'I had nightmares for weeks': Box CEO Aaron Levie reveals how hard it was to build a $2.5 billion business and take it public by age 29

Success How I Did It podcastAaron Levie

Aaron Levie dropped out of college 12 years ago to start Box, a cloud-based file-storage company for enterprises; it's now a public company with a $2.5 billion market cap.

But getting to the current size and scale wasn't easy.

Levie recalls weeks of nightmares, sleepless nights on yoga mats in the office, getting turned down by investors, and a botched IPO — all before he turned 30.

"We've been dealt lots of different blows as a company over the years," Levie told Business Insider US Editor in Chief Alyson Shontell on the podcast "Success! How I Did It."

"We've had funding rounds where we got turned down by 20 investors, and it was the final meeting of the final investor where we got really lucky and somebody finally decided to invest in us. We've had bridge rounds, we've had to take loans ... there's been a lot of complexity to get to where we are.”

In the wide-ranging conversation, Levie and Shontell talked about:

  • Growing up and dreaming of running a company.
  • Dropping out of college to start Box with a neighbor and school friends.
  • Getting Mark Cuban to invest without ever having met him.
  • His unconventional daily schedule.
  • Passing on a $600 million offer to sell Box, and the weeks of nightmares that followed.
  • Becoming a case study on how not to go public.
  • Continuing to work hard after achieving a life goal.

You can listen to the full interview here:

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Following is a transcript of the conversation; it has been edited for clarity and length.

Shontell: Aaron, we are so happy to have you with us today. The first thing I want to do is I want to figure out how someone becomes the CEO of a $2.5 billion company. Let's psychoanalyze you for a second. What were you like as a kid? Tell me about how you grew up.

Levie: Yikes — psychoanalysis is not my favorite subject, but I would say growing up I was fairly restless, so I had a lot of energy and really liked to do everything from start small businesses and projects, and was always very curious about just how things worked and why things worked certain ways. And as soon as I discovered the internet, maybe at 12 years old or so, that fundamentally changed my world view, which was like, "Holy crap — you can be in your bedroom putting together a website and people can go to that thing and from anywhere around the world."

But overall, just very, very restless, pretty annoying in classes, was always just calling out things and probably getting into trouble and stuff like that.

Shontell: You know you mentioned you kind of tinkered around with technology from the time you were young and you actually did something like 15 startups when you were a teenager. What were some of those early projects that got you on this path?

Levie: I would hesitate to call them startups. I think they were the equivalent of putting together hacked-up website on the internet and then imagining that you had a company. And it was always fun to print out a business card that said you were CEO of a one-person company.

But some of the ideas were, in high school, we came up with an idea of having a search engine that had randomized search results instead of algorithmically ranked search results, and the idea was to benefit website publishers as opposed to people who were searching, so it was a really horrible idea because basically every time you did a search, you got a random result that met the criteria of your search as opposed to getting the best result. And so, as you can imagine, not a lot of people went to that search engine.

I had a website at the very end of high school, which was a real-estate website where people could list their homes for sale. Not clear why I worked on a for-sale-by-owner website, not a particular passion or interest of mine. So just lots and lots of bad ideas poorly executed. The good news is, when you do that enough times, you start to build a model for what stuff doesn't work and that hopefully eventually leads you to finding something that might work.

Dropping out of school

Box cofounders Aaron Levie (R) and Dylan Smith

Shontell: So tell me about the idea genesis for Box. I believe you founded it with a middle-school friend, a high-school friend, and a neighbor. Talk about how this band came together.

Levie: The band was the same band that in high school, and even middle school — I was doing a lot of these projects that we worked on together. We all went our separate ways for college, and in sophomore year of college, I had sort of started tinkering around with the idea of having a service that would let you store your files online securely and then be able to access them from anywhere. This was back in 2004, and this was at a time where we had 50 megabytes of storage space in our email accounts. Basically you could email yourself files, but you could only email yourself maybe three or four or five files and then all of a sudden you'd run out of storage space. So it was really ineffective for being able to share and access data.

Then you had FTP sites and you had USB thumb drives — all of these things were really inefficient. I also had an internship at the same time where we were using some clunky legacy software to share and collaborate and so between both of those experiences it became obvious that there had to be a better way to be able to access and share your files from anywhere.

At the end of 2004, we started to work on this project; early 2005, we launched it. The first person to join up was Dylan [Smith], who's now our CFO, and then eventually we were able to convince Jeff [Queisser] and Sam [Ghods], who run kind of various engineering, and then a big chunk of technology work for us then joined up soon after so that was the founding genesis idea of Box.

Shontell: So you ended up dropping out of school to do this, but you've gone on to say that college, you feel, is really critically important.

