public market is going to get the short end of the stick again.
- jgalt212 13y agoEnterprise salespeople are very expensive. Probably because for most of their existence they have been selling very expensive products. Not sure where this all shakes out. Does the enterprise salesperson of the future get paid less b/c he/she is selling cheaper products, or do we just employ less enterprise salespeople? i.e. only use them for the biggest contracts and have the rest of the leads handled by sales engineers/customer service types who work off of funnel scripts?
- zaidf 13y agoThe answer is inside sales. Sharefile, one of the leaders in this space for enterprise, has a well-oiled inside sales machine(50+ reps cold calling all day long). When Citrix failed to acquire Box, they acquired Sharefile.
- antr 13y agoI don't disagree with "salespeople are very expensive", but they are clearly not bringing in enough revenues to make the business profitable. Is it the sales people fault for not bringing in enough revenues or the company's for spending too much on sales and marketing? Time will tell, but a $170m loss is no joke.
- jpalomaki 13y ago25M registered users but I wonder how many of those are active? Box has been quite active with their promotions of free storage space, but the actual limitations on the service made this free space not very useful.
- josephjrobison 13y agoBox is just way too slow at syncing. From a product perspective they are terrible compared to Dropbox as many of us know.
- suyash 13y agoI'm not a fan of either, Google Drive is enough for me.
- Jare 13y agoI loved having 50GB for free, but couldn't stomach using the product. Their absurd process for selecting a custom location for the Box folder, from their own website, included uninstalling the software and doing some registry magic by hand. With that kind of attention to detail, I couldn't have any trust in their engineering or product teams. The idea that actual enterprises would entrust their data or operations with a company I wouldn't use for casual syncing of unimportant data is something I'm still trying to stomach.
- owenwil 13y agoI've used Box extensively in the Enterprise and never really "got" it - it was cumbersome and often confusing. It just seems like another layer on top of what could be used as a first-party integration in something like Onedrive or Google Drive. Perhaps where some of the "big" wins are its integration with other enterprise products like Salesforce, but we just didn't understand it because it felt like another layer on top of our office suite that wasn't necessary.
- rsync 13y agoIf only there was a storage platform / offsite backup platform that just gave you a plain old unix filesystem to do whatever you wanted with. If only...
- sjg007 13y agoSo where is the inevitable comparison to DropBox?
- ycmike 13y agoTo those who read this cover to cover: Bravo.
- jmathai 13y agoReading the Risk Factors was a bit depressing. http://www.sec.gov/Archives/edgar/data/1372612/000119312514112417/d642425ds1.htm#toc642425_2 http://www.sec.gov/Archives/edgar/data/1372612/0001193125141...
- nathancahill 13y agoThey legally are required to list every imaginable risk. The actual chances of some of these happening are not that likely.
- dctoedt 13y agoIt's not exactly that they're legally required to list every imaginable risk -- it's that listing a risk gives their future trial counsel a useful sound bite. Suppose that the company were to miss earnings targets, and the stock price dropped as a result. Just as sure as shootin', there will be plaintiffs' lawyers claiming that the company wrongfully failed to disclose Risk X or Risk Y or Risk Z. Proactively disclosing every risk you can imagine is thought to be one way of combatting that plaintiffs' bar strategy. Personal anecdote: I used to be the general counsel of a public software company. I had to draft the risk-factors section of our Form 10-K annual report, which likewise is filed with the SEC. The first time I did it, I read a lot of other software companies' S-1s and 10-Ks and harvested as many risk-factor ideas as I could. It struck me as peculiar to proceed as if investors were utterly ignorant of basic facts of business life. But many jurors, and even some judges, might fall into that category. You can pretty much count on having a plaintiff's lawyer, professing to be outraged, accusing your company of having covered up Risk X. In responding to such an accusation, it's a whole lot easier (A) to be able simply to point to your public disclosure of Risk X, and possibly get the case dismissed early, without an extremely-expensive and risky trial, than it is (B) to have to try to convince the judge or jury that, well, no, you didn't disclose Risk X, but it doesn't matter because everyone supposedly knew about Risk X already. Option B can be a real roll of the dice; far better to go with Option A.
- deleted 13y ago[deleted]
- marccuban 13y agoWe have incurred significant losses in each period since our inception in 2005. We incurred net losses of $50.3 million in our fiscal year ended December 31, 2011, $112.6 million in our fiscal year ended January 31, 2013, and $168.6 million in our fiscal year ended January 31, 2014. As of January 31, 2014, we had an accumulated deficit of $361.2 million. These losses and accumulated deficit reflect the substantial investments we made to acquire new customers and develop our services. We intend to continue scaling our business to increase our number of users and paying organizations and to meet the increasingly complex needs of our customers. We have invested, and expect to continue to invest, in our sales and marketing organizations to sell our services around the world and in our development organization to deliver additional features and capabilities of our cloud services to address our customers’ evolving needs. We also expect to continue to make significant investments in our datacenter infrastructure and in our professional service organization as we focus on customer success. As a result of our continuing investments to scale our business in each of these areas, we do not expect to be profitable for the foreseeable future. Furthermore, to the extent we are successful in increasing our customer base, we will also incur increased losses due to upfront costs associated with acquiring new customers, particularly as a result of the limited free trial version of our service and the nature of subscription revenue, which is generally recognized ratably over the term of the subscription period, which is typically one year, although we also offer our services for terms ranging between one month to three years or more. We cannot assure you that we will achieve profitability in the future or that, if we do become profitable, we will sustain profitability.
