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Cloud Computing

Box IPO Is All About Persuaders and Storytellers

In news rooms and trading floors there has been a great deal of slobbering over the details of Box’s S1, the regulatory filing that companies make before an initial public offering of shares. Some of the attention and tittle-tattle resembles tabloid interest in Britney Spears at her personal nadir. But much of it has loftier, even quasi-academic interest, because Box may or may not become the playbook for developing an enterprise software company from Eureka moment to multi-billion-dollar business.

Certainly the numbers are staggering and clearly Box has more red ink than Bic pens. But early losses of this kind can merely be evidence of vaulting ambition and the numbers show that Box has a world of ‘upside’ — in other words, opportunities to win more customers, get current customers to spend more, and turn current freebie users into paying customers as the world’s automation goes to the cloud. The big question is whether CEO Aaron Levie and his team have got their sums right and can ride out the years of losses and wait for base revenue gains to be alchemised into profit. The ancient rule applies: revenue for vanity, profit for sanity, and we can’t yet know whether he is an over-reacher or brilliant strategist and executor.

But perhaps the most interesting aspect of the S1 disclosure is the vast sums Box is spending on sales and marketing: $171m per year, steeply up from the previous year. This, it seems to me, is evidence of a very modern approach to building a technology company that emphasises storytelling, branding and persuasion. Box spends heavily on wowing prospects customers, analysts and, yes, the media*. Increasingly this is the trend in tech: spend heavily on messaging, PR, marketing campaign management and people who will repeat your narrative (Cloud! Not just sync but collaboration! Enterprise-grade workflow management! Secure!). Do it until your mantras are as hard to shake off as the tune to Achy Breaky Heart and people share them like a viral video. The message stays stuck: love it or loathe it, you can never leave it or lose it.

In the old days, the counsel that would be everywhere in technology was to “build a better mousetrap and the world will beat a path to your door”. Box has a good mousetrap and strong R&D, but a large part of its spending has been on persuaders and storytellers and the making of that most elusive, hard-to-define yet powerful phenomenon — a brand.

 

*(Full Disclosure: My daughter wears a Box T-shirt I was gifted by the company)

 

Martin Veitch is Editorial Director at IDG Connect

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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