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Cloud Storage IPO

Written By Brian Hicks

Posted February 5, 2014

Online storage company Box quietly filed for an initial public offering (IPO) just weeks after the company announced a $100 million funding round.

As the online storage market sizzles, Box is still in the throes of hot competition. This latest move comes at a time when Box has its sights set on international markets, with company target offices in Japan, Australia, and Brazil this year.

Using the advantageous law that allows start-up companies to quietly file paperwork with the Securities and Exchange Commission without public disclosure, it was the perfect time to create a little buzz in the tech world amid rumors of Microsoft (NASDAQ: MSFT) hiring a new CEO and Google (NASDAQ: GOOG) announcing major earnings. And with one simple tweet – voila – here we are.

We could see Box go public as soon as April, but company spokespersons are keeping mum for the time being; instead, they maintain that Box will continue to build business and expand globally.

The Company

The Los Altos, California based company founded in 2005 by two childhood friends Aaron Levie and Dylan Smith has a valuation right around $2 billion. Levie, the company chief executive and wide eyed 29 year old has made a name for himself by using 140-characters or less, often taking to Twitter to boast about his company or to unabashedly take on big name competitors like Microsoft and Apple (NASDAQ: AAPL).

Call it youth, or what have you – Box has the moxie and the gusto to stand firm behind its product – enough so to fire directly at the big guns.

And there’s something to be said for that. By the company’s own standard of ethics and conduct, and sprawled across the company website, Box offers simple, secure sharing from anywhere, using secure, scalable content-sharing that both users and IT love and adopt. Box lets you store all of your content online, so you can access, manage and share it from virtually anywhere. A user can integrate and do all this with Google Apps and Salesforce, and access is easy on any mobile device.

The Box customer base stretches to more than 200,000 businesses worldwide, including Proctor & Gamble (NYSE: PG), Pandora, AARP, Six Flags (NYSE: SIX), and sports teams like the San Francisco Giants – the list goes on and on, and on, and on, and on, and… As Box sets up shop overseas the possibilities are endless.
Its recent foray into public offering seems to be all part of the big Box plan, and has nothing to do with its arch nemesis Dropbox making similar recent moves.

According to Forbes, “This isn’t about Dropbox, it’s always been independent of them,” one source says. Box has been preparing for this course for weeks, the source adds, with its major funding round of largely international investors preparing “a new book of business” for the company to demonstrate to Wall Street and analysts later this year… With the market seemingly receptive to jaw-dropping valuations and public offerings from less-mature tech companies, Box has the regular enterprise revenue to produce consistent quarterly totals that will be appreciated by investors, the source adds.”

The Competition

That may be, but it doesn’t negate the fact that Dropbox just completed its own round of funding and has its own valuation of $10 billion.

Neither side seems deterred by the other though. Dropbox, much like Box, is a cloud-based storage platform.
Unlike Box though, Dropbox has recently become the target of security scrutiny because of its user data privacy.

The problem: the way Dropbox currently operates, the company has complete access to all customer files. Users think that because their files are held under Dropbox storage, that they’re automatically held privately, but that can’t be the case when Dropbox has full access to all of its files.

The battle will rage on, and I’m sure Mr. Levie will capitalize on this bit of intel in no time.

Aside from Dropbox, the amount of online storage companies is greater than ever before. With the likes of Sugarsync, Wuala, and Syncplicity created by EMC Corporation (NYSE: EMC), who offers a wide range of IT solutions and services; each company presents its own unique twist to both a personal and professional online storage presence. And there are countless others out there offering a similar service, and more and more pop up every day as the importance of online storage becomes vital to security.

And we can’t forget the big guys. Google Drive, Apple iCloud, and Microsoft Skydrive lead the way in this tumultuous industry.
The Investment

So, with so much competition, and Box looking up at major competitors, are they even worth the gamble? I say yes!

These guys have made their mark here in the states, and they’re pushing for a bigger slice of the pie globally.

There are concerns about problems with cloud storage security, like what Dropbox is confronted with presently. Moving forward, ownership of encryption keys will be the key to any future success. Box hasn’t yet been called into question, but that doesn’t mean it won’t. Ease of use and security will be a major challenge for any one of the companies mentioned here, and fundamentally, will separate the winners from the losers in the end.

It’s all about control, and people want their privacy.

Regardless, of who you think will come out on top, Box’s IPO – and Dropbox’s, will both be highly anticipated for 2014.

I’m putting my money in the Box.