The Origin Story of Box 📦 Aaron Levie on the Garage Days | Draper University

Let's just back up. So what Box is, is our vision is to make it really, really easy for businesses to store, share, manage, access their information from anywhere. We have about 20 million users on the platform, about 150,000 businesses that use the product, and we're solely focused on making it really easy for enterprises to manage all of their data and their business content, and then work from any device and work from any kind of application. So that's what we do today. And just to kind of take everybody back just a little bit, so when we started the company in 2004, who was— OK, it's sort of illegal to ask people's age, but like, who was on the internet in '04? OK. Who was like looking at businesses in '04 on the internet? OK. So if you remember, back in the internet in 2004, this is sort of what the internet looked like. OK. It was a sort of barren, deserted landscape. Tim, can you confirm this? Yeah. OK. So this was sort of the internet. The camel that was sort of looking up was Google. The sad camel was Yahoo. And that was basically all there was on the internet in 2004. So there wasn't a lot of things going on. And my co-founder and I were at college at the time, and we were thinking about new kinds of services to build. And I'd launched a bunch of things prior to that. prior to Box, prior to 2004, that weren't very successful. One time, tried to build a search engine that was the world's fastest search engine. If you had never been to Google, that's what you would think of it as, but unfortunately, Google was about 10 times faster, so that business idea didn't work out really well. That was '04, and we were sitting around in college, and this was a time when you would access files and data from lots of different computers on campus, and you were sharing data across the library and the office computer that you were working from, or the classroom machine, or your friend's laptop, and it was really, really hard to share data. So a couple people said they went to USC. Raise your hand if you went to USC. So I don't know how it is today, but back 9 years ago, you got 50 megabytes of email space. 50 megabytes of space, and it would delete every 6 months. So it would sort of auto-cycle every 6 months. And so I'm not really sure where all of our tuition was going, but certainly not into servers. But the issue was, was it was really, really hard to share your files in the classroom environment and in the campus. So things have obviously changed today, but back then it was really hard to do. So what we said was, let's look at this space. Let's look at the landscape and see if there's a new way that we could do this. We could create a new way to share information. And as we looked at the market, people weren't storing their data online. So we thought this was going to be a pretty big opportunity. And we looked at the new factors that had been created. And this is something that you should sort of be doing at all times in your businesses, which is really, what are the things that today enable your business to exist that didn't exist 3, 5— probably not more than that— years ago? Because if you're not doing something that was fundamentally enabled by some new improvement in cost performance or some new improvement in technology in just the past couple of years, it's probably going to be really, really hard for you to stand out. So you have to fundamentally be leveraging something that is brand new about the environment or about the ecosystem. And so in 2004, we looked at what had changed about the internet since the late '90s. And in the late '90s, there were a bunch of companies that had tried this idea of storing files and storing data online. So we tried to compare what happened in the late '90s compared to 2004 that was going to make this business model more likely to succeed. So the first was the cost of storage had gone down every year or 2 by about half. So just a few years later, our cost of storing information was about an 8th of the price of what it was in the late '90s. So everybody knows Moore's Law, which is that the performance of computers sort of double every 18 months to 24 months. A very similar trend happens in storage. Which is really what matters for our business because we want to be able to store lots of information as cost-effectively as possible. So the cost had gone down of actually doing this. What's really cool is today we buy hard drives, we can store about 50 times the amount of information in a hard drive than our competitors could have in the late '90s. So when you have a 50x cost improvement, that's in 2013, but in '04, '05 it was only an 8x improvement. that dramatically changes the use cases you can then enable with technology. We also found that there were more powerful browsers and networks that were emerging. So there was this huge battle for browsers in the late '90s between Netscape and Internet Explorer. And what we ended up with was Internet Explorer effectively dominating the ecosystem. And what we had was— does anybody remember IE5? So it would take about 6 minutes to load a web page. And after you loaded the web page, you probably had a virus on your computer by the end of it. So it was just a really, really horrible, experience for being able to build applications. But by '04, '05, we finally had new kinds of browsers. We had Firefox emerging. You could build rich applications. So we had much simpler ways that we could then interact with information and interact with applications on the internet. And we also were getting much faster internet. So we used to have dial-up connections to the internet. Now, by the time 2004 and 2005 rolled around, we started having cable internet. Obviously today, we're on even faster networks with fiber and whatnot. So we had the ability to move data around much more quickly. One of the fundamental limitations in the late '90s with these kind of services was that it was just really, really slow to share your files. It took hours to be able to upload just megabytes of data to the