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tv   Studio 1.0  Bloomberg  April 4, 2015 9:00am-9:31am EDT

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known for his colorful sneakers, his magic tricks, and ironic tweets. but there is no underestimating his ambition to dominate the flight of business to the cloud. he started building websites when he was 13 and met the kids who would become his co-founders as far back as middle school. but unlike places like facebook and twitter, where tales of early infighting are legend, all four of box's co-founders still work there together a decade later. joining me today on "studio 1.0," box ceo and co-founder,
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aaron levie. aaron: how you doing? emily: how you doing? aaron: good, thank you. emily: blue sneakers today, i appreciate that. what are the socks? aaron: these are cloud socks. emily: ok. aaron: official cloud socks. for the enterprise offer industry. emily: i like it. you grew up in seattle. aaron: yes. emily: what kind of kid were you? aaron: probably not atypical of, certainly, people in the tech industry. so, i spent far too long, far too much time, on the internet. not, sort of, large volume of friends. most of those that were my friends i founded the company, i founded box with. we were growing up in the shadow of microsoft. emily: did you idolize jeff bezos and bill gates? aaron: yeah, everybody knew the bill gates story kind of by heart. what's cool about microsoft is that you can actually go and they let you be a product tester. so a lot of people in high school would actually go to microsoft and test out new products and then they would give you like a free mouse at the end of it. emily: ok, you met your co-founders in middle school. tell me about that. aaron: so, dylan smith, kind of
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the first co-founder of box who's now our chief financial officer, we actually played trumpet together in middle school. neither of us were any good at that. and then throughout middle school and high school though, i did a lot of stuff on the internet with jeff and later in high school with sam ghods. emily: tell me how box began. aaron: if you go back about ten years ago, not a lot of innovation was happening. so it was really, really hard to do basic things like, how do you share your files, how do you access your data from anywhere, how do you collaborate and work with other people? i was in college at the time. and the original idea was what if you could have these sort of hard drives in the cloud that would let you put all your files in these hard drives and then access it from the internet and any device that you wanted to be able work from. emily: so tell me about those early days. like, fondest memories. aaron: one was mark cuban -- was an angel investor in box. and that was just done by a cold e-mail that we sent to mark back in 2005. so he sent us a $350,000 check to people he had never met.
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so that gave dylan and myself the idea, maybe we should pursue this full-time. which led to us basically proposing the idea to our parents that we're going to drop out of college. they subsequently got freaked out. but we had to do it and pursue the mission. we dropped out. and then we convinced our other two friends, sam and jeff, to also drop out of college. and we all huddled together in berkeley, and -- emily: this is when you moved to the garage? aaron: we moved to this garage, this renovated garage in berkeley that my uncle had built up. and i'm not sure that it was legal at all. we would spend 16 hours a day, 17 hours a day, just working on the software, on the business model, on marketing. it was just four of us living, working, you know, eating, sleeping in the same place. it was pretty disgusting, actually. [laughter] if you really want to know, it is probably more akin to a sweatshop. but this is how you build companies. emily: you tweeted a picture of that garage. saying box's first office 8 years ago where we slept, worked, fought, pivoted, and
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built. when it came to each of your co-founders, what was each of your roles? aaron: we got really lucky, i think, collectively, because we each bring a different kind of skill to the table. so we had sort of the software skill, the hardware and networking skill. we had the finance, administration, legal, business operations skill. that was dylan. and i focused really on the product side. emily: so when you say you fought, i'm just curious. in those early days, what did you fight about? what were the issues that came up? aaron: we had all the sort of fighting and all of the bickering as founders. but the nice thing is that it all fell back on, again, that trusted relationship that let us kind of work through that. we did not have the same kind of early founding battles that other companies have run into. because we had been friends for, in some cases, a decade before we even started the company. emily: so obviously at facebook you had lawsuits, twitter, you know, tales of infighting and backstabbing. what makes box unique? what makes you guys different?
