Article is paywalled, unfortunately. Have things dramatically improved at Box over the last year or so, since they delayed the IPO? Or is it just that the market is better for them? I'm really curious whether they do enough to validate their existence as a multi-billion dollar business alongside the several other cloud storage options out there (DropBox, iCloud, Amazon Drive, Microsoft OneDrive, etc). I'm sure their product is good, but is it IPO good?
I'm not much of an investor, so I won't be investing in their stock directly either way, but I do have to wonder just as a thought experiment.
> As it prepares to go public, the Palo Alto, Calif., company will seek to show investors it has reined in costs without sacrificing too much growth.
> Box spent 97 cents on sales and marketing for each dollar of revenue it made in the three months ended Oct. 31, down from a ratio of $1.38 to every dollar of revenue when it first filed for an IPO in March of last year. The company’s loss narrowed to $45.4 million in the latest quarter from $51.4 million a year earlier.
Also: they're "only" raising $100-$200m? They raised $150m a year ago when they punted on the IPO then, I believe. Is their burn rate so high that they need the money? If so, the IPO won't really buy them much time. If their burn rate is low, is right now really the peak of the market for them? It's already a "down" time to IPO, so why not wait? Are they worried that the price is going to cave in more and more? If I were looking at their stock price, that's what would scare the crap out of me.
Box's burn rate is the highest in the industry [1]. I would be surprised if they had to keep raising money or IPO or risk facing an impending bankruptcy.
> Exxon sells a commodity in a highly competitive market and still one of the top 2 companies by market cap in the world.
Exxon sells a commodity in a market where there are a narrow enough set of nation-state sources that a small cartel of them can substantially impact world pricing by output decisions, where (both inside and outside the cartel) production decisions are substantially governed directly by government policy by nation-states, and where all the firms selling the commodity are either extracting it by way of agreement with the nation states in which it is being extracted or are directly controlled by a nation-state.
When you start hearing about production decisions by the Organization of Data Center Operating Countries, comparing that market to the one Exxon operates in might make sense.
Exxon's value has little to do with the actions of nation states. Rockefeller was relatively speaking wealthier than Bill Gates ($336 billion in 2007 dollars) before nation states got involved in the oil business.
The world's proven oil reserves are ~1.5 Trillion barrels. At 50$/barrel that's 75 Trillion $ before refining. You don't need a large slice of 75 Trillion $ to be ridiculously wealthy.
Large commodity markets require efficiency which might not be sexy, but it can directly translate into profits. Look at the world’s richest people and you see several people from the Walton family because efficiency really can be worth far more than all the social websites combined.
PS: Not to mention 12 out of less than 200 countires are in OPEC and they controwl ~81% of the worlds proven reserves. It's fairly common for a small number of countries to supply the majoirity of a given comodity. EX: 81% of the worlds rice is produces by just 9 countries, and just 6 countries controwl 81% of the worlds coal.
He was worth between $1 and $2 billion in his day, per the best biographies and historical information on the man.
That's a lot closer to $25 to $50 billion today.
The false hundreds of billions number is usually reached one of two ways: 1) by pretending Rockefeller still owned his former share of Standard Oil, represented in the form of the children oil companies today (Exxon et al.); 2) by taking Rockefeller's wealth as a share of GDP, and then claiming based on 2007's GDP he'd be worth X amount.
Note: I used relative wealth for a reason, doing a direct $ to $ conversion misses out of things like the US being on the gold/silver standard well into the 1900's. "Nixon Shock” Often people use things like how much bread cost back then forgetting that bulk food has become ridiculously cheap over time. A better measure is how much it costs to bribe a Politian.
In the end, there are a lot of ways of calculating wealth. However, the ROI was generally much higher in 1800's than today so simply looking at the value people were willing to pay back then is a poor way of calculating wealth. Looking at NPV corrects for most of this based on those calculations you get ~300B.
Also, 1) Ignores dividends so it's actually not nearly as inflated as you might think. And 2) is useful to figure out influence aka things like how much land some historical figure could buy. Or how many people they could employ.
"At the high end of the initial IPO stock price range, Box would have a valuation of about $1.7 billion, including employee stock options and other outstanding equity.
That was below the $2.4 billion valuation TPG and hedge fund Coatue Management placed on the company in a round of funding last July. In that financing, Box agreed it would be required to issue more shares to TPG in the event it sells IPO shares at a lower price than expected."