Levie: I personally was really, really bad at all academic kind of experiences — my running grade point average in a good quarter or year would probably be a B or a B-minus, and, like, I was very proud of that. But I do think that education is incredibly important. Just for us, it was so compelling to go out and focus on Box full time. I was spending most of my time during school just dealing with issues, and Box, and so eventually decided that, OK, I have to choose one way or the other. Does this become a side project in college or does it become a real business?

We moved into a renovated garage and we convinced Sam and Jeff, our two other kind of members of the founding team, to drop out and join us, and we all lived together in Berkeley and slept on yoga mats, and really not great living conditions — mostly lived off of hot ramen, hot pockets, and sort of three or four hours of sleep a night. But it was certainly pretty fun at the time.

Shontell: I'm really concerned about yoga mats.

Levie: My back is now paying the price.

Getting Mark Cuban to invest with a blind email pitch

mark cuban

Shontell: I bet. One thing you said in there that’s really interesting is that Mark Cuban was an early investor and he invested blind, right? You two had never met, yet somehow you tracked down his email. What was it like hustling to get Cuban involved? You were kind of the first startup in "Shark Tank," I guess you could say.

Levie: You know, if you want to credit us with that, that would be awesome. I'm sure there's somebody who came before us, but it was actually really random.

Back in 2004 and 2005, Mark had one of the most popular blogs on the internet, and it's still his blog today, Blogmaverick.com. We were just pitching him to have him write about Box, through a set of conversations over email. He became interested in investing in the company, and we had never even met, but he did full due diligence, and then our first time meeting him was at a basketball game — you could think about it as our first official board meeting, which was, you know, pretty thrilling. And that investment was a few hundred thousand dollars. We decided to drop out of college and then go and kind of focus on this full time.

Shontell: And so what was the product at that point?

Levie: It was incredibly basic. It was called Box.net, and it was a really easy way to upload your files to the internet and be able to access them from any device and be able to share them with anyone.

Soon after we got Mark's investment, we opened up the service to give you a whopping 1 gigabyte of free storage, which was pretty groundbreaking at the time, in 2006. But the idea was, hey, let's give everybody a 1 gigabyte of free storage, and they will eventually pay us. I think it was something like $5.99 or $4.99 a month, to be able to buy more storage space. Obviously, eventually we pivoted the company, but the core was always about making it so individuals could just easily access their files from anywhere.

Leading a company in your 20s

aaron levie young

Shontell: One thing that you have talked about before is that what you were doing initially was short-term success and you had this aha moment where you realized, I don't know if this is going to be successful down the road, and you ended up writing a "Jerry Maguire"–like memo when you were 22 that changed the future of Box. Tell me about that moment and how you realized this and what you did.

Levie: In any great story, usually there's three or six months of context that led up to that one epiphany or moment, and what was happening was, it was becoming more and more obvious to the founding team and to early employees that we would not survive if we gave people a little bit of free storage and charged them for more as an independent company.

It was going to be too competitive with some of the bigger incumbents, and we could not rationalize a standalone consumer company, and what was happening was we were talking to small and medium businesses, and they were telling us that they would actually pay on the order of 10 to 100 times more for Box if we had just built these additional enterprise features or additional security features. We realized that that we had this unbelievable opportunity where if we could bring our consumer ethos to the enterprise, that would let us still maintain the original premise of the company, which was the focus on end users, like you and me, but be able to have a viable business model to go sell into the enterprise. And then we could scale the company. That was when we fully changed our approach.

Shontell: You're a first-time CEO; you start this when you're 20 years old. What was the hardest part of getting Box off the ground and then growing into your CEO role as a first-time founder?

Levie: It's fairly atypical to be, you know, 21 or 22 and go after the enterprise because of all of the additional sort of complexity and sophistication of that sales process and the amount of sales orientation you tend to need over time.

I had to shape my understanding of what it would mean to run a company like that and what kind of people I would need to be surrounded by and what kind of culture would be created in the process and how do you balance these two very different kinds of DNAs and company ethos where you have, again, a sales organization, but a very internet-centric, consumer-centric engineering and product organization.

Ultimately, I think the biggest learning that I had was I had to go from a mental model of myself as a consumer product manager to now a CEO who has to manage this complex organization that's going to be pulled in very different directions because of the kind of customers we serve and the kind of ethos that we have as a company.

An unusual daily routine

Aaron Levie Box CEO

Shontell: As part of all that and all those learnings, you created a unique daily routine for yourself. I read that you start your days late. You're proof that you don't have to wake up early to be successful. You drink an ungodly amount of coffee. Tell me about your day in the life because what you wrote in Inc. was very startling.

Levie: Oh, God. I'm like the biggest believer in sleep. I think sleep's very important. I just happen to go to bed late and then I sleep in. But my routine is, I wake up usually about 9:30, check all of my emails, crank through any open items that need to be addressed, get ready, come into work, have two to three coffees, usually a full day of meetings of things like product reviews, design meetings, talking about strategy, meeting with some customers, and then around 6 or 7 o'clock, when things wind down, that's when I take a power nap — big fan of power naps, just 20 to 25 minutes is all you need, and then you get fully recharged.

