Box CEO explains that his company is about the software, not the storage.

By Dan Primack
January 23, 2015

Cloud storage company Box Inc. BOX went public earlier today, raising $175 million. It was the culmination of a very long process for the decade-old company, which originally filed for the IPO last March but delayed pricing due to concerns that investors would be turned off by its massive losses. Box would calm those concerns a bit by more than doubling revenue for the year ending January 31, and already has seen its stock pop nearly 70% higher than the $14 per share IPO price.

Fortune spoke to Box CEO Aaron Levie and CFO Dylan Smith today from The New York Stock Exchange. What follows is an edited transcript of our conversation:

FORTUNE: It has been a long time since you first filed to go public. Why January 23?

Levie: It was either this or January 22.

Smith: We’ve always taken a very long-term view of the business, and had planned to go public both when we were ready and when the market was ready for us. It wasn’t always the most straight-forward path, but we’re thrilled to be where we are today… Our goal was to continue to execute and educate the market on our model and show leverage around our model. There were no specific milestones we were looking for.

You once tweeted that “if your stock shoots up, you left money on the table.” Do you regret leaving so much money on the table?

Levie: I can’t comment on the dynamics of the pricing process, but there are certain tweets that that won’t make as much sense anymore… We have a business model that requires you to understand the disruption going on in enterprise IT, and are very happy to have brought on strong investors who are committed to the re-platforming of the enterprise.

Was there an unexpected question you heard repeatedly from prospective investors during the road show?

Levie: Some of the misunderstanding of our business, and part of this is due to us being in a quiet period for eight or nine months, was that we are a storage company. We’re not. We are a software company with 80% gross margins that sells per seat. I think there was some initial confusion over that, and not understanding that storage is part of our infrastructure as opposed to something we sell. Users get unlimited storage, and pay us for our apps. That was already understood by people who have followed our company the closest, but not by people who were new to it.

During your interview at Fortune Brainstorm Tech last July, you mentioned that one mistake Box made with the original filing timing was that, in the prior year, you had made a lot of costly investments that had not yet borne revenue fruit. Can you better explain that, and should investors expect similar expenditures in a year from now, or two?

Levie: Around calendar 2012-2013 we did make a number of new investments. Things like international expansion and building up a field sales force. It takes time for those sales and marketing investments to kind of mature, and we’re now seeing those efficiencies play out in the business in our current fiscal year. We’ll continue to grow sales and marketing expenses over time, but they will decline as a percentage of revenue over time.

Do you have any concerns that some employees will leave now that their vested stock options have become liquid securities?

Levie: We have an entreprenurial culture, and I’m sure some employees are are very good in early-stage endeavors are likely to go do that. But we’ve been growing the team with very committed Boxers, which is what we call ourselves, and this is a very typical phase for a growing company. We’ll continue to build out the company and bring new people in.

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