Enterprise cloud storage company Box became a public company on Friday and investors ate up the stock. It popped about 70%: the stock was priced at $US14, opening at $US20, and is now trading at over $US23.
The company’s young charismatic CEO, Aaron Levie, always knew this day would come but it was a long, rocky road to get here.
Levie was a born entrepreneur. While other kids were riding skateboards or playing video games, he and his childhood friend were launching tech startups. As a teen, he started something like 15 companies.
When in college, he created online storage company Box with childhood friend, Dylan Smith. He dropped out to work on the company and hasn’t looked back since.
“I’m living the life I dreamed of as a 12-year-old. I don’t have hobbies. I want to build a big company, and this is it,” he told Forbes’ Victoria Barret in 2013.
About a year ago, Box inched up to its IPO, releasing a prospectus that shocked the tech community. When Box shared its financials, it revealed that it was burning through cash at an astounding rate, mostly on sales and marketing to acquire customers.
In the cloud computing industry, enterprises pay by subscription, and typically spend more over time. There’s a race going on now to nab enterprise customers. All of them will be eventually using cloud storage and collaboration of the type Box sells, and there is a lot of competition. The faster Box can grow its customer base, the more money Box will make from them over time. A lot was written and said about the soundness of Box’s business when people got a glimpse of that cash burn rate.
About the time cloud filed its S1, investors cooled on cloud companies, too. So, Box delayed its IPO several times, and Levie answered endless questions about it and the sustainability of his company.
Box is still burning through cash and doesn’t plan to stop anytime soon, it says in its current prospectus. At $US14 a share, Box raised about $US175 million from its IPO and if it spends that, it may sell more stock, it warns.
So, if investors had panned the stock, that wouldn’t have been good for Levie or his more than 1,000 employees in Silicon Valley, Austin, Tex., London, Tokyo, and Paris.
But they loved it!
So this is a very good day for Levie when his childhood dream of running a public company came true.
We’re going to take a stab at it at figuring out how much Levie and the other big shareholders are worth today using the number of shares they own (or have the option to own) listed in the company’s prospectus and the IPO’s Class A stock trading price (about $US23). It’s not actually that simple.
As we previously reported, Box management and investors are holding Class B stock, which gives them 10 votes per share. The IPO is basically Class A stock, which gives one vote per share. In other words, they are retaining most of the voting power and public shareholders won’t be able to easily oust managers or board members.
It’s unclear exactly how much their Class B stock is worth today, but it’s logical to assume its worth at least as much as the Class A stock. None of the principal shareholders sold any stock in today’s IPO, but they should be able to do so after their lock-up period expires
With those caveats in mind, here’s what this IPO did for Box’s leaders:
$US94 million: Aaron Levie, co-founder and CEO, 29 years old.
$US41 million: Dylan Smith, co-founder, CFO, 29 years old.
$US44 million: Dan Levin, COO, 50 years old
Most of the company is owned by VCs Steven Krausz (U.S. Venture Partners), Rory O’Driscoll (Scale Venture Partners), and Josh Stein (Draper Fisher Jurvetson) and they did well today, too.
And just to add icing to this sweet cake, Apple CEO Tim Cook gave Levie and the Box team a public shout out of congratulations today.
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