And then get a dinner and then maybe one or two other meetings, and then I have four or five hours to myself, which is when I can think about longer-term business issues, write various notes and emails on what we need to improve on or what we need to be working on, and then eventually leave the office around midnight or 1 and go home and it all repeats. But I'm a big fan of sleep — I highly advocate it.

Shontell: I didn't hear any eating, working out, extra hobbies, anything like that in there. Do you have time for any of those things?

Levie: I definitely do. I sometimes choose to skip over some of those things. Usually I don't do anything too much fun during the week, and then on the weekends, go to movies with my fiancée, and we go out and go hiking or things like that. That was more of my week schedule, and then during the weekend, we'll maybe do longer-term strategy stuff, read some books, but that's usually just the amount of business that we'll do on the weekend.

Shontell: I'm glad to hear that because I had read that you only eat dinner and you don't have time for anything else, so it sounds like life has gotten better now that you're a public company CEO.

Levie: I certainly don't want to glamorize or make it feel like it's necessary to do all these things. I don't think it is. The challenge is that I'm just excited and passionate about what we do, and so if I can trade off watching a show or working on a new project, I just tend to work on the new project but it's not a requirement to survival — it's what I love to do.

Nightmares after turning down a $600 million acquisition offer

Box CEO Aaron Levie

Shontell: You went on to make Box a very large company, and to help you do that you raised a ton of money and you had a big offer from Citrix at one point to buy your company for about $600 million. Your board really wanted you to sell at that time but you didn't want to and you resisted.

What's it like as an entrepreneur when something like this happens? You have this opportunity to exit, your board is pushing you to do it — what was the thought process and how did you work through that?

Levie: It was definitely a struggle, and I think the board was probably a little bit more mixed, so I don't want to necessarily paint it as the board was firmly on one side versus my decision. It was it was a pretty complicated process because we were still relatively young and early in our growth and so we didn't have a lot of data points to extrapolate out and imagine what Box was going to be in five or 10 years from that point. And so we had very little data to go off of. We were in a very still competitive market with companies a hundred times larger than ourselves, and so in many respects it was a very attractive opportunity.

It would have been a great kind of financial outcome for early employees, for investors, and so that was very difficult to think about because, on one hand, you had a guaranteed outcome and so you could take all of the risk off the table and it was staring right at you right in the face. And then on the other hand, you had really an improbabilistic outcome which is like, OK, we're going to somehow go from being a $20 million revenue company to hundreds of millions in revenue and survive all the competitive landscape that we're dealing with and continue to build a culture that we care about and want to be a part of and all of these things, where the odds were against us and it was a couple months of really debating that and struggling it.

I called a lot of mentors and founders who had either sold their company or not sold their company and tried to understand why they went either direction. I was getting advice from lots of different, great founders and leaders and the advice was sort of all across the spectrum. Some people said, "Totally sell — you're never going to get a better offer than this." And some said, "Hey, when you have an opportunity where you can keep doubling down and growing something that you love to be a part of, don't kill that opportunity."

Ultimately what happened was the four founders did an offsite where we holed ourselves up in a hotel room for 24 hours and we decided that we were not going to leave until we had the answer of what we wanted to do. We still didn't have the answer at the end of the offsite so that didn't end up working out fully, but within about a week or two, we concluded that we didn't want to sell. We wanted to keep doubling down and we wanted to give this a shot.

The conclusion was when we thought about all the things that we had yet to do and what we still wanted to accomplish. Those dramatically outweighed the value of the money that we would get and the risk mitigation we would get by selling.

As soon as we made the decision, we were freaking out for, like, months, and on one hand, we were pumped up — OK now, we know we definitely want to build an independent company. But on the other hand, we're, like, Holy shit, what did we just do, what did we turn down? I was having nightmares for a few weeks after. Did we actually make the right call? We can never now go back on this. We're pretty locked into the current path. It was a scary decision.

Shontell: Wow — and you did eventually exit. You took the company public, and it ended up being a great decision because you went public for much more than $600 million. But what were those years like getting to that point, since the nightmares eventually subsided and you got back on track?

Levie: Yeah, it was about five years before we went public. We probably passed about three to six months — we didn't really look back and question the decision because even when things were getting difficult, we were very confident in the long-term vision we had.

We've been dealt lots of different blows as a company over the years. I mean, this has not been a straight line for us, and you know we've had funding rounds where we got turned down by 20 investors and it was like the final meeting of the final investor where we got really lucky and somebody finally decided to invest in us.

