Enterprise Software

Getting Business to Think Inside the Box.net


At 26 and with frizzy, out-of-control hair, Aaron Levie is not the typical khaki-and-blue-shirt-wearing enterprise programmer. And that’s fine by him. The college dropout came of age in the era of social networking and mobile applications and says he’s baffled by office programs that are hard to use, expensive, and inaccessible from his iPhone. When it comes to business software, he says, “the vast majority kind of sucks.”

Levie’s startup, Box.net, makes software that allows users to sync and share documents through the cloud. The goal is to make enterprise software simpler and more intuitive, and Levie plans to preach that message at Box’s first annual conference for some of its 60,000 customers, scheduled for Sept. 28. Investors are listening. The Palo Alto (Calif.) company has already raised $48 million this year and is now raising an additional $50 million in a round that values the company at more than $600 million, according to two people with knowledge of the deal. The war chest will help Box expand and go up against Microsoft (MSFT) and IBM (IBM), two heavyweights in the enterprise software market worth $245 billion globally, according to research firm Gartner (IT).

The company’s software, which Levie started developing six years ago in his dorm room at USC, lets users store documents, spreadsheets, and presentations on the Web and access them from anywhere, including smartphones and tablets. That’s an advantage over direct competitors such as Microsoft’s SharePoint, which has built a mobile app only for Windows phones. For groups of up to 500, Box charges $15 per user per month, and it also sells a more comprehensive product that includes encrypted storage and dedicated customer support.

Box’s users include Procter & Gamble (PG), Pandora, and Six Flags (SIX). Equinix (EQIX), an operator of data centers, recently bought licenses to use Box for 2,000 employees. Chief Information Officer Brian Lillie says he was attracted to Box software because it works on most mobile devices and doesn’t require a three-year contract, as many enterprise products do. He says Box is helping his company diversify away from larger, more expensive software sellers. “The new mantra is agile,” he says.

Box remains the underdog: Microsoft’s SharePoint boasts 100 million users, more than 14 times the number of Box subscribers. In June, Microsoft started selling Office 365, Web-based software that lets customers access SharePoint in the cloud, rather than just on internal servers. “We see the trends out there,” says Jared Spataro, director of product management for SharePoint. (He adds that Microsoft is “committed to crossplatform access,” though he wouldn’t say when SharePoint would be available on non-Microsoft smartphones.) And Dropbox, which makes a product similar to Box.net’s but has so far targeted consumers, already has more than 25 million users and has “big plans to go after all sizes of organizations,” says Julie Supan, a Dropbox spokeswoman.

Scott Weiss, a partner at venture capital firm Andreessen Horowitz, which has invested in Box, suggests there’s room for plenty of business-focused startups. (Bloomberg LP, parent of this magazine, is an investor in Andreesen Horowitz.) “There’s so much change about to happen in enterprise software,” he says. “Little companies” like Box “are set to be the new franchises.”

The bottom line: Box.net faces competition from SharePoint, which has 100 million users, and the popular consumer program Dropbox.

Levy is a reporter for Bloomberg News in San Francisco.

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