 Welcome to News Desk on SiliconANGLE TV. For Wednesday, October 10th, 2012, I'm Kristen Folletti. The second annual BoxWorks Developer Conference in San Francisco wrapped up yesterday, box CEO Aaron Levy took the stage on Monday to talk about how box is faring against its competition. So how bright is the future for box? Plus more on Bravo's real look at Silicon Valley and what's happening in venture capital markets. Here with his breaking analysis on today's trending stories is SiliconANGLE founder John Furrier. Welcome, John. Great to see you again. Good morning. First off, can you provide us with a quick background and overview of box and who they are? Box.net are now called Box as a startup, a hot startup in Silicon Valley. That was started by a whiz kid, Aaron Levy, who now is all over the place in terms of being his own media company, tweeting, blogging. I think he's like 25 years old or something like that. Started the company in the dorm room and classic success store, young kid, disrupting existing markets. They started, got some venture funding. Now they're worth over a billion dollars in their last round of funding, raised 125 million dollars. So give or take a few 10 millions here and there. But they're about five, six years old and they provide basically started out doing file sharing or FTPing files. And now that's basically called in the cloud file sharing. And since then have morphed their company from a wild and crazy startup throwing keg parties to trying to seriously compete in the enterprise. And that's a market that's growing like crazy and they're disrupting incumbents like Microsoft. That's their, was their original position. And that's their whole thing. Their whole thing is that we are the new school. We are cloud, we are file sharing in the cloud. So Box hopes to be a high-flying company in the enterprise and the consumer. Box started as somewhat of a college business project in 2005 and they've seen rapid growth. And now there are even indications that the company may be heading towards an IPO. So is this another Facebook fairy tale story? You know, you know, box.net or box has been over the top with PR and marketing. And, you know, the trend in the marketplace right now is not too hype, but not to be more humble. The hype stories like with Facebook are not something that anyone wants to do. But box has definitely been hyping themselves up over the past year. We've been watching them kind of, you know wave their hands around trying to be relevant. And I think what's happened is in their last round of funding, and I commented that's on the blog post is they realized that they didn't have a lot of tech and that they were just simply a file sharing company in the cloud with a nice UI on it. And I think, you know, I'm oversimplifying it, but I think ultimately that's what the marketplace looks at box as. As a consumer company, people put down their credit cards, they have some, you know, shadow IT, go around IT, buy some file sharing. But, you know, box has almost no adoption in the enterprise. They have some clients, I'm sure they, you know they wrestled some clients to the ground, but ultimately have not been successful in the enterprise. So I think they've stepped back from the whole IPO rhetoric and to build out the product. And that's a smart move. And my take on that, that's a super smart move. And the box conference that they had, the box customer event that they had was really showcasing that they have new capabilities. So they still did the old, you know we're disrupting the incumbents like Oracle and Microsoft but are really playing their hand into trying to be relevant and showing more depth to the product. And that's really what people have been dismissing box as is not really a real product. But I think they're working hard to fix that. At the conference in San Francisco yesterday, CEO Aaron Levy dropped some updates on the company's growth over the last year. What kind of milestones did they reach? They, apparently from the reports on tech crunch but, you know, really hard to believe with, you know, what's being reported there. Cause again, they're marking the hell out of their company. I mean box.net, it's hard to believe what's real, you know, in some of the cases there. But, you know, apparently from what I've found they are doing well. They are growing. They've doubled their business. They said to 140,000 customers. And I think they said they had a, you know a large percentage of the fortune 590% something like that and doubled their user base. So this is not a company that's dying at all. I mean, I like this company. I think that, you know, this college culture throwing keg parties and having a young CEO has was a good start, a good culture. And I think that, you know, as they grow up and do less of the keg parties, more of the, you know, we're a growing young company. But, you know, the health of the company is solid. The overall market segment of cloud computing is growing like crazy. So again, the big action here is not so much that they have people putting their credit cards and using box for the PTA or the soccer club. It's really more about can they penetrate IT in the enterprise? And I think that's where they're going. They've hired some high profile people. And, you know, from what we're hearing they're making some progress, but not as much as they should be. Can you tell us how developers are interacting with box and who some of their competitors are? I think the developers' story is new to box. And they rolled that out. Again, I commented on this on my blog when they did that. It was a good move for them. This is a good strategy for box. They are a low end company relative to the enterprise market. They're a new entrant in the market. They have to be competitive. And the only way for them to be competitive is not to take on the big boys directly. They have to create a new game, a new ground game if you will. So part of that is let's build out the technology which they're doing and Aaron and the team is doing. And the second thing is to build out the developer ecosystem. I like this move of box. Where I'm critical of box is I don't like the overhyping of the company. I feel like they're overplaying their hand and everyone knows it. And I think that they should just stick to the