Box, Inc.
Teaching Note
Summary/Abstract
This is a case organized around the theme of preserving an entrepreneurial culture in the face of
rapid growth, including over 800 employees and several offices. Founded by four friends, all still
under age 30, the company has reached over $124 million in annual sales. As of January 23,
2015, when the company went public, its market valuation was over $1.5 billion. The company
is particularly conscious of wanting to preserve the open, action-centered, fun culture that has
been created. In some ways it is a highly representative Silicon Valley technology company, and
the case tries to capture the flavor of such an organization. There is an excellent video available
that was made for Inc. magazine when it named Box CEO Aaron Levie as entrepreneur of the
year in 2013,1 as well as several video interview clips done for the case with Dan Levin, COO.
On culture: https://babson.mediaspace.kaltura.com/media/Culture+at+Box+%284+7%29/1_sx0typxf.
On hiring: https://babson.mediaspace.kaltura.com/media/Hiring+at+Box+%283+7%29+/0_s5juqmgn.
On spreading the culture:
https://babson.mediaspace.kaltura.com/media/Preserving+the+Culture+Through+Growth+%285+7%29/1
_yk9ka6la.
On management lessons learned:
https://babson.mediaspace.kaltura.com/media/On+Management+Lessons+I+Have+Learned+%287+7%29/1_8fwkrc
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Serving as the top management group, the energetic and charismatic Levie, Dylan Smith (28),
and Dan Levin (50), are an unusually complementary and collaborative executive team,
committed to keeping what has been built and sustaining rapid growth. They see a potentially
enormous industry, cloud storage and sharing, and want to capture the opportunity despite
increasing competition from business giants such as Google, Amazon, and IBM, which have
begun to see the potential, as well as consumer-focused Dropbox. The case documents the
company history: its early reluctance to hire anyone older than the founders, until finding Dan
Levin and valuing what he brought; the many elements of its hard-working and playful culture;
and some of the practices intended to preserve the culture.
Issues/topics in the case
Rapid growth, executive leadership style, executive team, culture, openness, action orientation,
technology company, Silicon Valley, combining entrepreneurial culture with efficiency, IPO.
Preparation Questions
Here is a menu of questions which may be chosen from depending on the interests of the faculty
member and the place of the case in the course. This case may be used as an opening for an
organizational behavior or entrepreneurship course because it raises broad overall issues. It may
also be used farther along in such a course to explore one of the possible topics.
1. Will Aaron be the next Bill Gates or flame out before Box can become profitable and really large?
2. What is the culture of the company?
3. What accounts for its being so open and freewheeling?
4. How does the culture reflect the four founders, their history together, their ages, the culture of
Silicon Valley, etc.?
5. Does the culture seem unusual, compared to other Silicon Valley companies or companies in
general?
6. Would you want to work in a company like this?
7. Is it too unstructured? Too dependent on constant innovation? Too free of unnecessary
bureaucratic procedures?
8. Are there elements of the culture you think will create other problems for the organization?
9. Where are the trade–offs between innovation and execution? What is your sense of how they are
being managed?
10. Where do you suppose the most tension will arrive?
11. Can this organization truly scale up?
12. Is there likely to be tension between younger employees and those who have more experience
elsewhere? If so, what kinds of issues are likely?
13. What is your assessment of Dan Levin in his role as chief operating officer?
14. What do you make of the history of the founders as friends, not necessarily planning to go into
business as partners?
15. Are there dangers from mixing business with personal relationships? What are they? Advantages?
16. What more would you want to know about the company if you were deciding to take a job there?
17. After the IPO, if you could buy stock in the company, what else would you want to know before
deciding whether to invest?
18. Is there a place for women in this company? In top management?
19. Is the absence of women typical in Silicon Valley? Why or why not?
20. Would a woman want to work in this company? Be in top management?
Here is one grouping of preparation questions that worked well:
1. What strikes you as interesting and unusual about this company?
2. Will Aaron be the next Bill Gates, Steve Jobs, or Mark Zuckerberg? Or flame out before Box
can become profitable and really large?
3. What is the culture of the company? Does the culture seem unusual, compared to other Silicon
Valley companies or companies in general? Would you want to work in a company like this?
4. What is your assessment of Dan Levin in his role as chief operating officer?
5. Can this organization truly scale up?
Analysis and Teaching Strategy
There are different ways to come at this case and a variety of angles to focus on. Building toward
the question of whether the company will be able to scale up, yet preserve unique aspects of their
entrepreneurial culture, allows for rich discussion of several elements in the case.