- eaurouge 13y agoProbably a fake account, but apparently Mark Cuban was an early investor but had his investment returned over a disagreement on strategy.
- deleted 13y ago[deleted]
- 001sky 13y agostory>http://pando.com/2014/01/31/box-is-the-unicorn-that-mark-cuban-let-get-away/ http://pando.com/2014/01/31/box-is-the-unicorn-that-mark-cub...
- ycmike 13y agoI think I speak for many that we like Aaron but don't know if Box can become that iconic enterprise software company that Aaron or others in the company would like us to believe.
- suyash 13y agoAaron is the CEO and his Salary is only about $155K, seems too less as compared to other executives. I know that their majority of the compensation comes in the form of Stock but can anyone explain why and how it works for executives?
- jdavis703 13y agoAs a startup CEO your salary is there to provide for your "essentials," such as housing, food, etc. It is not designed as an income that you can get rich off of. That ways your personal success is tied to the success of the company, which incentivizes you to have the investors best interests in mind.
- valleyer 13y agoEither that's some damn good food and shelter, or there's a heck of a lot of "etc.".
- freyr 13y agoIt's typically discouraged for startup founders to pay themselves very high salaries. Box isn't a startup any more, but compensation of $189k (not $155k, notice the cash bonus) doesn't seem bad for a young company losing over $100M per year. As others have said, he may have cashed out options along the way as well. Keep in mind, he was paid ~$2M in stock options in 2013, and owns 4% of shares overall. The IPO will make the other executives/shareholders very wealthy. Box likely had this IPO in its sights for a while, so that probably made it easier to take home "just" $189k.
- Nicholas_C 13y agoThe CFO is only 28 years old. As a twenty-something finance guy I'm very jealous of the experience he's getting.
- davidjgraph 13y agoFor the past few years we've had it had beaten into us that a start-up is an organization searching for a scalable (and implicitly, profitable) business model. Some businesses are always going to need a ton of capital up front: space travel, medical, semiconductors, etc. Also, social networks for obvious reasons, twitter doesn't counter this argument. There isn't a huge amount of utility gained by you when the company your friend works for is using Box. I see Box need would need some capital, but I can't remotely put it in the capital intensive category. Which leaves me thinking that Box simply hasn't yet found a scalable and profitable business model, it's a large company to still be in the search stage. I get the argument that Enterprise sales is a long process and there's a race against the likes of Dropbox. Let's say the sales cycle is 2 years. If I have 500 sales people in year 4 and 800 in year 6, I expect those original 500 to be earning twice their wages, at a minimum, at year 6. If they're not doing that after 2 years, why do I keep recruiting at such a rate? I also expect some proportional contribution from sales after 3-4 months, up to 2 years. Let's call that roughly 600 people-worth of sales, that's a minimum of 1,200 salaries of income. Looking at their numbers they'd have to have gone from (normalise this to their actual numbers) 500 to 1,700 sales people in 2 years (or 250 to 850, etc). In that actually the case?
- stanleydrew 13y agoThey don't have a scalable business model when measured annually, that is clear. But enterprise customer LTV accrues over years, not months. It might take $5 to generate $1 of income this year, but then only take $0.25 to maintain that $1 of income for the next 10 years. I don't know for sure, but I'd say there are probably enough smart people who understand the dynamics of enterprise software involved with Box for this to make sense.
- jackgavigan 13y agoNote that sales and marketing accounts for 66.6% (yes really) of total operating expenses and "Sales and marketing expense [includes] datacenter and customer support costs related to providing our cloud-based services to our free users." (p55). Their Net Loss, as a % of revenues, is decreasing year-on-year: 13 months to 31 January 2012: -227% 12 months to 31 January 2013: -191% 12 months to 31 January 2014: -135% You can project that curve forward and predict that they'll be cash-flow positive by the end of 2015. I think that, if you were to ask Levie off the record (i.e. with the restrictions imposed by the SEC), he'd say that they've found a repeatable and scalable business model and that the company could become profitable in the not-too-distant future. They could slow their expenses' growth rate further by ceasing to offer free storage to new users. If they really started running out of money, they could cut expenses significantly (and increase revenue a bit) by saying to existing users "No more free storage! Pay us $x/GB from next month or you'd better download your files because we'll delete 'em!" I doubt they'll do that, though. I expect they'll simply keep selling and marketing and growing bigger and bigger, in the same way that Amazon studiously avoid profitability in order to keep growing and expanding. Interesting, by the way, that Andreessen Horowitz don't show up in the list of >5% shareholders.