internet. And then finally, we had more locations that people wanted to access information from. So today mobile is obviously ubiquitous, but in the mid-2000s this wasn't as obvious of a trend, but we started to see that with BlackBerrys and with Palm devices, people were going to be accessing their information from more locations. So we had at least sort of 3 factors that had fundamentally changed in just the few years since the last set of companies that tried this. And so if you're thinking about a business, it's really important to really understand deeply what are the new factors that have changed. Some of them are technological. Some of them are sort of economical and sort of financially driven, so something has become much cheaper. And even some of them are even cultural. So sometimes just our sort of cultures or societies change to allow us to do new kinds of things with technology. So you want to make sure that something has really changed just in the past couple of years that's going to enable some new kind of factor for your business to succeed. And so we put together a really quick version of the product and we launched it. And this was really exciting because all of a sudden people were signing up for the service. We started getting a bunch of users to show up and sign up. And so what we decided to do was actually raise— it wasn't venture capital, but we decided to raise angel funding at the time, and this was in 2005. And it's really challenging. We were 19 and 20 years old, my co-founder and I, and we were going around— this was in Seattle still— we were going around trying to get people to fund us. And this was— we would go and pitch every single possible investor that we could. And we got a lot of nos in the process. It turns out, so my co-founder is our CFO, and he was 19 years old, but he looked like he was about 11. And so the challenge is when you have an 11-year-old-looking CFO, the investors tend to think that you're going to run off to Disneyland with the proceeds. So we had this huge hurdle to overcome to actually convince people that we were going to build a reputable and reliable company. And this became one of our biggest issues. But we finally got lucky. We actually had Mark Cuban invest in the company. And sadly, today most people know Mark Cuban for things like Dancing with the Stars and Shark Tank, but we were, you know, he became a multi-billionaire for selling his company to Yahoo in the late '90s. So this was a huge internet entrepreneur, and we were very, very fortunate to have him invest in the company. So we were very lucky. We decided because of that investment that we would actually drop out of college and move to Silicon Valley. And, you know, it's funny because when you leave college and go to Silicon Valley, everyone sort of around you is sort of like, oh my God, this is going to be spectacular. If you think about the other people that dropped out of college in the past, you have Bill Gates. Bill Gates dropped out of college. And there's Michael Dell. And Michael Dell dropped out of college. So this is amazing. And of course, we all know Steve Jobs. Steve Jobs dropped out of college. This is going to be incredible. But no one ever thinks about this guy when you think about the college dropouts. So I don't know if anybody knows this guy. I apologize if you're related to him. In fact, I don't even know if he's a college dropout. But he's sort of— You sort of just assume by the picture. But it's not like you're guaranteed any level of success beyond what you would otherwise have. And this was a big risk, because we decided we were going to leave school, move up to the Bay Area. We initially moved to Berkeley for a little while. Anybody ever been to Berkeley? Kind of a freaky place, right? So did you guys go to Berkeley? Raise your hand. OK. I like Berkeley. Don't worry. So we went to Berkeley. We lived out of my uncle's sort of extra garage. So this was quite exciting. And actually, we ultimately got discovered there by an investor at Draper Fisher Jurvetson, Josh Stein. He actually came to our garage. I don't know if that was in the diligence notes, but he probably should have been a little more concerned. But it was a pretty disgusting living arrangement that we had. So we would sort of— what would happen is, All 4 of us would— we lived in one place, and then we worked in another, these 2 sort of semi-connected garages. And there was only 4 of us. And there wasn't Amazon Web Services at the time. There wasn't cloud computing. So we had to manage our own servers. So what would happen is we had a sleep schedule that made it so everybody— there was always somebody awake at all hours of the day. And what would happen is— and that was because we had to basically make sure that the servers were always online. And so what would happen is about 4:30 AM, it might be my turn to stay awake. And the server would go down. And you'd basically go into just the other room, basically, the other garage. And you'd wake up the guy running the servers. And he would sort of roll out of bed and go reboot the servers. And that was just a thing that we did 3 or 4 times a week, which is probably not saying anything good about the servers we had at the time. But this was sort of— we had to live and work together in these kind of crazy Crazy environment to try and build up Box. And so we settled in the Valley. We launched a free version of the product. So initially we were pay only. That was the only way we could afford to fund the company. Actually, the initial funding was both through our customers and my co-founder was really, really good at online poker. So he had about, I don't know, $12,000 in online poker winnings. And so that was sort of about the most money that we'd ever heard of. And so that all went into the business. And he basically helped fund the company initially. So eventually, though, we used venture capital to sort of subsidize the early adoption of our free plan with the goal of eventually getting people to convert and pay for the service down the road. How did you decide to go with the free plan?