Google scared this 27-year-old entrepreneur into changing his idea — now his company is worth more than $500 million

There was a time when Google built products that could scare startups out of a space.

Case in point, "Google Drive" — an online storage service from Google that is now rumored to come out in April.

When rumors of its existence first popped up, it spooked Aaron Levie, CEO of Box, which was at the time an all-purpose online storage company.
Levie changed direction of his company to be an online enterprise storage service, and now it's worth more than $500 million.

The company is on a hot streak, too. Today, the company announced it's bringing 30 new enterprise apps to its mobile Box service called OneCloud.
He's not so scared of Google Drive. And, on top of that, Google has even seemed to lose its touch — Google Wave and Google Buzz were total flops after drumming up a ton of excitement.

What happened to Google's raw power over consumers? We spoke with Levie to find out just how it happened. Here's what we learned:
When Google Drive was first rumored, it was building off the huge buzz of Gmail. At the time, Google could basically do no wrong and it was on a huge hot streak. It was expected that everyone would adopt Google Drive when it came out.

• Box now has more than 10 million users. 82 percent of the companies on the Fortune 500 have deployed it.
• Now, Google is trying to do too much. It's fighting wars with Facebook, Microsoft and Apple — and it just isn't killing it in any one specific space.
• Box is already way ahead in the enterprise. Google will probably be more geared toward consumers, and Google isn't too interested in jumping into a spot that's not already occupied with Apple, Microsoft or Facebook.

Here's the full interview:

BUSINESS INSIDER: So how are things coming at Box?

AL: Man, a lot has changed this year. The world has dramatically changed, Apple is a $700 billion company at this point. It's been a lot of fun.
If you're in Silicon Valley, we have an updated billboard — it now says 82 percent of the Fortune 500 have come onto Box, and it continues to grow. We will be announcing that we're over 10 million users as a part of this most recent launch, so a lot of the pushes on mobility have been growing the user base as well.

BI: Google Drive is coming out soon. Did Google scare you out of the consumer space the first time "Google Drive" was mentioned?

Aaron Levie: This is a traumatic experience, so I apologize if it takes a while to get the story.

We started the company in 2005, and to start a company in 2005, you're basically running off ideas and problems you had in 2004. We have been thinking about this problem for over 8 years. That's a huge number, that's crazy, if you think about 2004 what this space looked like. There were startups that didn't survive past the dot com, Gmail had just launched, Yahoo had a product called briefcase, but there were no — and I mean this as humbly as possible — no adequate sharing and storage solutions on the web.

That's why we started Box. It was meant for all use cases and completely all purpose. It was meant to serve everything from a student to a consumer and for enterprise. We launched the company, we started to get traction.

And then the industry and the market changed.

Google bought Writely — they were getting more into data. Apple was expanding its new devices and MobileMe was getting more important. Microsoft was realizing they had to get into the cloud services. There were a bunch of new vectors we had not anticipated. We looked at the landscape, and then this "Google Drive" started to pop up and it had just been rumored. But we realized a lot of these bigger companies could effectively subsidize these services to consumers to the point they would be free. That makes sense. It's in in Apple's best interest: sell devices. Getting the information makes it easier to sell.
As soon as Google got into the device space, it became just as relevant for them to have all that information. With all this looming competition in the consumer space, that was going to be too difficult to differentiate. But in the enterprise space, competition and customers are sort of defined a little more differently. There is a much deeper value for innovative solutions, a much larger budget for innovative solutions. Enterprises want more agnostic systems that work across all platforms and we frankly thought we could build a better collaboration and content management offering. So we decided to focus our entire company, all our marketing and sales, on the enterprise space.

BI: Was it Google Drive that finally pushed you guys over the edge?

AL: There once was a day that Google would launch products and everyone would adopt and be excited about them. You have to imagine that in our mindset, the thought of having Google, the $100 billion company behemoth, enter our category when we were a 25-person startup — it didn't seem like a really attractive situation. They would subsidize it, so we really decided we would not want to be the sort of sole-survivor small startup in the area.

Google was the straw that broke the camel's back but, honestly, even if Google hadn't been focused on getting into the space, we would have gone into enterprise around the same time anyway. The market sizes are dramatically different, consumers spend a fraction of a fraction of enterprise spending on software. If you think about the spend difference and the size of market difference, then enterprise is a really attractive market, but Google made that a very clear decision.

BI: Are you guys prepared for Google this time around?

AL: If you want "exhibit A" for not being able to lock anything up in the tech industry, just look at BlackBerry. For as much market share and penetration you can have, leadership changes so quickly because of new generations of technology and new consumer and enterprise interest. I don't think we'll ever have the belief we've locked in the enterprise cloud storage market.

We have a significant head start and more of an orientation around security, and it's hard to balance the need or desires of both consumers and enterprises with this technology. You really have to be focused on one space or the other. If I have to bet, Google is more interested in competing with Microsoft and Apple and it will benefit them to focus less on the enterprise market. For any enterprise asking the question about managing information at scale, we think our offering will be extremely competitive.

I also think that in 2012, the world has changed pretty dramatically for companies like Google. It has a lot of offerings it's trying to balance. It's in a multi-front war trying to compete with Facebook — which is so far from us — and competing with the Apples and Microsofts. There's a lot of areas they're trying to cover and it'll be hard to be competitive and effective in all those areas.

If you are a major investment bank or a pharmaceutical company or someone in finance or anyone with sensitive information and business content, this market will eventually be led by enterprise oriented companies that take the consumer sensibilities from the consumer internet and apply those to the enterprise. that's our point of differentiation, that's why we think we've seen healthy success so far. We can balance these two worlds and focus on the business market.

Matt Lynley covered video games and technoloy for VentureBeat prior to joining Business Insider in 2011.

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