fact that they have a great growing market, great team of people and engineers and they're building out their product. So they are making some good metrics on the success. Again, my critical analysis of box is less hype, more meat on the bone, they have it and it's a growing market. So they should just kind of throttle down their rhetoric. So going back to what we discussed earlier, how likely does an IPO look for box? I think it's likely, but I don't think that's on their mind. It's the end game for the VCs. They have good investors. They have big deep pockets. They've got Mark Andreessen behind them. I think that that's ultimately an end game for them at some point or just a milestone. I don't think that they're engineering their company for an IPO. I thought that a year ago with all the hype and press, but given the whole IPO market, people in the IPO market want to see more work days, less Facebooks. So box is vulnerable until they have the sustainable traction on the enterprise. I don't consider them an IPO candidate because the consumer market switching costs are a lot lower than the enterprise. If they can penetrate the enterprise, we're at the good product that they're potentially saying and have a developer ecosystem. They have an opportunity to be sticking the enterprise and be nested in there and that's a sustainable business. And if they get the kind of traction they currently have on the consumer side, the percentage of the Fortune 500, that's a good play, that's a good prospect. I think they're smart to back out of the IPO track and hit it when they're more solid on the enterprise. Yesterday, we covered the new Silicon Valley Bravo show. Can you talk about how startup culture is being highlighted within the show? Yeah, I mean, I think this, first of all, the show is ridiculous. It's total non-Silicon Valley. This is an actual cool show from the sense of it shows the tech culture. In fact, Mark Hopkins and I were talking about this because one of the characters is from another blog and one I know Sarah from Sarah Austin we've worked with in the past. These are people that are tech lovers but they do not have any reality towards entrepreneurship. They've never started a company. They've been essentially running around with their cameras, doing kind of the social media thing. And so two of the four people don't have any experience being an entrepreneur. So that's one issue. This is total Kardashians for Silicon Valley. I like that. I'm glad that the cameras are being turned on in a non-valley way, kind of way. I think it's good for the digital culture. I think this will be accepted and I think what's gonna happen is Bravo's gonna shift the focus from less glamorous startup, non-real entrepreneurs and make it a little bit more real and sexier. And I think one of the things they need to do is bring back a central character in the show and I think that's something that's key. But the startup community in general in Silicon Valley is changing. The whole idea around Bravo is that people are getting money left and right. That is not true. These incubators and accelerators are hurting and not really doing well. Although they are making investments but they're making 800 million investments and that's just like free money and that game is gonna end as we say that jig is almost up and that's a big problem for Silicon Valley. Yeah, so for a while incubators and accelerators like Y Combinator, they were hot and now they seem to be cooling down. So what's going on there? I just think that two things happen with this whole Y Combinator, Superangel kind of micro VC thing, this investment strategy, is that people wanna disrupt the marketplace and that's just natural. And I think there's been disruption with Twitter and Facebook but here's the problem. They're making 800 million investments, 800 investments here and it's just too much investments. The companies don't get the mindset, they don't get the value add. And at the end of the day, it's the same business model of venture capital, one or two hits. Y Combinator showing that of their big successes that are all pretty much failures except for Airbnb and Dropbox, of which those companies are still questionable at this point. And they're private companies. So even though the valuations are high, they're still private companies. If you look at box.net, we're just talking about same situation, although it's a billion dollar valuation, it's still a private company. So it's still not working. People don't think it's gonna work. I think the traditional venture capital model will evolve to that low end of the market. But this is not a good sign for the ecosystem in the sense that all these startups are gonna be funded and they're gonna start drying out. I think Y Combinator will be successful because they're brand but pretty much everyone else will dry up in my opinion. John, real quick before you go, you're speaking on a panel today about big data monetization at the Quadrus Conference Center on Sandhill Road in Manilow Park, California. Who else is gonna be joining you on the panel and what big ideas will you be discussing? I'm gonna be at Sandhill Road in Manilow Park, which is where the center of the VC action is. And it's being put on by Reed Smith, a big law firm out there. One of the partners over there, Bob Stefansky, ex general counsel, CFO of TIPCO, putting it on. So it's gonna be Ram Menon, who's the president of social computing at TIPCO, MC Shreem is the founder and CTO of MAPR, which we've covered on Silicon Angle, and Steve Soma, the CMO Splunk and myself. And we're gonna talk about monetization really around the future of big data and where the action is. And so it's gonna be fun to be on a panel where I'm not the host. And we're gonna be talking about our experience with Hadoop and HBase, and some of the things that we're finding in the marketplace on our own experiences, as well as what's going on in the marketplace. And then we have a bunch of venture capital guys, talking about policy and privacy. So it's all through the day on Sand Hill Road. It should be a lot of fun. Well, John, thanks so much for your time and we'll talk to you soon. Okay, thanks. For information on news of the day and the latest breaking analysis, stay tuned to News Desk right here on Silicon Angle TV.