Box CEO Aaron Levie thinks going public helps enterprise startups compete with the big dogs (BOX)

Box

• When Aaron Levie took Box public in 2015 — nearly a year after first filing — critics wondered if it was too soon for what was once the hottest startup in enterprise technology. 
• Three years later, Levie said he's "really happy" Box is public — particularly because enterprise clients like to know what's going on at the companies they work with.
• Also, he said, quarterly earnings reports have helped Box mature into a more financially disciplined organization.

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Many corporate executives love to grouse about the difficulties involved in running a public company — from the regulatory red tape involved to the market's intense focus on quarterly results to being at the beck and call of often short-term investors.

But don't count Aaron Levie among the complainers. Instead, Levie, the founder and CEO of cloud service provider Box, is "really happy" to be running a public company. Among other things, being public has helped reassure Box's big corporate clients.

"We have a lot more transparency, so our customers know exactly how we're doing," Levie said. "They see the underlying financial viability of the company. That's often fairly opaque to large enterprise customers when you're selling enterprise software."

It's not obvious that Levie would be a fan of running a public company. It took nearly a year for Box to go public after it filed to do so, thanks to concerns about whether it was ready for the public markets and worries about its spending and losses.

After its shares finally hit the public markets in January 2015, Box's stock price has been on a roller coaster ride. It hit a high of more than $24 a share on its first day of trading, then fell continuously until it bottomed out near $9 a share little more than a year later — before heading right back up again.

But despite all that, Levie says going public has been great for Box. 

Being public has helped Box compete with Microsoft and IBM

When Box was still private, clients would often ask Levie whether it was financially stable. It's really important to enterprises that their technology providers don't suddenly shut down. Even for Fortune 500 companies, the failure of such a provider could significantly hurt their business, especially if they are sharing their data and proprietary assets with that provider.

"This is why, often times, for large enterprises it's easier to just work with the big incumbents in the technology market," Levie said. "It's easier to just go to Microsoft or IBM or Google, because you know they're going to be around."

But going public helped quell customers' questions and put Box in a better position to compete with the market giants, Levie said.

"By being public, we look a lot more like those bigger incumbents than we do startups," he said.

Quarterly earnings reports have made his team more disciplined 

But being a public company has had other benefits for Box. It's encouraged the company to be financially disciplined, he said.

"When you are public, every single quarter your numbers are going to be public, everyone's going to see them, and Wall Street's going to dissect every single element of them," Levie said. "Having that many more eyeballs on your business just forces you to really, really run your company and operate in a different way."

Public accountability has also prompted Box to be more strategic and efficient when it makes changes, he said.

"Because we know that in three months, we'll have to show up again on Wall Street," Levie said.

Having a publicly traded stock help with morale

Being public has had one other big benefit — it's helps with employee morale, Levie said.

For many tech industry employees, stock options and other forms of equity compensation are a key component of their compensation. If a company stays private for too long, those options and stock holdings can become a point of frustration for employees, because it can be unclear what those holdings are worth, Levie said. Employees at public companies don't have that problem.

"It's helpful to just say, 'Here's what the stock-price is. We're going to work really hard, and hopefully it will go up over time,'" Levie said. "'But you at least know what the price is and there is no confusion about that.'"

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