I like Box, I think they have a good model for cloud storage and they seem to be able to keep operational costs in line. And when they pulled their IPO last year the only reason I could think of was that during the Roadshow they realized that their later investors were going to lose money. This too was something I saw in the 90's where the valuation of a company at the last raise got "too high" for it to go public (the later investors don't sign off on it as they lose money).
I hope this means that some folks will think twice about valuations, but you never know.
~$50m, I wonder if he could have done better by selling earlier. Plus as CEO he probably won't be able to sell the majority of his shares least he signal lack of confidence.
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[ 5.5 ms ] story [ 79.0 ms ] threadActual WSJ headline: "Box Moves Ahead With IPO"
"Restart" sounded to me like they were starting over. But I guess it could be interpreted as starting back up.
IPO is expected by end of month.
I'm not much of an investor, so I won't be investing in their stock directly either way, but I do have to wonder just as a thought experiment.
> As it prepares to go public, the Palo Alto, Calif., company will seek to show investors it has reined in costs without sacrificing too much growth.
> Box spent 97 cents on sales and marketing for each dollar of revenue it made in the three months ended Oct. 31, down from a ratio of $1.38 to every dollar of revenue when it first filed for an IPO in March of last year. The company’s loss narrowed to $45.4 million in the latest quarter from $51.4 million a year earlier.
The true test will be can they retain market share. Aaron says yes (what else would he say). His competitors say no (what else would they say).
1. http://pando.com/2014/07/08/boxs-updated-s-1-contains-onerou...
[1] http://www.businessinsider.com/box-ipo-analysis-2014-3
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&c...
Exxon sells a commodity in a market where there are a narrow enough set of nation-state sources that a small cartel of them can substantially impact world pricing by output decisions, where (both inside and outside the cartel) production decisions are substantially governed directly by government policy by nation-states, and where all the firms selling the commodity are either extracting it by way of agreement with the nation states in which it is being extracted or are directly controlled by a nation-state.
When you start hearing about production decisions by the Organization of Data Center Operating Countries, comparing that market to the one Exxon operates in might make sense.
The world's proven oil reserves are ~1.5 Trillion barrels. At 50$/barrel that's 75 Trillion $ before refining. You don't need a large slice of 75 Trillion $ to be ridiculously wealthy.
Large commodity markets require efficiency which might not be sexy, but it can directly translate into profits. Look at the world’s richest people and you see several people from the Walton family because efficiency really can be worth far more than all the social websites combined.
PS: Not to mention 12 out of less than 200 countires are in OPEC and they controwl ~81% of the worlds proven reserves. It's fairly common for a small number of countries to supply the majoirity of a given comodity. EX: 81% of the worlds rice is produces by just 9 countries, and just 6 countries controwl 81% of the worlds coal.
He was worth between $1 and $2 billion in his day, per the best biographies and historical information on the man.
That's a lot closer to $25 to $50 billion today.
The false hundreds of billions number is usually reached one of two ways: 1) by pretending Rockefeller still owned his former share of Standard Oil, represented in the form of the children oil companies today (Exxon et al.); 2) by taking Rockefeller's wealth as a share of GDP, and then claiming based on 2007's GDP he'd be worth X amount.
Both are absurd.
In the end, there are a lot of ways of calculating wealth. However, the ROI was generally much higher in 1800's than today so simply looking at the value people were willing to pay back then is a poor way of calculating wealth. Looking at NPV corrects for most of this based on those calculations you get ~300B.
Also, 1) Ignores dividends so it's actually not nearly as inflated as you might think. And 2) is useful to figure out influence aka things like how much land some historical figure could buy. Or how many people they could employ.
"At the high end of the initial IPO stock price range, Box would have a valuation of about $1.7 billion, including employee stock options and other outstanding equity.
That was below the $2.4 billion valuation TPG and hedge fund Coatue Management placed on the company in a round of funding last July. In that financing, Box agreed it would be required to issue more shares to TPG in the event it sells IPO shares at a lower price than expected."
I like Box, I think they have a good model for cloud storage and they seem to be able to keep operational costs in line. And when they pulled their IPO last year the only reason I could think of was that during the Roadshow they realized that their later investors were going to lose money. This too was something I saw in the 90's where the valuation of a company at the last raise got "too high" for it to go public (the later investors don't sign off on it as they lose money).
I hope this means that some folks will think twice about valuations, but you never know.