After IPO Delay, Box Gets a Jolt From GE Contract
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Box, the cloud storage and collaboration company that is reported to have put its plans for an IPO on hold last week, received a solid jolt in the arm today in form of a large contract from industrial giant GE.
Under the terms of a deal that was two years in the making, GE has chosen Box as its company-wide product for content sharing, according to a corporate blog post by CEO Aaron Levie. GE, which has 300,000 employees in 170 countries, will roll out Box as its standard product for file sharing across the company.
The move is consistent with the kind of strategy that Levie has set out for Box. In an interview earlier this year he talked about how most companies are in one way or another becoming software companies, building their own custom applications to manage their particular work flows.
GE is one of those companies that has recently gotten into the software business in a big way. It has opened its own software development center in San Ramon, Calif. and is doing some of the most ambitious work anywhere on the concept of the Industrial Internet. And it’s also an investor — to the tune of $150 million — in Pivotal, the cloud software and data analytics company also backed by EMC and VMWare.
After filing for an IPO in March, there was considerable surprise at the sheer size of the monthly average loss of about $17.5 million that Box ran in 2013.
It’s a significant deal for Box, and has the potential to boost its overall number of end users by more than one percent. Levie’s post doesn’t disclose what GE will be paying or exactly how many of its employes will be using it.
But let’s do some back-of-the-envelope math. Its standard rate for its business plan is $15 per user per month, but it cuts custom deals for large-scale deployments.
Let’s assume GE is getting a big discount. If it were to create a Box account for 10 percent of its workforce and pay a discounted rate of $10 per user per month, it would bring in $3.6 million a year for Box. Or if it pushed Box to half of its work force at $5 per user per month, it would bring in as much as $9 million which would amount to about seven percent of sales. (It reported $124 million in revenue last year.) Whatever the math, there’s no way this isn’t a significant, material deal for Box.
It’s also worth noting that Box had an in with GE. Gary Reiner, a partner at General Atlantic the private equity firm which led a $100 million funding round in Box in 2012, was the CIO at GE from 1996 until 2010. He also sits on Box’s board of directors. Levie has been careful to say that Reiner wasn’t involved with the deal “beyond a few introductions.” But that’s a pretty powerful introduction.
Yet it’s also worth nothing that Box has been attracting some top-flight sales talent. In February it lured Graham Younger away from SAP’s SuccessFactors unit and put him in charge of global sales.
Having now closed a deal with one of the most respected industrial companies in the world — GE makes everything from jet engines to home appliances — means more deals like this may follow.