Silicon Valley file-sharing giant Box has revealed that pouring money into marketing ‘convinced the world’ that it was a market leader in the early days - when it wasn’t.

Dan Levin, chief operating officer (COO) at Los Altos-based Box, told Techworld that Box’s rapid growth to a billion dollar company is thanks to better marketing than its rivals, which helped the firm attract high quality staff and greater investment.

"Box really was all about marketing and not about product,” Levin said at Web Summit in Dublin this week.

“Our product wasn’t better than anybody else's in 2009 but our marketing was. We did $5 million (£3.2 million) in revenue or something (in 2009). There were a bunch of people in between two and eight million. We managed to convince the world that we were the market leader."

Box started out as a consumer product when it was founded in 2005 but it is increasingly targeting the enterprise, with 240,000 businesses worldwide using the platform. Some of the company's biggest rivals include the likes of Dropbox and Britain’s Huddle.

“I believe we got out ahead because we raised more money and hired better people. The reason we could do those two things is because the perception was we were the market leader. It wasn’t true," said Levin.

Levin said that Box, co-founded by 28-year-old Aaron Levie, who is now thought to be worth $100 million (£63 million) ran event-based marketing and stealth marketing programmes that led people to believe Box was ahead of its competitors.

“We put on a big event called altitude in 2009 that made us look a lot bigger and more successful than we actually were at the time.”

Box - now used by 300,000 General Electric employees and 90,000 Schneider Electric companies - is due to become a public company in the near future after it secretly filed for an initial public offering with the US government earlier this year. Prior to that, the company raised $561 million (£354 million).

Levin, who is on Box's board of directors, believes that Box is similar to taxi-hailing service Uber in that it spends money very aggressively in order to expand.

He said: “One of the things that’s so common between Box and Uber is we’re willing to spend. We’re not bashful. We’re both willing to commit our resources to the war. Not keep a big war chest and assume that we’ll be able to raise more money later at a higher valuation."

There are lessons that startups can learn from Box’s success, according to Levin.

He said: “Many entrepreneurs are technical. Very black and white. Very linear, logical. They believe reality is reality and perception doesn’t matter. It’s just not true.

“Investors are very momentum driven and they want to back the winning horse. If the investment community believes that you are ahead then you’ll get more money and a better valuation.”

 

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