What it’s like when someone offers you $600 million, and you say no

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Samantha Lee/Business Insider

BOX_Aaron Levie 5960

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Box CEO Aaron Levie had a tough decision to make about his company’s future.
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Box

Aaron Levie dropped out of college to start Box, a cloud-based file storage company for enterprises that is now publicly traded. But six years in, Levie had an opportunity to sell his business.

Citrix offered to buy Box for ~$600 million. Levie and his cofounders ultimately declined the offer.

But the process was emotionally grueling and the decision haunted Levie for a long time.

“It would have been a great financial outcome for early employees and investors, so that was very difficult to think about,” Levie said in an interview for Business Insider’s podcast, “Success! How I Did It.”

“On one hand, you had a guaranteed outcome, and so you could take all of the risk off the table, and it was staring you right in the face. On the other hand, you had really an improbabilistic outcome…all of these things where the odds were against us.'”

Levie got advice from other founders who had faced similar situations. Some told him to sell; others told him not to give up a business he loved.

Finally, he and his co-founders – Dylan Smith, Jeff Queisser and Sam Ghods – holed themselves in a hotel room for 24 hours to deliberate. They left still conflicted, but eventually decided to stay the course. The weeks that followed were tough.

“As soon as we made the decision, we were freaking out for months,” Levie recalled. “I was having nightmares for a few weeks after: ‘Did we actually make the right call? We can never now go back on this. We’re pretty locked into the current path.’ It was a scary decision.”

Fortunately, Levie made the right choice. A few years later, at age 29, he took Box public. It now has a market cap of more than $2 billion.

Check out the episode with Levie explaining how he built Box, below, or keep scrolling for a transcript of how he decided not to sell it for $600 million.

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Here’s the relevant part of the podcast, explaining how they made the difficult decision:

Shontell: You went on to make Box a very large company, and to help you do that you raised a ton of money, and you had a big offer from Citrix at one point to buy your company for about $600 million. Your board really wanted you to sell at that time, but you didn’t want to, and you resisted.

What’s it like as an entrepreneur when something like this happens? You have this opportunity to exit, your board is pushing you to do it – what was the thought process, and how did you work through that?

Levie: It was definitely a struggle, and I think the board was probably a little bit more mixed, so I don’t want to necessarily paint it as the board was firmly on one side versus my decision. It was a pretty complicated process because we were still relatively young and early in our growth, and so we didn’t have a lot of data points to extrapolate out and imagine what Box was going to be in five or 10 years from that point. And so we had very little data to go off of. We were in a very still-competitive market with companies a hundred times larger than ourselves, and so in many respects, it was a very attractive opportunity.

It would have been a great kind of financial outcome for early employees, for investors, and so that was very difficult to think about. Because, on one hand, you had a guaranteed outcome, and so you could take all of the risk off the table, and it was staring right at you right in the face. And then, on the other hand, you had really an improbabilistic outcome, which is, like, OK, we’re going to somehow go from being a $20 million revenue company to hundreds of millions in revenue, and survive all the competitive landscape that we’re dealing with, and continue to build a culture that we care about and want to be a part of, and all of these things where the odds were against us. And it was a couple months of really debating that and struggling it.

I called a lot of mentors and founders who had either sold their company or not sold their company, and tried to understand why they went either direction. I was getting advice from lots of different, great founders and leaders, and the advice was sort of all across the spectrum. Some people said, “Totally sell – you’re never going to get a better offer than this.” And some said, “Hey, when you have an opportunity where you can keep doubling down and growing something that you love to be a part of, don’t kill that opportunity.”

Ultimately what happened was the four founders did an offsite, where we holed ourselves up in a hotel room for 24 hours and we decided that we were not going to leave until we had the answer of what we wanted to do. We still didn’t have the answer at the end of the offsite, so that didn’t end up working out fully, but within about a week or two, we concluded that we didn’t want to sell. We wanted to keep doubling down, and we wanted to give this a shot.

The conclusion was when we thought about all the things that we had yet to do and what we still wanted to accomplish. Those dramatically outweighed the value of the money that we would get and the risk mitigation we would get by selling.

As soon as we made the decision, we were freaking out for, like, months. And on one hand, we were pumped up: “OK now, we know we definitely want to build an independent company.” But on the other hand, we’re like, “Holy s—, what did we just do, what did we turn down?” I was having nightmares for a few weeks after: “Did we actually make the right call? We can never now go back on this. We’re pretty locked into the current path.” It was a scary decision.