We've had bridge rounds, we've had to take loans. There's been a lot of complexity to getting to where we are and I think the thing that has gotten us through any issue in the business strategically or operationally has just been going back to our north star and our vision. We think that in the future, there's going to be a fundamentally different way that people are going to work and share and collaborate and want to be able to work with their information and that we have a unique opportunity to build a company that can power that.

And so you have to zoom out and think about the five- and 10-year horizon to be able to get through a lot of these difficult times, because otherwise the pressure mounts in a significant way and you can feel overwhelmed by the individual decisions that you're making. Focusing on the long-term gives you the best perspective to make those decisions.

Shontell: A lot of people look at a story like yours or all these other entrepreneurs you read about, and it’s like, Aw, they made it work — they had no hard times. But of course that's not true. To hear that it came down to the last investor after 20 rejections and you had those moments too and powered through, it's really important.

And also that you had nightmares after a big decision. I think anyone would, but a lot of people don't talk about what happens right after you turn down a giant acquisition offer like that.

Levie: For me, it's always been about going back to your mission, going back to that north star as the best way to get through those difficult experiences and difficult problems, and even as we were going public we were on file to be public for a year where we had a kind of a stalled IPO, and that was a horrible experience.

Shontell: It was a long IPO process, and it didn't seem like the easiest time because a lot of people were critical. Box is burning so much money — it's irresponsible. I think even Cuban came out and bashed you a little and it was about a year long. What was that like?

Levie: It was really difficult, and it was self-inflicted in some respects, because on one hand, we created a harder situation for ourselves because when you stay on file, you're obligated to remain in a quiet period from SEC requirements, and so we couldn't respond to a lot of the financial criticism about the company, and so we couldn't even really educate the market on our business model or why we felt it was going to work out over the long run.

We sort of shot ourselves in the foot on that front. The challenge was we filed, and about a week after filing, the market for SaaS companies in the public market had a significant correction, so valuations dropped by like 30% or 40%, and so we were getting advice from our bankers and the general market that we shouldn't go public in that period.

The problem was that we didn't know if that was going to end in a week or in a month and so we didn't want to defile if literally two weeks later you know things would recover. Maybe someday I'll write an e-book on how to not go public, because we definitely learned the hard way of the very specific steps to take if you want to have a difficult IPO process and I definitely would advise people to learn from our experience.

But the cool thing is it forced us internally to really, really focus on the stuff that mattered most, focus on the culture, focus on really communicating way better about what was going on, but fortunately we got through that.

What it feels like to take a company public and how you celebrate

Box CEO Aaron Levie

Shontell: You took the company public and it popped the first day. Lots of people don't have any idea and are never going to know what it's like to take a company public so what does that feel like, this company you've been working on for 10 years, the day you IPO? And what did you do to celebrate?

Levie: The challenge with the celebratory side of the IPO process is it's after about eight or nine days of doing 12-hour days of pitching to investors, and so actually what you most want to do is just sleep at the very end of it.

I just remember we got to the New York Stock Exchange and I was the most tired I had ever been in my entire life. We got onto this podium, we pressed the button, and I was just, like, Holy crap — I need to go to sleep. We flew back and there was a little bit of a celebration at the office, which was exciting, but for the most part, I was basically just tired at that point. And then the following week, we kind of had to press reset and say, Hey, guys — we're in a new era, we're now a public company, and there are going to be ups and downs. We need to not treat this as an exit as much as a starting point for a new chapter of the company.

I would say the actual process of going IPO is probably just a lot more work than it is pure excitement. There's about three minutes of excitement in the initial set of trades, and then you basically just want to get back to work and get back to running and operating a company.

Shontell: It's not exactly how I imagined it, how you just want to go to sleep.

Levie: Sorry! At least that was my experience.

Shontell: So it's not quite like winning the NBA Finals where you take the plane and land in Vegas for a few hours before you start back. Sounds like all work, no play.

Levie: Well, I don't know anything about winning the NBA Finals, but I think there's this off-season period that you get to go through, and unfortunately in our world, you're back in business a day later, and so we at least didn't experience the winning of the NBA Finals element.

How to stay motivated once you've achieved your lifelong goal

Box CEO Aaron Levie

Shontell: That is very true and very responsible of you.

So you've had this dream since you were 12 to run a company. You've done that. What do you do when you've achieved your goal? How do you keep motivated? What's next?

Levie: It would be hard for me to say that I've accomplished my goal in the check-the-box way. I think it's an ongoing journey and an ongoing problem, and the thing that excites me is building a culture and a company that hopefully can sustain lots of change, and there's a new set of challenges.

I would say the goal remains but the challenges going forward is we're 12 years in — can we do this another 12 years? Can we continue to scale to thousands of more people, can we keep a unique culture that can continue to stay fresh in our thinking and as innovative as possible as we scale? Those are now unique challenges that we're passionate about.

Shontell: Aaron, thank you so much for your time. It's been a pleasure.

Levie: Thank you.

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