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aaron: when you play trumpet with your co-founder at the ripe age of 11, you have a rooted friendship that, you know, bickering and frustrations from building a company tend to not be able to break. emily: has keeping the team together been a priority? aaron: yeah. we spend a lot of time together. still. once a year, for instance, we do our own off-site, just the four of us. emily: have any one of you ever had a moment where you thought, i don't know, i don't know if i want to keep doing this, maybe i might want to move on? it has been 10 years. aaron: it has been 10 years. i have no idea if my co-founders have had those moments, but none that i have been told about. emily: what is it like becoming a ceo at the age of 19, when your peers are in college, partying? certainly not starting businesses. aaron: it is generally just worse than what your peers are doing. so -- [laughter] it's not very illustrious to be a ceo of a two-person company. it got me excluded from a lot of parties at the time. and people -- it looked, from a
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distance, looked like they were having a lot more fun. and -- because it is generally more fun to go out than to be on your computer 14 hours a day during college. emily: what is the myth of aaron levie and what is the reality? aaron: i think i am still early with myths. so i don't know what myths have emerged. but the reality is that it's a really simple idea. our job is to build software that previously enterprises didn't think was possible to create. emily: how is aaron levie sitting in front of me today different from than 19-year-old ceo? aaron: i think as the 19-year-old ceo, i would be grabbing my hair more. i had a lot more -- a lot more issues with add, so. emily: i know you are on the road a lot. this is now a global company. how do you structure your time? aaron: i probably spend about 50% of the time on the road, because it turns out that enterprises are everywhere. until you go out to a farm who is going to use drones to manage their agriculture business, you don't actually know how these technologies are going to intersect with the sort of "real
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world". and so you have to go out on the road and actually understand that customers directly. emily: right. aaron: the view is, it's sort of silicon valley versus the rest of the world. when it's actually silicon valley being integrated into the rest of the world. ♪
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emily: you drink a lot of coffee, apparently. aaron: i do. emily: you take a nap. aaron: i do take naps. emily: every day. aaron: i try to. emily: what is this, spain? i mean -- aaron: this is -- you forgot the three months of vacation i take every year. emily: no, but really, you do. you do take a nap. aaron: i do take a nap. emily: and you work more in the evening. tell me about that. aaron: yes. it's really, um, just the best practice -- right around 7:00 p.m. or so -- you take a 25 minute power nap and you wake up fully recharged and that lasts for another about five hours or so. and then it's me time. that is where i get to go design, sort of, what are we going to do next? what are we behind on? what do we need to start to think about? that is generally when everybody gets inundated by e-mails from me. emily: and you have a diary,
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right? like a personal, aaron levie-only diary. aaron: the range of different industries and what you have to learn about from their technology is just very vast. and so you have to keep track of that somewhere. emily: and this is something that only you see? aaron: yes, i would not want you to see it. so these are sort of my personal things. emily: how big is box today? aaron: we have about 1,100 employees. we have 240,000 businesses that actively use the product. about 39,000 companies are sort of paying for our enterprise edition of the service. 27 million users. emily: you recently rolled out box for industries. for health care, retail, media, and entertainment. how is that going and what is next? aaron: what we started to see happening is in every industry that we were serving, there was some edge of our product or edge of their use cases that was far more advanced and innovative than we had ever imagined that could be done with our platform
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technology. about a month ago, we announced box for industries, which today covers health care, media, retail, but we will be announcing a number of other industries over the next couple of months that will take box into more regulated industries that we think are very ripe for change. it will serve every major industry. emily: you are seeing so much change and disruption in the world of enterprise technology right now. larry ellison stepping down. as the ceo of oracle. hp splitting up. ibm struggling. when it comes to incumbents versus start-ups, how does it play out? aaron: so every couple of decades, you have this sort of changing of the guard as it were. start-ups that are really optimized for that disruption have an opportunity to take advantage of that and potentially build the next era of ibm and hp and microsoft. at the same time, you do have incumbents that have a lot of cash. they are led by incredibly smart and astute leaders that
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understand this change. the changes you are seeing are driven specifically because they know they are being disrupted. emily: peter thiel, for example, said to me hp is not a technology company anymore. it is a bet against innovation. aaron: i think that is a -- certainly that is a provocative statement. but i think in terms of relevance, you have leaders of these companies that are recognizing that their previous strategy would have lead to irrelevance and that they have to change that. we have this view that sort of everything is sort of zero sum. ibm does not have to lose for apple to win. or for salesforce to win. emily: what about a company like microsoft? a company that you grew up with. aaron: i think there are specific product areas that could potentially lose or be harmed by some of this transition, but then there is an entire company at the macro level that does not necessarily have to lose. emily: so companies like microsoft, google, amazon are dropping the price of cloud storage.
