Box Takes On Microsoft, Google for Cloud Dominance

Cloud-based storage for the enterprise space might not seem like the most exciting of topics, but Box CEO and co-founder Aaron Levie begs to differ. In six years, Levie and co-founder Dylan Smith have taken Box from a college business project in a dorm room to a company that Levie says serves about 82 percent of Fortune 500 companies.

Levie wants businesses to leave behind the "Microsoft- or Oracle-dominated world" of business software and embrace the cheaper and more open cloud. To that end, the company recently launched its Box Innovation Network (BIN), into which Box will invest up to $2 million "to drive the development of meaningful apps on the Box platform." Box has partnered with companies like Appcelerator, Heroku, VMware Cloud Foundry, Rackspace, SnapLogic, Twilio, and more to lay "the foundation for a more open enterprise ecosystem."

The company, which is now formally Box as opposed to Box.net, is open to the average consumer, and the company recently offered a , as well as iOS and , but enterprise is where Levie sees the most potential. But is the enterprise ready to truly embrace the cloud? Can Box compete against major firms like Microsoft and Google? And will BIN spearhead a more open app eco-system or is it just another app store? We talked to Levie to find out.

PCMag: I've read that you made a shift from consumer to enterprise over the years; can you talk about that evolution?
Box: In 2005, when we started the company, we really decided that people should be able to share and manage and get to their information from anywhere. And we didn't necessarily have a focus on consumer or enterprise. We just built this application that we thought would be really cool for people to use, and if you fast forwarded a year or so after our launch and you looked at our user base, we had a number of consumers, but we also had a number of businesses who were using the product in a number of interesting and unexpected ways. So once we started to dig through the way that businesses were using it, we saw that that was going to be a much bigger opportunity versus a consumer space, which tends to get commoditized pretty quickly by companies like Google or Microsoft or Apple. So we basically just looked out in early 2007 around what our next five years look like, and we just realized that if we attacked the enterprise, we would be far more effective at building what we thought could be a multi-billion product in technology and company.

PCMag: Do you have examples of the interesting and unexpected ways enterprise customers were using Box?
Box: A lot of traditional software like Microsoft SharePoint and other kinds of software for storing information were really built for keeping data within the organization. The firewall prevents you from sharing outside the organization, and the software doesn't anticipate that you would share with somebody outside your network. So when we launched Box, we saw all these new use cases that were emerging where people wanted to share with people outside their business. We had a talent agency in Los Angeles that was able to now securely share all their media content with all of their clients and all of the various people who work with them. We had a major retail chain that was using Box able to collaborate across all their offices and buildings in a way that they wouldn't have been able to do previously. We had people who were traditionally Fed Ex'ing data, because that was the only way they could get large amounts of data outside their organization [now using Box]. Across all of these use cases, the pattern that emerged was people want to be able to share everywhere, they want to be able to work from anywhere, and they want to be able to do this for an extremely low cost. And we had a technology that allowed them to do it, so that's why we focused on the enterprise.

PCMag: You mention Microsoft, but what about Google and Amazon?
Box: Google's just not really focused on the enterprise fully. They have a lot of various distractions right now between social and mobile and search and advertising that have made Google not go as far as they need to for most enterprise customers in terms of what they need for managing their information. The scale that you need to be able to hit for doing this kind of business data management in the cloud is pretty significant, and it's an undertaking the customers want to make sure that you're fully focused on. So when we go and talk to a company like Proctor & Gamble or Merck or Panasonic, they want to ensure that they're dealing with a company that's 100 percent singularly focused on this problem, which Google can't really claim to be; and it shows up in their products that they're not really focused on the enterprise.

On the Amazon side, Amazon kind of operates at a little bit of the lower level of the stack than we do. Amazon is where maybe competitors to Box would build their application but a customer wouldn't go there directly to solve their problem.

PCMag: So are these bigger companies your top competition or are you focused on smaller rivals like Dropbox?
Box: The number-one competitor by far is actually Microsoft. Microsoft makes the most amount of money in this space and they represent the leader in this category for the past five to 10 years, with SharePoint and other services they have.

Continue Reading: Box Innovation Network Tackles Apps>

PCMag: Can you talk about the Box Innovation Network?
Box: There's two ways to serve enterprises. The first is to have an application and people will use that application for whatever it's built for and hopefully it was built for their needs and their use cases and their industry. And the other is to have a platform where other people can build the right kinds of applications for your customers. And we found that with our kind of services for managing and sharing information, we kind of have to do both. We have to deliver a very, very compelling and amazing application for businesses to be able to share and manage information, but there's lots of things that we can't build ourselves.

