Box, headquartered in Los Altos, California, is an enterprise software company, which enables users to store documents in the cloud. The primary business model is a product, in which the company sells cloud storage and file management to individuals and companies alike. Box also operates a work-for-hire business model alongside its product model in which it creates a tailor-made cloud storage and file management system for large companies. This write-up will focus on the product business model.
Box was founded by Aaron Levie and Dylan Smith, Silicon Valley entrepreneurs in 2005, based on an idea Levie had at business school. Levie found sharing documents and group work with business school classmates to be cumbersome. At this time, the concept of the cloud was still in its infancy and the iPhone was still yet to be invented.
Box quickly became popular with individual users, but Levie and colleagues realized that the product would also appeal to companies. While their initial launch was designed for individual users who used it as a secure option for storing files (eg music, videos, photos) and who want to be able to access the files from mobile devices as well as desktops, Box saw the effect of consumerization of IT, which meant as individuals became comfortable with Box’s offering, they demanded the same quality and accessibility in the workplace. Box has recently, therefore, begun to target more and more of the corporate user market. This sets Box apart from Dropbox, which still largely focuses on the individual consumer market.
Three years ago Box launched in the UK and now has over 140 staff at its Mayfair international headquarters. Box Limited was listed on the New York Stock Exchange in January 2015, netting Levie, 29 years old, approximately $100 million.
CUSTOMERS – WHO THEY ARE:
Box targets two categories of users: individuals and small businesses, and large companies, who need a way to store, access and share files in the cloud.
ENGAGEMENT – VALUE CREATION PROPOSITION (INCLUDING NETWORK EFFECTS):
In its product business model, Box provides a scaled, standardized product for personal and small business users. All users can share access to the files to colleagues or friends allowing them to edit, download or add files, enabling collaborative working. The other major benefit is that users can then access the files on any device they are using, whether it’s a laptop, tablet or iPhone, wherever they are. Small business users benefit from the ability to share documents within small offices and teams. Box effectively removes the need for inflexible traditional office networks. Large enterprises can benefit from the secure mobile access to corporate information, document management and collaboration benefits. This is of particular value for employees who are working remotely or travelling. The Box platform also integrates with other enterprise software providers (including Salesforce, DocuSign, NetSuite, and others), which means workers can still use their enterprise software resources within the Box.
DELIVERY – THE VALUE CHAIN:
Box’s servers create cloud storage space, which it essentially sells to users for the purpose of storing and sharing files. The software and algorithms that Box developed in-house provide security from hackers, and enable real-time file management. Users access their files through Box’s web-based interface, or through their own desktop/laptop as they would access files on their hard drives.
MONETIZATION – VALUE CAPTURE:
Box operates a typical freemium pricing model. Personal users can get up to 10GB of storage free. If they need additional storage, users can pay £7 per month to get 100GB. Small business users can get monthly subscriptions for £3.50 per month or £11 per month, depending on needs. Enterprise users can buy an enterprise license, which is priced based on number of users and amount of storage and additional services (such as other SaaS tool integration). These enterprise contracts tend to be operated more as a work-for-hire business model.
Written by Andrea Hornsby and edited by James Knuckles under the direction of Prof Charles Baden-Fuller, Cass Business School. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. © 2016
Published 20 April 2016