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Friday 25 September 2020

Box CEO: Power Of The Cloud

“Snowflake is a very disruptive enterprise software company actually going out and going public larger than Google did,” says Box CEO Aaron Levie. “It’s a profound statement about the power of the cloud and the scale of these opportunities. We would not have anticipated ten years ago an enterprise software cloud company that doesn’t exist in 2010 going public at $60 or $70 billion. These markets are enormous and the opportunities for disruption only continues.”

Aaron Levie, CEO of Box, discusses how the Google-sized Snowflake IPO illustrates the “power of the cloud” and how disruptive it is to the past way of doing business:

Move To Digital Adds Tailwind For Cloud Companies

Certainly, the macro market is very volatile right now (for cloud and tech IPOs). You’re going to see a dynamic range of prices both on the day of an IPO and the subsequent trading (for companies like Snowflake). We’re going to have a lot of different narratives about did people leave money on the table, did stocks go down or up in any of these kinds of trading periods.

The broader macro thing that we’re seeing is that these are companies that in many cases were founded seven, eight, nine, ten years ago. They’ve now reached a scale with even more of a tailwind right now because of this move to digital. These are companies going after incredibly large multi-billion and multi-tens of billion-dollar markets um that have a tremendous amount of growth going forward in front of them.

You’re just going to continue to see this IPO pipeline. Over the past decade, we’ve seen dozens if not hundreds of very disruptive enterprise software companies emerge and get funded and really be able to reach scale.

Snowflake IPO Shows Power Of The Cloud

I remember Google having this jaw-dropping valuation and game-changing and historic IPO in terms of its scale. Then you have Snowflake which is a company that is not necessarily known by consumers generally. But it’s a very disruptive enterprise software company actually going out and going public larger than Google did. It’s a profound statement about the power of the cloud and the scale of these opportunities. For Snowflake to be as big as Google a lot of other things would have to happen in terms of their portfolio.

The size of these companies and the markets they’re going after are so enormous. We would not have anticipated that five or ten years ago if you had said are you going to see an enterprise software cloud company that doesn’t exist today, back in 2010, going public at $60 or $70 billion? I don’t know who you’d be able to find that would say yes to that. These markets are enormous and the opportunities for disruption only continues. I think we’re just going to continue to see more and more companies go public.

We Didn’t Feel We Left Money On The Table

It’s great that there are lots of different ways to do an IPO, direct listings, and more of a traditional IPO. It’s fantastic that the market supports different approaches. Now you have SPACs in the mix as well. We went public with a fairly traditional approach. Our stock went up by 70 percent or so on the first day of trading. We didn’t really feel like we left money on the table. We were happy to be public. We got great investor support. Some of these things are easy to look at in retrospect. You don’t often know the sheer demand for a new public offering at the start of the IPO process. Some of this ends up being easy to to to be able to comment on after the fact.

From an entrepreneur and from a company and corporate standpoint, your biggest priority when you’re going public is making sure you can educate investors, building a strong set of support in your IPO process. Sort of incrementally leaving 10 or 20 percent of financing on the table is not usually the most important factor that you’re focused on. Maybe it should be which is again why it’s great to have these different points of view out there.