Providing cloud-based storage seems so commodity-like, and so hard to defend as a unique differentiator, that it would seem that Box.net, despite the dynamic vigor of the company and its CEO, Aaron Levie, couldn’t really make a go of it in the market. After all, some very very big companies, like Microsoft, Google, and Amazon, are competing in this space. And don’t forget Box.net’s many small-fry competitors, including Dropbox, among others. You’d think that with these kinds of enemies, how the heck can Box.net find enough customer and investor love to keep the flame alive.
That’s before I went to Box’s user conference a few weeks ago, where several important reasons why Box.net might stand a chance came to the fore. And that was before I started keeping track of all the times Box.net came up in conversations about social/collaborative software, And before I actually started using the free Box.net account that came with my HP Touchpad.
Suddenly, Box.net’s real opportunities started to make a whole lot of sense.
The first inkling that Box .net was doing something right came when I ran into some folks from SAP at the conference. These weren’t your tire-kicking market-researchers, or even someone from the partnership organization. These were the investor types, the guys you send over to do the due diligence before you put your money down. And it was clear they were there to do a deal and follow the footsteps of Salesforce.com and investor Marc Andreessen, among others, in buying a piece of the Box. That the company has raised $162 million so far is far from the only reason to pay attention to it (unfortunately, the amount of money a company raises is not highly correlated with success), but when you see SAP Ventures and Salesforce.com putting their money where the mouths are (or want to be) it’s definitely food for thought.
The other indication that Box.net has legs came from presentations and casual conversations with its customers, who were fairly gushing about the company’s value to their organizations. Having used Box.net now for a few weeks, I can agree that it’s a great productivity tool (despite a little glitch I’m having with Office 2010 on my desktop PC). There’s a nice app for my new iPhone, my Touchpad, my iPad, and, on my laptop, the Office 2010 integration makes it pretty easy to move documents from the cloud to my devices and back again.
But is that really enough to make Box.net worth whatever multiple of $162 million is needed to make back its investor’s money? The answer is simple: no.
What Box.net needs – and fear not, dear investors, I’m pretty sure Levie gets this– is an understanding of the meta-opportunities that add value on top of what is otherwise a cloud-based version of good-old sneakernet. Those meta-opportunities come from three major areas, in my opinion:
The Social/Collaborative Box. Using Box.net as an adjunct to social and collaborative software is one of those no-brainers that was dissected in great detail at the conference. And outside the conference as well. I’ve been keeping a running tally of the times I see and hear Box in the context of some other vendor’s social or collaborative offering, and so far Box is batting 1000. A recent briefing with SAP about Streamwork included a Box reference, and my favorite social/collaborative start-up, Sococo, can make use of Box.net as part of its amazing visual communications/collaboration environment. There’s Box.net and Chatter. The list seems endless.
The Analytical Box. We’re only just starting to crack the nut on how to use metadata for business advantage, and the folks at Box.net seem to grok the fact that data about how data are used could be an extremely valuable asset for businesses trying to improve anything from customer satisfaction to data governance and risk management. There’s a lot we don’t know about how data really get used, and by putting the data in the cloud, Box.net can use the cloud to collect every aspect of data usage, and use that data for some interesting analysis. Analytical services on top of Box.net could prove to be as valuable as the company’s original content sharing raison-d’etre.
The Innovative Box. This is where the real challenge – and opportunity – lie. If Box.net is to rise above the noise and make good on all those millions from it investors it will have to be in the forefront of defining a new set of processes and functions around content collaboration that weren’t ever possible before. This is a corollary to what I call the SaaS 2.0 imperative. It’s not enough to just flip an established process from on-premise to the cloud, a la Salesforce.com. In order for Box.net to really make its mark, it has to be on the forefront of defining and bringing to market the things we only dreamed of doing – or never even dreamed we could dream of – that are now possible with the functionality that Box.net can provide.
Using Box.net in a social/collaborative context is a good place for the company to begin to define this opportunity to the market. That’s why I like the marriage of Sococo and Box: Sococo creates virtual workspaces for collaboration where collaborators can show up – online, using their avatar – and, in addition to communicating and working with one another, they can participate in the creation, editing, and development of documents and other content. One of Sococo’s fascinating capabilities is the abiliyy to create task-specific virtual rooms, that are open only fellow-collaborators by permission. This effectively adds context to the documents that are being used in the virtual room, and that context, especially when combined with workflow and other collaborative tools, takes the commodity-level concept of clolud-based storage up a notch or two.
As the innovation opportunities grow – and the above example is merely one iota amongst the many possible scenarios for using Box.net in a value-added process – the key to Box.net’s continued success will be similar to what every innovative must do in order for innovation to be adopted: proscribe the ways in which the new capabilities can be used. This is true for almost any truly innovative product, but especially true in areas where collaboration and analytics are part of the process: it turns out that there are enormous cultural gaps in the business community’s understanding of how to collaborate and how to analyze, and every truly innovative collaboration or analytical tool needs to include methods and other proscriptive help or, no matter how cool a tool it is, real world users just won’t get what to do with it .
Cloud-based storage is a useful, but hardly sufficient business case for the success of Box.net. Value-added services are where Box has to go, and it’s clear that there’s an entire class of new innovative applications and services waited to be created on the back of their core capability. It’s going to fun watching what Box.net does next…..