- joeyd 13y agoI spent 6 yrs bootstrapping a sales & services startup to $12M rev / 7-fig net. I watched every $ and plowed My Own Profit back into growth. How easy it must be to get huge VC checks & spend more on sales than company top-line! And all we've heard in the ecosystem is how brilliant Levie is.....
- sgy 13y ago- It had a net loss of $168 million over that period, compared to a loss of $112 million the year before. - Revenue for the year ended January 31, 2014 was $124 million, which is up 111%. - Sales and marketing expenses were $171 million. Note that this is higher than its revenue. - Box has $109 million in cash on hand, and it just raised $100 million in December.
- icedchai 13y agoLooks like 1999 again.
- capkutay 13y agoMy company is up to about 50 people now with a good amount of people in each department (sales, marketing, hr, engineering, etc) and we've never come across a dire need to spend money on something like box nor has anyone internally expressed the desire for us to look into it. Google drive has fit our needs for sharing documents, powerpoints, excel, etc. Can someone explain the actual value proposition for box? Just google drive with better features?
- dualogy 13y agoWell maybe your company is lean and smartly frugal. Many Enterprisey customers aren't, many are as un-lean and un-frugal as they can "get away with". So if there's one tiny little thing a user thinks they need they'll proclaim to their team "Google doesn't provide this little trinket and for us it's really mission-critical or it's all for naught" -- with no one budget-owner challenging that with a good ol' lean&frugal "do we really need it, as in need or perish?". Instead it'll be "OK look for alternatives and put it on expenses". The bigger they are compared to your 50-people shop, the more "inefficiencies" they can afford. If they're on the S&P500, they're auto-propped-up. If they're directly or indirectly close to big-gov or mil or finance contracts, they can simply overcharge "the biggest spending debtor entity in human history" who won't bat an eye. If they are a big "NGO" or UN or EU institution, they'll ask for a nominal discount and pretend to be tight-budgeted but are essentially same-same. That's not to say that box is useless, overpriced or that such customers hand out unlimited money freely to any and all. But they may well be slightly less "lean & frugal" than your shop, in fact most of them are guaranteed to be, and if their "urgent necessary needs" (even if they change their minds about their importance half a year later) are met, they pay up.
- dantiberian 13y agoI thought it was really interesting that only ~15% of businesses are paying them money. "34k+ paying institutions"/"225k+ great organisations"
- dmourati 13y agoAnyone care to speculate on when the IPO will happen? I know from the JOBS act that the S-1 must be made public no less than 21 days before the roadshow. Beyond that, the roadshow itself would likely last at least a week. That puts us at end of April at the earliest?
- cheriot 13y agoLike most initial S-1s, there's a lot of information left out (the number of shares being offered, the price, etc). You can get alerts on the updated filing at http://www.wellreadinvestor.com/companies/105975 http://www.wellreadinvestor.com/companies/105975 </shameless-self-promotion>
- jsm28 13y agoThis is all coming from a salesman at a different SaaS company. Answering some questions about how companies may use Box and the key 2 differences (in my mind) between Box and a competitor like Dropbox: Someone below said that their company of 50 doesn't see the value add that Box would bring over Google Drive. In response, Box definitely isn't for all businesses. They try to tap into companies that use other cloud softwares like Salesforce, Workday and NetSuite. Box offers these integrations that make it simpler for businesses running these tools to access data. The goal here is increasing efficiency and decreasing time spent transferring content from one place to the next. They also try to tap into industries with complex and stringent security needs like healthcare. Point here being that Box has certification and is compliant to securely store certain types of private information. Finally 2 key differences: 1. The rich integrations I mentioned above. Dropbox really doesn't have that and by many industry reports is not considered a real competitor of Box (yet) due to improper infrastructure to support common needs of a business looking to go cloud. 2. http://www.citeworld.com/cloud/23090/box-aaron-levie-sxsw http://www.citeworld.com/cloud/23090/box-aaron-levie-sxsw It seems Box's goal isn't just to go cloud; it's turning into a platform for developers to build off of. This seems like a highly profitable pivot to me.
- calciphus 13y agoI wish the product wasn't so intolerable to use. It's a ten-year-old approach to syncing two folders with a minimal amount of collision detection. Why does everything have to live in their folder? Why do I have to use my boss's crappy organization structure? Why is everything (sharing, permissions, history, changes) done through their website instead of on my local machine? It's amazing to me they've spent as much time and energy on marketing as they have and haven't spent time getting a product that's usable in an enterprise in a serious way. It just becomes a bin that marketing throws a bunch of documents into and no one else in the company uses.