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how much of a threat is that to box? aaron: we love that. the same unit of storage is now a 40th the price as it was 10 years ago. on the supply side of our business. so the cheaper that storage gets, the more data that we can store for a customer, and the more we can deliver unique experiences around their content. emily: you recently took on $150 million in funding from tpg and coatue. the company is now valued at $2.4 billion. why did you take that money? aaron: as you may have seen, we have filed to go public in march of this year. and then basically about a week after we filed to go public, there was a bit of a market correction in the tech stock space. so you saw a bit of volatility -- quite a bit of volatility and a lot of sass in kind of high-growth technology companies. so we decided it wasn't the best time to bring a new company to market. and we had amazing support from some private market growth late-stage investors, tbg and coutue in this case. they were willing to and interested in supporting the
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company as a private company. we took that money on to allow us to continue to invest in growth, continue to invest in the business model and building up box without necessarily going public. emily: how much have you wondered did we make a mistake, did we file too soon? aaron: what is obvious is that we should not have filed when we did. we dealt with a lot of distraction because of that filing. i think whether that was a log of unfortunate news reports and the cycle that has happened around the business that we brought on because of the filing. that was absolutely a distraction to what our core focus is and has been, which is, you know, execution and building the business. but, you know, life is certainly too short to have any specific regrets. so we have learned. we have been and remain in just full execution mode. emily: i'm curious about what that moment was like for you. because you open your books to the world. everybody can see your finances. somebody like om malik calls box
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a "house of horrors." aaron: yeah, that's an extreme phrase. we are competing against really the biggest companies on the planet in the technology industry. and so to do that, you have to make a pretty significant investment. in our case, that is an investment in research and development, in infrastructure, in our sales team, in our ability to actually go to market and reach these customers. emily: the criticism was that you are spending more on sales and marketing and acquiring customers than you are making. how are you changing that or how has that changed? aaron: the thing that scale gives you is that because we are a recurring revenue business model -- which i think is another thing that was lost in the mix -- every dollar that we acquire of revenue is a dollar that is recurring annually. and so our job is to keep customers happy and successful. and compound that dollar over time. we just happened to unveil our s-1 at a point where, again, the new investments had outpaced the revenue scale. and so now, i think, we are more in a stage where the revenue is
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-- we're focused on growing that of course, and that is compounding. but we don't have as many of the new significant investments, because we have done a lot of the international expansion. we built out a lot of the enterprise sales force. and so you're starting to see that efficiency play out over time. emily: how much have you thought about selling box? versus staying independent. versus going public. aaron: we want to sell our software to a lot of companies. but the company itself, we spend about 0% of our time thinking about over the past few years. emily: alright. china, obviously this is a critical market that a lot of u.s. technology business have trouble getting into. what is your strategy on china now? aaron: sort of absent learning chinese -- or mandarin -- my challenge has been how do we go explore working in the market in a big way. and i think what you will see is probably us partner over time with key players in the space. but i would not expect us doing anything really big in china in the near future. emily: there is a company you
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may have heard of called dropbox. aaron: yes, i have. emily: your name -- the name box is in the name dropbox -- you do overlap to a certain extent in terms of business, customers. how much of an inconvenience has dropbox been for you? over the last however many years? aaron: you know, inconvenience is a unique word. i think they are an innovative company. drew is obviously an incredible leader. we obviously are a fierce competitor from a business standpoint. in the business part of the market. but i think that the world is better with them. emily: why do you think you can offer business customers something better than they can? aaron: i think that, when you go after the enterprise, it is really, really hard to balance a strategy where you are world-class on the consumer side and also be world-class for a hospital or a life sciences company or a financial services institution. those are just very, very different types of problems. at box, we don't have any distractions. we are 100% focused on the
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enterprise. aaron: i am sort of between peter thiel and mark andreessen in my tweet volume. ♪
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emily: silicon valley is sometimes criticized for being too audacious, too arrogant, and thinking that we can change the world. is that fair? aaron: it used to be that there was a cycle of disruption within silicon valley where software companies constantly sort of disrupted themselves. we are going through an evolution where we are having to interact with so many new markets in so many different ways. and at first that starts out as, we can solve those problems better than anybody else. sometimes that belief is right, and sometimes that is not. sometimes when it's not correct, it ends up looking ludicrous and we look obnoxious for it. right? the outside world is unbelievably fascinated with and excited about working with
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silicon valley in this wave of disruption. something that we do not get a perspective for as often as i think we could or should -- emily: you mean because we are living in our own bubble? aaron: we live in our own bubble. the view is it is sort of silicon valley versus the rest of the world. when it is actually silicon valley being integrated into the rest of the world. and for the first time where we are not sort of in this isolated universe of 'it's its own industry.' there's no "tech" industry. there's sort of tech "enabled" everything. it is an unbelievably interesting time to be the same kind of retailer that five years ago you would have thought was going away because of the internet. there is a tremendous number of companies that have emerged that are trying to help you develop new experiences to get to your customers. right? 10 years ago, you thought amazon was just going to destroy your entire industry, and now you are on the upswing because we want all new experiences of how we are going to go shop. emily: so you think there is no such thing as the tech industry or in the future the tech industry won't be so defined?