I like to start with the open-ended question of what struck students about the company, partly
because this helps determine how much time needs to be spent on aspects that surprise the
students, especially if they are not used to observing and understanding such freewheeling
companies; but other instructors might prefer a more focused question. The response to this
open-ended question could go almost anywhere. My assumption is that whatever topic begins the
discussion, it can link to other important case topics, leading to whether or not the organization is
likely to be able to scale, and what it would take to make this possible. If by chance students are
most struck with this topic in the beginning, it is possible to poll them for their position on this
question and then start to work backwards through the other topics.
The question whether Aaron will be the next Bill Gates/Mark Zuckerberg/Steve Jobs taps student
assumptions about entrepreneurial leaders. It allows for rich discussion about the mythology of
heroic entrepreneurs who do it all alone, know exactly where they are going right from the
beginning, make only brilliant correct moves, and triumph over lesser mortals in the business
world. If students have this kind of romanticized view, it is useful to get them to think about any
one of these leaders. Ask if anyone knows about the wrong turns taken by these people and their
businesses. If not, be prepared to describe some of the early moves of at least one of them. For
example, Zuckerberg was mucking around with a simple rating or possibly matching service;
there is no evidence that at the beginning he had a grand picture of Facebook becoming a major
communication and linking vehicle among people. Many students will have seen the movie, The
Social Network; although the movie is not necessarily 100% accurate, you can ask them to think
back to where things were in the beginning. Or, you can point out that Steve Jobs almost
completely wrecked Apple and was thrown out of his own company for a while. Even Bill Gates
was thinking much smaller than Microsoft’s ultimate role.
This line of discussion can lead to asking students to describe Aaron Levie as a leader. Students
will quickly identify him as smart and energetic, but try to extract richer observations from them.
What is he good at? (Anticipating industry direction. Focusing on customer service. Driving for
meeting diverse platform and customer needs.) How hard does he drive his opinions? (He is
extremely hard to move. “He’s like an elephant charging through the savannah, it takes five
people with blowguns to slow him down.”) Where does he focus his activities? (Strategy, long-
term vision, projects to meet customer needs.) What does he see himself as not being so good at?
(Day–to-day operations management, dealing with people.) How do students evaluate him as a
leader?
One way to go from there is to ask what it would be like to work with him or for him. Would
students like to work with such a strong-minded, opinionated, visionary person, or would they
find it intimidating? Some students have worked in companies with brilliant entrepreneurs like
him and found it very uncomfortable to have so many shifts of direction. And they resented that
the leader would throw out ideas, get people whipped up, then quickly move on to other things.
Yet many find it inspiring, and they are willing to commit deeply to the person and company.
Another direction might be to ask why he and Dylan (and Dan) are still signing off on every
single hire. The obvious answer is to try to preserve the culture, but discussion should not stop
there. A deep exploration of exactly what the culture is would first be in order. Obvious elements
are its openness, speed, action orientation, focus on hard work, fun. But how is it possible to
create a culture in which people are willing to get things done rapidly, yet quickly change
directions as needed? How do you get a culture in which people are willing to fight very hard for
their ideas – not intimidated by disagreeing with charismatic and powerful founders – yet willing
to roll up their sleeves and work really hard, even on things they argued against? Indeed, isn’t it
necessary to have the capacity for intense disagreement in order to get the most creative
decisions? There is ample evidence that the more diversity of ideas, the more potential for
creativity, although also the greater the potential for endless bickering and fighting. How do they
manage to overcome this?
What is it about the business they are in which requires the newest and most creative ideas?
(Isn’t this a characteristic of a high–tech company trying to create an industry that has only
scratched the surface of its potential? Does this differ from what is needed in a bank or insurance
company?)
Isn’t it possible to fail in any one of several hiring directions? Find people with really strong
opinions, and they can easily be arrogant and difficult. Find people who are more amiable and
willing to get along, and they may allow mistakes to be made, even by leaders who are quite
often right. Think how easy it is for very strong leaders to “win” arguments too often, even when
they are not correct. I call this the curse of the powerful, where it is the very intelligence and
strength of a powerful leader that can end up over-gaining compliance, even at the most critical
times. In itself, this point is worth further discussion.
It is useful to tease out these paradoxes and help students understand just how delicate a balance
is necessary in order to be, and to continue to be, successful. It isn’t that interviewing is such a
reliable way of determining potential employee quality and fit; most research shows interviews
are seldom more than 50% reliable, although most managers think themselves better than
average at judging interviews. There are consequences from having the founders/top managers
involved in signing off. It becomes a powerful signaling system as to what the organization is
looking for; as a byproduct, it reinforces the idea that the people who work there are special and
capable, which increases everyone’s commitment.
Of course there is always the danger that powerful founders will only hire in their own image, so
it is worth talking about what, if anything, Aaron and Dylan are doing to prevent creating
groupthink and just replicating themselves. It is necessary to find people who share the same
values but not always exactly the same knowledge, beliefs, or backgrounds. This is easier said
than done.
