Box surges despite Wall Street skepticism
The biggest misunderstanding about enterprise cloud company Box is that it's in the consumer space, CEO and co-founder Aaron Levie said Friday, after the start-up's stock surged in its IPO.
In fact, Box works with about half of Fortune 500 companies at a time when the nature of computing in business is fundamentally changing, Levie told CNBC.
"Box helps manage corporate data and corporate information for the world's largest companies," he said in a "Squawk on the Street" interview. "The most important point is that we are participating in once-in-a-lifetime transition from on-premise computing to cloud computing."
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Shares of Box traded up as much as 70 percent in its trading debut Friday. The company priced its shares at $14 on Thursday evening, above expectations.
Box focuses on digital storage, file sharing, and content collaboration. The company has not yet turned a profit.
Investors interested in buying into Box should understand that enterprise technology is transitioning to a new platform and the company is focused on the profitability of deals with individual customers, Levie said.
He said Box expects to grow as both new and existing customers continue to expand their deployment of its services. The company has a 130 percent net retention rate, which means that customers who expand their use of the service more than offset those who drop it, he added.
Asked about the high cost of attracting new customers, Levie said: "We're going after a market where tens of billions of dollars are spent every year in the legacy technology, and what we're trying to do is capture the value there and acquire customers, which is why we're spending that money."
Customers are roughly profitable after two years, he added.
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Despite its many rivals, Box remains confident about its own strong competitive advantages. In particular, the company says its tools allowing workers to share files and folders in the cloud are the most secure and easy to use.
A lot of companies agree. Box boasts 44,000 paying organizations, including a wide range of industries, from General Electric to Eli Lilly.
—CNBC's Josh Lipton contributed to this report.