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What Box Founders Learned from Tough IPO

When going public, an enterprise software company needs an explanation of their business so simple that it can be written down on a cocktail napkin. That’s one of the lessons Box’s co-founders Aaron Levie and Dylan Smith learned after the cloud file storage company went public in 2015. And it’s a good lesson for the current crop of tech companies expected to go public in the next 12 months, including Cloudera and Dropbox.

In an interview with The Information, Mr. Levie, Box’s CEO, and Mr. Smith, the CFO, acknowledged they could have done a better job explaining their business when it went public in January 2015. Box had one of the most highly scrutinized tech IPOs in recent memory. Its high cash-burn rate and mounting losses, paired with its vaunted “unicorn” status, turned it into an easy target for those critical of Silicon Valley’s growth-at-all-costs mentality. Its stock price was cut in half within a year of going public, taking it below Box’s $14 a share IPO price to as low as $9.90.

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Even so, “from an internal communication standpoint, that was arguably the most challenging period that we ever went through as a business,” Mr. Smith said.

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“We were not the type of company that was going to get a lot of love from Wall Street.”