The investment fund Starboard wanted to fill the board of directors – but the company founder and CEO prevailed in a vote among the shareholders.
(Photo: Bloomberg)
san francisco When Aaron Levie reviews the past year, the CEO of the US cloud group Box can look back on a number of successes. The digitization push as a result of the pandemic has given the company a real boom: sales in the past third quarter increased by 14 percent compared to the previous year. In just a year, Box’s share price has risen by more than half to just under $25 per share.
“We are very satisfied with our results,” says the manager in an interview with the Handelsblatt. Business has recently been much better than in many years before. This has to do with major trends such as hybrid work and increased digitization in many companies. “We offer solutions that enable companies to make their information and documents available via the cloud in order to work with them in new ways.”
Levie’s greatest achievement, however, is that he, who founded the company almost 20 years ago while still at university, is still at the helm. Because just four months ago, the activist US investment fund Starboard, which had secured almost nine percent of the shares at the time, called for the 36-year-old to be dismissed – and wanted to replace the board of directors with their own candidates with the help of a vote among all shareholders.
The escalation was preceded by a months-long dispute about the profitability of the company, which began quite harmlessly – and subsequently became increasingly violent through public letters from the fund, until the end finally broke with the management. Levie also fought hard – and published the quarterly figures earlier than planned in order to advertise the good results to the other shareholders.
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Box board feels confirmed in the course
With success: the current management ultimately won the election in September. And clearly, as the manager emphasizes. “Of course we were very happy about the outcome of the vote,” said Levie. Many investors were irritated by the public exchange of blows and therefore called for a quick solution. “If you look at our past quarterly figures, we also feel confirmed in our course.”
The fund, on the other hand, withdrew – and began gradually divesting itself of its shares. In a statement after the lost vote, however, the group also pointed out that institutional voting rights advisors such as Glass, Lewis & Co. and Institutional Shareholder Services (ISS) had rated Starboard’s commitment quite positively. “Today, the company is significantly more profitable than it was before we took an interest.”
In retrospect, Levie can also see positive aspects of the dispute. After joining the company more than two years ago, Starboard made many valuable suggestions, which were also implemented. “We had differences mainly in the M&A strategy and certain goals for the size of the company.” This dispute has now been decided in favor of a more expansive strategy.
The vehemence of the interference in the management of the company was also an unusual experience for the college dropout. Because the history of Box is inextricably linked to that of its founder. In 2004, Levie started the service with current CFO Dylan Smith as an undergraduate project at the University of Southern California, which he left the following year to pursue full-time entrepreneurship.
Marc Cuban and Salesforce are among the investors
Box first started out as consumer cloud storage, where users could store their files on Box’s servers for a fee. One of the early investors was Texas billionaire Mark Cuban, whom Levie and Smith unknown to them via email, prompting Cuban to invest $350,000. The venture capital funds Andreessen Horowitz, Bessemer Venture Partners and SAP’s rival Salesforce are also among the financiers.
When the market became increasingly competitive from 2009 onwards with competitors such as Dropbox and Wetransfer, Box specialized in corporate customers – and worked on developing interfaces to widespread business software from SAP or Salesforce, for example, in order to better integrate its cloud into the systems of customers to be able to integrate.
Box finally went public in early 2015, raising $175 million from an opening price of $14. Overall, the group was valued at 1.6 billion US dollars. Today the company has a market capitalization of almost 3.7 billion US dollars – an increase of almost 130 percent.
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