In addition, the bigger the company gets, the more it can become a bottleneck to have top people
so heavily involved in final signoff. What would they have to do to preserve appropriate hiring
but not take this responsibility upon themselves?
One of the interesting features of the company is the self-conscious way top management thinks
about working on the culture. The case refers, and has links, to two video interviews with Dan
Levin about hiring, and another interview with him about preserving the culture in the face of
growth that quickly comes back to the importance of hiring.
It is important for the instructor to decide whether to tell students to look at these footnoted
videos in advance, or to show them in class for discussion. Exactly when to use them may be
decided in advance, or they may be brought up for viewing when the instructor believes they
might help advance or deepen the discussion. The instructor should definitely see the videos in
advance, even if they are neither assigned nor shown in class.
This raises another potentially interesting area for discussion. As one of the first hires
substantially older than the founders, Dan Levin has come to play a very important role. He has
sufficiently earned the respect of others so that he has joined Aaron and Dylan as the top
management and driving group of the company. And others expect him to be the one who thinks
most consciously about the organization, making sure things get done, preserving the culture,
and so on. He brings knowledge of how larger organizations get results, but sees that the tools
need to be adapted to the more entrepreneurial culture. The previous discussion should make it
clear why this is such a critical role. It is unusual for a group of three at the top to be so diverse
and mutually supportive at the same time. Listening to Dan talk about a number of issues, is it
possible to figure out part of why the dynamic works? (He is calm, straightforward, thoughtful,
and almost philosophical as he thinks about issues in the organization. Not many 50-year-olds
can work so well with hard chargers still in their 20s.)
This discussion of leadership and culture can lead to further discussion about the trade–off
between innovation and execution. The biggest battles between Aaron and the others are over
this trade-off. Every organization needs both, but it is very hard to continue to be this
ambidextrous. Few individuals can sustain the balance, and few organizations are able to do so
over time. In early stages of entrepreneurial organizations, the need for continuous innovation is
dominant; without it, the company may never develop the right products, gain a leadership
position over competitors, or attract the necessary talent. Before too long, however, if execution
problems of assuring quality, driving down costs, serving customers, recruiting and retaining the
right people, and so on, are not overcome and appropriate routines put into place, the enterprise
will also fail.
It becomes necessary to create a leadership constellation that can preserve this balance, not an
easy task. Currently it is working at Box, partly because of the deep friendship and trust among
the co-founders, and the earned friendship and trust with Dan. He has the experience needed to
understand execution issues, but is close enough to the entrepreneurial experience to be credible
to and sympathetic with Aaron, Dylan, and the others. There are no guarantees that this can keep
going indefinitely.
Scaling up is likely to grow more difficult, especially if the company launches a greater number
of far-flung offices, such as the one recently opened in London. Considerable face–to–face
contact would still be needed; the top players may find themselves living on planes, constantly
trying to embody the culture to spread it. Concerns may arise about how well the combination of
openness, hard work, and fun will play in other cultures, although there is some evidence that
companies can create their own subcultures that differ from broader country cultures. Industry
needs and leadership from the top can make a difference here. For example in India, some new
high–tech companies reportedly have been able to create more internal openness and directness
than is traditional for Indian business organizations. What such firms measure and reward, the
demands for sophisticated and highly trained employees, the competitiveness within the industry
— all reinforce behavior that is different from traditional, rigid, hierarchical expectations.
It is difficult to transmit a deep understanding of cultural messages, the more employees there are
and the farther from the center they are. One advantage at Box is that they seem to have
considerable self-consciousness about which elements they want to transmit, as well as a
willingness to go far in reinforcing them.
Depending on the experience of the students, it could be useful to ask them to identify all
elements of the culture at Box, and to discuss which elements strongly reinforce the desired
openness, norms of hard work, action orientation, high standards, and desire for fun. The video
from Inc. magazine shows a number of cultural elements and existing behaviors, including
Aaron walking around teasing people, clearly valuing quick wittedness, on open floors without
individual private offices. Does the availability of free daily lunch make any difference? How
about the hackathon open to all members of the company, not just technical staff? It could be
interesting to ask students to brainstorm in buzz groups what else the company might do to
reinforce the desired culture.
To bring the discussion to some kind of conclusion, a few alternate questions might put students
a bit more on the line. One possibility is the question mentioned earlier about whether people
would like to work for Aaron, and what it would take to succeed with him. Another possible path
would be to ask: What more would you want to know about the company if you were deciding to
take a job there? Another possible variation would be: Now that you can buy stock in the
company, what else would you want to know before deciding whether to invest? Any of these
possibilities could help bring the discussion to a close, or could be used to begin the class to get
students to take a stand and then open the discussion from there.