Home For Box, Online Storage Is Just The Beginning

For Box, Online Storage Is Just The Beginning

For consumers, Box still pitches itself as “online storage,” the kind of digital warehouse for files that’s rapidly becoming a commodity. But the fast-growing startup, as it races to take itself public, long left that market behind for its real customers—businesses both large and small.

For its big, paying customers, Box bills itself as a way of managing “content”—the virtual reams of company data generated in the course of doing business. The distinction is crucial as it seeks to convince investors that it’s not just roadkill for Google and Dropbox.

Just what is so different about this business-focused storage player? And what makes Box CEO Aaron Levie think it can succeed as a publicly traded company?

Escaping The Storage Box

Box started nearly a decade ago, at a time when the world of online storage was obviously a very different place. Levie and his cofounder, Dylan Smith, didn’t initially anticipate selling to businesses. But they came calling, and eventually Levie realized that should be his company’s focus. That was a heady insight for a college dropout. Storage may become free, he told ReadWrite in 2012—but there are other services businesses will pay for.

It won’t be easy. Google has more online capacity than just about anyone, and it’s using that clout to push prices ever lower. What it lacks, however, is a feel for the kind of customization businesses like. Its products and pricing are one-size-fits-all.

Dropbox, by far the most popular consumer file-sharing service, is now making a big push into the business market, but it has only recently tweaked its product to separate personal and business files.

That’s where Box, which now has more than 500 people working in sales and marketing, may have an edge.

A Platform For More Than Storage

For Box, that strategy includes expanding into making itself into a service that allows other companies to build their own applications using Box’s technology. Finance, accounting, and HR software all end up generating documents, and those documents need not just storage but a way to flow to the right people at the right time. That’s where Box comes in.

Box is also experimenting with new tools, like Box Notes, a document-creation tool that’s still in private beta that puts it in competition with Microsoft Office. 

As well, Box hopes that businesses will build their own specialized internal applications using its infrastructure—and pay it for the privilege. Instead of relying on the traditional seat-license model, Box now aims to charge by how much customers access it services through its application programming interface, or API.

Under the new model, introduced this week at the Box Dev conference, Box is free to use until an enterprise customer makes more than 25,000 API “actions” a month. Then a $500 per month fee kicks in. (An API action might involve uploading or retrieving a file, getting a list of files, adding a comment to a file, and the like.)

How much does that allow? Kloudless, a service for integrating multiple cloud services, goes through about that many API calls in a week, Vinod Chandru, a company cofounder, said in an interview. Initially, he was worried he’d have to pay the fee. But as it turns out, third-party developers like Kloudless can keep using Box for free. Only business customers building custom applications on top of Box, like Sungevity and Random House, will have to pay up in this new way.

Meanwhile, it’s aiming to sign up customers in specific industries, like design, retail, banking, and construction, by fine-tuning its offerings for those businesses. That level of customization makes Box less of an online-storage player and more of a purveyor of specialized applications that revolve around documents

That willingness to specialize, whether it’s for customers in particular industries or for developers looking to build on top of its platform, that promises to differentiate Box from its competition. The question is whether all of these new versions of Box—outside of its original mission of storing files—will generate enough revenue to close its massive profitability gap.

Photo of Box CEO Aaron Levie by Anthony Myers for ReadWrite

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The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

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