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aaron: i think it's going to be less defined, is the idea. you might have silicon valley. but, you're going -- that should be seen as the sort of software layer of every other industry. emily: your tweets are widely followed. semi-funny. aaron: thank you. semi-funny. yes. emily: thanks for the good material. in response to concerns that you would reign in your tweets after you filed to go public, you tweeted a photo of a missouri law firm. and gave a shout-out to your new twitter followers. aaron: actually, i'm not sure how the missouri law firm felt about that. emily: hopefully you won't get sued over it. aaron: they didn't sue us, so. they probably shouldn't. i'm sure we sent them some traffic for new customers. [laughter] emily: but tweeting as much as you do, why do you do it? aaron: well, maybe one myth that i actually can dispel is that i generally tweet only once or twice a day. emily: so you are way behind mark andreessen. you are not at 100 tweets a day. aaron: i am sort of between peter thiel and mark andreessen
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in my tweet volume. no, it's my one outlet that a pr team does not control for me to be able to just share my thoughts on the technology industry. emily: i guess i wonder, like, why aren't you more scared? aaron: that might be partly generational. i mean, i grew up on chat rooms. i'm sure i will say something stupid someday that i wake up to in the morning and pull a donald trump or something, and then regret tweeting for the rest of my life. emily: how much of it is strategy? aaron: it is probably less, actually, strategic than you might think. because my brain is sort of all over the place. so it is actually very representative of the random notions that i have. emily: i've had the benefit of seeing you do magic. aaron: i am less active now as a magician. emily: that's a very hard thing to learn -- aaron: yeah, some would say it's impossible. emily: what have you learned from that? or how has it affected your career? aaron: so the magic industry is very weird. have you ever been to a magic conference? emily: no. that sounds like an interesting experience. aaron: you think the tech industry has a diversity problem? there is something called the
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international brotherhood of magicians. i don't know if i learned much beyond what, maybe, not to do that would be very weird. but it was a fun experience when i was in my teenage years. emily: will box still become a public company? aaron: that is the path we are on. i would say it is pretty likely. emily: you wouldn't say yes? aaron: i would say yes in the sense of that is the path we are on. emily: would you ever start something new? or is this it? aaron: i think that if this continues to go as it is, i hope to be doing this for quite some time. emily: do you want to be the larry ellison? of cloud storage? aaron: it does not seem like he has had a horrible life. because of what we do is, sort of, transcends industry, transcends sort of different platforms and devices, and ways you're going to be able to work with information, there is really no limit to what is going to be possible in our kind of market, broadly. we have a very wide palette to work with over the next many, many years. emily: aaron levie, ceo of box. thank you so much. aaron: emily, thank you. emily: great to have you.
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emily: he is the provocateur behind some of the big ideas of our time. a creator of a sort of pop science. an unofficial, but incredibly influential set of laws that govern human behavior. between five "new york times" bestsellers and two decades at "the new yorker," malcolm gladwell has inspired, inflamed, and perplexed the most critical of readers. joining me on "studio 1.0," author, journalist, and thought-provoker, malcolm gladwell. thank you so much for being here, it's really great to have you. in your latest book, "david and goliath," your argument is disadvantages can become


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