We're not going to build custom applications ... for the healthcare space or financial services or PHARMA, so we need to go out and have a network of partners and other kind of startups and development firms and consulting firms that can build that technology for our customers and for their own customers.

So the innovation network is really, how do we get together thousands and thousands of developers and partners to be able to go in and attack this market and drive a new level of openness in the enterprise? It's fundamentally what we think is going to be this next-generation enterprise software eco-system. We think it's going to be comprised of hundreds of thousands of startups that are all building for the enterprise. It's a very different kind of ecosystem that we saw previously with Facebook or iPhone or other environments.

PCMag: What kind of different considerations have to be made?
Box: The size of the dollars are much more significant—we've already had an application that people have built that sold for $50,000 per license. The implications around security are also incredibly important; around how data gets managed and what the application can do with that data, and that's again, one of the powerful things about our API. We expose tools and those interfaces to developers in a way that makes it really, really seamless so they don't have to worry about all of the things that underlie what we do at Box.

PCMag: Does the enterprise really want a more open eco-system?
Box: When you go to a company like Microsoft or Oracle, these companies basically want you to implement an entire vertical stack of technology that they power and own. So, Microsoft wants you to get SharePoint with Office Exchange with Microsoft Lync with Microsoft Office with Microsoft SQL Server or Azure and they want all of that technology to come together and work for you and be implemented at a single, consolidated set of services. And maybe 10 or 15 years ago, [enterprises] didn't know that this would be a bad thing, but now fast forward and what we've seen is a complete lack of innovation from Microsoft and Oracle, because when you don't have competition, you have no need to constantly drive performance improvements, functionality, and innovation, and that's what's happened. So you tend to have much more lazy applications because of the characteristics of those ... I wouldn't call it a monopoly in the pure definition sense, but when you have such great market share between just a few companies, you get a complete lack of innovation. And what's happening is that enterprises are finally realizing that for 10 years, they've been buying technology that isn't really solving the problems that they have, and Microsoft has never really has to do that because of, again, the captivity they have on those customers.

So in our case, and really, we just represent one small piece of this trend. If you look at companies like NetSuite or Salesforce or Workday or Zendesk—all of these enterprise applications are now way more focused on interacting and participating in a much broader eco-system of enterprise software that wouldn't have been possible in a Microsoft- or Oracle-dominated world.

PCMag: You said back in August that you were focused on developing the best and most elegant strategy for tablets. How has that evolved?
Box: In an 18- to 24-month period, [enterprises] had all these new kinds of devices in their organizations, [but] these devices didn't work with their existing technology. So, we put together a whole mobile team that was going to be focused on building best of breed mobile applications for our customers that helped them manage and get to their data from Box. And that paid off because what happened was, we had pharmaceutical companies, we had consumer packaged goods companies, we had people in the finance space that all of a sudden needed to get data securely from their business to their iPads, and we were one of the very few applications that could do that in a very scalable way.

I think the diversity of these mobile platforms is actually a really positive thing for us and other startups because it means that Microsoft or Apple or Google can't really serve the entire market because they're really focused on their own platforms. For all the customers that want Office or that want Exchange or want SharePoint on their iPad or their iPhone, they can't do that because Microsoft is so focused on Windows Mobile. But with Box, they can easily implement this technology across any device and any range of platforms that they're using.

PCMag: Where do you see yourself in a year?
Box: In a year from now, we'd like to go from having 4,500 developers on Box to tens of thousands of developers on Box. We hope we'll have made it into 100 percent of the Fortune 500 and we would love hundreds of thousands of businesses to be active on the platform. We think it's going to be a pretty critical year for us.

It's just one of the coolest times to be in the enterprise business. And normally, it tends to be a sort-of forgotten or unloved space, but I think the amount of innovation that's going on right now is really profound. At our Box Innovation Network event, we had tons of young startups that were being created by people who traditionally wouldn't have been working on the enterprise who were now building enterprise-focused applications, so I think it's becoming a lot cooler and people are recognizing that innovation and scale that exists in the enterprise, and I think we're going to see some pretty massive changes.

Interview was edited for space.