As CEO Aaron Levie confirmed when the company's customer roadshow passed through London last week, it is a core part of Box's strategy to be seen "more and more over time as a platform company."
The platform play has a lot in common with the early days of the Salesforce AppExchange, even down to the launch of a venture capital fund to back startups that build on the platform. Box is well aware of the similarities, as Chris Yeh, head of product and platform, told me when I visited Box's Silicon Valley HQ earlier this month:
It's very similar in model to how you saw Salesforce develop over the years, where Salesforce started with a CRM business and then eventually moved into much more of a platform focused business. I don't know that everything that we do will mirror what they have done, but just philosophically I think we have the same orientation towards platform building.
As with Salesforce, many of the most notable early adopters will be enterprises rather than startups. Yeh cited the example of an educational publisher that plans to create a portal based on Box's infrastructure where teachers and students will be able to share access to purchased content. In another example, a financial advisor is creating a portal for sharing documents and statutory disclosures with wealth management clients.
Box sees partners taking a lead in projects like these that address the needs of industry verticals. It will focus on creating the underlying platform services, such as specialized file viewers, search functions and built-in security and compliance features.
One partner has already closed a half-million-dollar deal on the platform, said Yeh.
It's very interesting to see that happen — meaningful money generated on top of the platform components you built.
That's the evidence that you look for when you're building a platform ecosystem. If people don't benefit in some economic way, or some speed-to-market way, you can't claim yourself as a platform.
Investing in the platform
Box will continue to deepen its content and collaboration functionality, said Yeh. That will include further investments in specialized content viewers such as the recent acquisitions of MedXT, a specialist in medical image viewing, and 3D viewing innovator Verold.
Security and compliance will also be an important part of Box's differentiation against competitors, he said, citing the newly available Enterprise Key Management functionality as a case in point. Later this year, there will be enhancements to workflow and collaboration capabilities, he told me:
We have a real need to move content around in Box in ways that are compelling and real reasons to get people to interact with each other around content.
We'll start to invest pretty heavily into workflow and collaboration products that are tied to work getting done in Box — you'll see us announce later on this year some of the things we're doing on this front.
I'd like to see us get to a place which feels way more comprehensive.
All of this adds to the case for enterprises and partners to build applications on the Box platform, rather than starting from the ground up, he argued.
In the past I think these kinds of companies would have had to build the infrastructure. They may even have built it on something like an [Amazon] S3 or a[
nMicrosoft] Azure or something like that.
But I think that if you were to use our platform to do so you would find it economically easier, because a lot of these service components are already built — the level of abstraction that we offer over content is a lot more powerful in a lot of ways. Therefore it's worth building on.
That's the value proposition that we have, because we won't go into a price war with the team from Amazon.
The launch of a venture fund to encourage startups to build apps on the Box platform is perhaps the most blatant hat-tip to Salesforce's AppExchange model. Emergence Capital and Bessemer Venture Partners, two firms with significant experience of investing in B2B SaaS ventures (including Box), have each put up $20 million.
Back in 2008, Emergence put up the first-ever such funding for a startup building an application on the Force.com platform. The $1 million winner was Maxplore, which subsequently rebranded as ServiceMax and has become one of the leading lights of the Salesforce ecosystem with $122 million in funding raised to date.
Yeh acknowledged Box's debt to Salesforce's pioneering of the SaaS platform model:
We're now allowing people to build right on top of our platform, and build entirely on our platform as native. There are not many really terrific examples of SaaS platforms. Salesforce is one of them. Salesforce is probably the most advanced SaaS platform company. Everything they do with Force is really built around this and so for us, this is our step into these places.
Box's decision to strategically position its service as a content collaboration platform stems from a realization that it can reach a far wider universe of users through partners building on its platform than it may be able to through its own efforts.
It's also a wise move to differentiate itself from its deep-pocketed competitors in the collaboration space, including Microsoft and Google, as well as venture-funded rivals such as Dropbox. Once a partner has tied its destiny to the platform, it's that much harder to move elsewhere.
Salesforce has demonstrated that it's possible to build a substantial business through an ecosystem of platform-native partners. Sometimes, I suspect that Salesforce itself does not realize quite how significant that ecosystem has become.
I don't see Box making the same error of judgement because, unlike Salesforce, it does not have a dominant position in its core application market. Its platform strategy, if it executes well, looks set to become a crucial competitive differentiation and defense for the vendor.
Disclosure: Salesforce is a diginomica premier partner.
Image credits by @boxhq.