

A Look at the Box S-1 - mblakele
http://kellblog.com/2014/03/27/burn-baby-burn-a-look-at-the-box-s-1

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jcampbell1
This title is obnoxious, but the content is really good. The title refers to
"burn rate", not that the company is a house on fire.

I did a similar calculation... they are spending about $40M/quarter on sales
people who are generating an incremental $5M in recurring revenue each
quarter. Not great, but not a disaster. Especially when you account for the
fact most of the sales people are new.

A year from now, with the publicity from the IPO, and more experience and
natural snowballing, the same $40M salesforce could be generating $15M in
incremental revenue per quarter. That would be a recipe for a quite valuable
company.

He came to pretty much the same conclusion that I did:

"When you look big picture, I believe they see themselves in a winner-take-all
battle vs. DropBox and in this case, the strategy — while amazingly cash
consumptive — does make sense."

5 years from now, I do see a possibility that Box is doing very well in
enterprise, and Dropbox gets squeezed hard in the fiercely competitive
consumer/SMB space.

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tg3
I agree that's their strategy, and I also agree that it may be their only
play. However it feels like they're going all-in a little bit early.

With a $23m/quarter burn rate and a raise of $250m, they only have a few years
to "win" the market, and start moving in the direction of profitability.

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gtCameron
A few years is an eternity, its not like they have to keep burning through
$100m a year until they either "win" or run out of cash, they could easily
scale back on their customer acquisition spend and extend their timeline.

I think their strategy is very aggressive but far from all-in

