A Middle-Market Growth Phenom Breaks Out of the Bottom Quarter

If growing a company inside the lower middle market was a bike race, venture-backed firms would likely need to be assigned a league of their own — one where fresh rounds of venture funding (aka, growth hormone) can be liberally ingested, spurring new rounds of strategic hires.

Still, growth is growth, and no matter what high-calorie funding a company ingests, the question of how a company grows always boils down to people, culture, and software.

Or at least that’s how Dan Levin sees it as COO of Box, a cloud-based online file-sharing company that as of this very moment may or may not still reside in the middle market’s bottom quarter — a space occupied by businesses with revenues of between $20 million and $250 million.

“We’re in the process of blowing through the top end of that quarter,” explains Levin, who says that Box — already endowed with $280 million in venture funding — is now focused on quickly developing capability, a task that has in the last year alone required the online storage firm to grow its workforce from 350 to 700.

Today, Box’s offerings compete with those of established giants like Microsoft, Google, and IBM, all of which target the enterprise with online file-storage and -sharing products. Meanwhile, another high-flying online storage upstart — Dropbox — undoubtedly shares a lot in common with Box. However, along the way, Box moved out of Dropbox’s more consumer-oriented lane when it did what in the start-up lexicon is often called “a pivot.”

“Originally, we focused on consumers, but in 2008 and 2009, we began to focus exclusively on businesses, at least in terms of the business model for the company,” says Levin, who before his stint at Box had spent 6 years at Intuit Corp., where he oversaw the rollout of the enterprise version of Intuit’s popular accounting and reporting software, QuickBooks. His arrival at Box in 2008 undoubtedly helped to signal the new strategic direction for then 3-year-old firm.

“Consumer offerings usually don’t have any type of permissions models, so there’s no way to manage who has access to your stuff and who doesn’t, and there is no reporting, so you can’t see who has accessed your stuff,” explains Levin, while illustrating a few of the capabilities that distinguish Box from more consumer-oriented offerings. Just as compelling for middle-market businesses, according to Levin, is that Box’s capabilities are available to businesses as a cloud services offering — an approach now widely viewed as helping middle-market companies to cost-effectively add capability while enhancing their competitive footing against much larger enterprises.

Like that of many Silicon Valley venture-backed start-ups, Box’s IT environment has been built almost exclusively using cloud services offerings.

“We have no computers in our buildings that run any type of IT infrastructure. Our entire stack is in the cloud,” says Levin, who quickly lists NetSuite, Zendesk, and Salesforce.com as three of the developers whose cloud offerings Box currently accesses.

Asked to identify key milestones that have punctuated Box’s rapid climb, Levin touches on the parallel rise of cloud computing, but quickly becomes focused on the firm’s hiring.

“I have thought a lot about this. The key moment often arrives with the hiring of that key executive — a really senior and capable executive,” he says.

“Getting that first big leader to make the jump was critical, and it enabled us to get the next one, and then the next one, and so on. And once you’ve got the right leadership in place, you are a long way down the road to enabling growth,” explains Levin, who says that Box has also benefited from having “leverage in the hiring process.”

“If you have five senior people tasked with hiring 350 people, you are not going to get very far, but if you have 30 to 40 excellent first-level managers hiring 350 people, then ‘you got game,’” he adds.

Despite its quickly expanding workforce, Box has until very recently kept its people largely under one roof. The 7-year-old company last month opened a San Francisco satellite office, while opening an office in London last fall. Currently, the firm has an enterprise sales force of about 50 people spread across the U.S.

“We foresee our sales force sort of coalescing into sales offices in Chicago and New York, but I do think that we are never going to be a company where we have half of our people working out of their houses. We believe that communication and interpersonal communication is too important,” he explains.

Levin says that keeping the firm’s culture “cohesive” remains essential to attracting and hiring new key people. He adds: “We’re not a company that is a big believer in a virtual workforce, and in the face of this type of growth — where we are more than doubling in size and revenue every year — keeping the lines of communication open were absolutely critical.”

Still, Box’s greatest cultural transformation may lie ahead, after it experiences that other rite of passage for Silicon Valley start-ups: an IPO. Last month, Box’s leadership said that it is now planning for an IPO in 2014 — an admission that suggests that it could now be beaten to the IPO ticket counter by its competitor, Dropbox, which is now aiming to go public later this year.