Box’s successful IPO validates enterprise collaboration. Here’s what happens next

It’s certainly been a long time coming, but the Box IPO is finally out of the stalls and its initial success, trading as much as 77 percent above its IPO price, looks set to open the floodgates for a year of tech IPOs following a lackluster 2014. Regardless of the reasons for the IPO’s delay — Box’s huge burn rate and a lukewarm market for tech IPOs have all been much discussed — its success today is great news for the enterprise software market and tech stocks in general after a tough couple of quarters.

Most importantly, it’s huge validation of the rapidly emerging enterprise collaboration space, in which both Box and Huddle (where I’m chief executive) were early pioneers, and proof that the future of enterprise software is now here. Businesses simply weren’t giving their teams the technology needed to allow them to work securely from anywhere, at any time via any device. People were left battling with legacy systems, which locked content behind the firewall and drowning in email. This environment created an opportunity for a new enterprise software market that gives office workers the tools they needed to get their jobs done.

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While Box found initial success in the consumer cloud file storage market, this space has rapidly become commoditized by the likes of Google and Microsoft, and the importance of cloud collaboration over storage is now coming to the fore.

The value delivered by cloud storage offerings, particularly to businesses, has dropped significantly as people have realized that replacing your C: drive in the cloud might make access from multiple devices easier, but it doesn’t actually help people work together more successfully. Instead, content now just gets siloed and forgotten about in the cloud.

Working together more effectively is the real problem that organizations are trying to solve in today’s digital economy, and there’s an increasing stampede away from providing simple cloud storage. Box saw this was the case and has striven to add value to its storage platform core by offering its enterprise customers additional collaboration features. As its debut today demonstrates, collaboration is where the true value now lies.

So what does the future now hold for the cloud collaboration space? Well, the challenge for Box in particular will be to ensure Q3 and Q4 are also a success. Although the initial IPO hurdle has been crossed, Box will face increased pressure from competitors in the space and will need to consider how it can continue to add value to its mid-market and enterprise customers. Let’s not forget the fact that Box is also still offering free personal accounts and supporting freemium users is costly, so this may be something the company decides to move away from in the future.

For the market, it’s clear that collaboration is now coming into its own as an enterprise software category and customers are going to look for simple, secure collaboration in the cloud for everyone they work with — inside and outside the firewall. We’ve been on the cusp for quite some time, but the collaboration market is now very real!

Alastair Mitchell is cofounder and chief executive of Huddle. Since setting up the company in 2006, Alastair has grown Huddle around 170 people in London, San Francisco, New York, and Washington D.C., raised in excess of $40 million in funding, and seen sales double year on year.