In this episode of Influencers, Box Co-Founder and CEO Aaron Levie joins Andy to discuss the cloud computing business, big tech regulation, and how President Trump’s immigration policies are hurting American innovation.
Video Transcript
ANDY SERWER: Tech has never been more important to our lives, but its future has perhaps never been more uncertain. Top companies face withering criticism at home and rising competition from abroad, while they wait for President-elect Biden to make his first moves. Aaron Levie operates right in the middle of all of it. He’s the CEO of Box, a nearly $3 billion data storage company that’s much bigger than a startup, but much smaller than one of the giants.
More than 100,000 companies use Box’s software, including the likes of Morgan Stanley and Coca-Cola. In recent years, Levie has become one of the most outspoken CEOs in Silicon Valley, driving discussion on issues from immigration to big tech. On this episode of “Influencers,” Aaron Levie joins me to talk about the secret to Airbnb’s success as it nears its IPO, how Washington might regulate Facebook and Twitter, and what business leaders really think of Donald Trump.
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Hello, everyone. Welcome to “Influencers.” I’m Andy Serwer. And welcome to our guest, Aaron Levie, co-founder and CEO of Box. Aaron, great to see you.
AARON LEVIE: Hey, good to see you, Andy.
ANDY SERWER: So, first of all, for those people who aren’t familiar, why don’t you tell us a little bit about Box, what you do, and how you make money?
AARON LEVIE: Yeah, so we started Box 15 years ago really with a very simple premise, which was we wanted to make it easy and secure for people and businesses to access all of their data, all of their information from any device anytime, anywhere. And so we built this secure platform to help Enterprise manage their most important digital assets and content.
And we’ve been now doing this for about 15 years. We have over 100,000 customers globally. We’re in about 70% of the Fortune 500. And enterprises pay us a monthly subscription fee or annual subscription fee to be able to use our software and store and secure all of their data.
ANDY SERWER: So subscription business, people love that. How has it been during COVID-19? Are you one of those stay at home trades, or how’s that working out?
AARON LEVIE: Yeah, so I think, you know, it’s been an interesting journey. We started our company on the premise that people wanted to be able to work from anywhere and be able to access information from anywhere. We obviously never would have imagined that a pandemic would actually drive the acceleration and ubiquitous sort of adoption of this type of technology.
But that’s sort of the environment that we’ve been in, where companies globally have been adopting video conferencing solutions, new communication platforms like Slack and others, as well as more modern ways to manage their digital content and digital information. So there’s been a lot of growth in the business, especially in the enterprise segment.
At the same time, of course, there’s been challenges because you have small businesses that are dealing with a lot of difficulty in their businesses. You have some sectors of the economy that are harder hit and are dealing with the COVID crisis in, unfortunately, worse ways. So it’s been a little bit of a mixed bag, but we have been able to grow pretty quickly with our enterprise customer base.
ANDY SERWER: Hmm, interesting. So I want to ask you about cyber security this year and how that threat has influenced the business and how are you trying to mitigate that. How much is that something that you have to worry about every single day?
AARON LEVIE: Yeah, so cyber is sort of core to what we do. We hold and we manage and we store some of the most sensitive data in the world from everything from pharmaceutical companies that are working on a new drug and doing clinical research, all the way to banks that are collaborating with their most important clients to media organizations that are working on film scripts and a new launch to a new film. So our platform has to be able to secure that information. And our companies– the companies that use Box look to Box to be able to help them really stay secure in the digital age. So security is incredibly important to our strategy.
ANDY SERWER: You guys went public in 2015, I believe, Aaron. And it’s been a successful company, a trajectory, although profitability has been a little bit elusive. Talk to us about what you’re doing to achieve that.
AARON LEVIE: Yeah, well, unfortunately, it’s become less elusive over time. So, you know, we did guide this year to double digit percentage points in operating margin. That was a pretty significant change in our financial profile. We’ve guided to around $100 million in free cash flow this year. So we’re definitely generating free cash flow in the business. We’re growing pretty rapidly at our scale.
We obviously want to grow even faster. We know that the market is quite significant, and there’s a lot of opportunity out there. But we want to make sure that we’re both balancing growth and profitability as we continue to scale the company.
ANDY SERWER: Let’s talk a little bit about some IPOs right now, specifically Airbnb. I think you called their decision to go public recently the perfect market hedge. What did you mean by that?
AARON LEVIE: Well, I think, you know, it’s interesting because you have– I think that the market has sort of had this binary approach that there are companies that are either going to do well in COVID or be really impacted by COVID. So the kind of classic examples are, you know, if you’re a movie theater, that’s a really difficult business to be in. If you’re a traditional hotel operator, that’s a really difficult business to be in. If you’re an airline, that’s a really tough business to be in.
Conversely, if you’re a completely digital company or a company that is sort of digital but whose trends are accelerated in this environment like Peloton, then you’re going to do extremely well during COVID. And so, you’ve seen the stock market actually have these trades where, at the moment there’s a vaccine announcement, the companies that have been really impacted by COVID negatively, their stocks go up. And actually the stay at home, work from home stocks tend to go down.
The really interesting thing about Airbnb is that actually works in both of those environments. Airbnb has found a way to both be compelling for people that want to be able to work remotely because so many people want to work remotely from new and unusual locations. Maybe they want to be able to go be somewhere different for a couple of months. And so, Airbnb has been seeing a ton of growth with a very different kind of use case.
At the same time, if the vaccine comes out quickly and everybody feels comfortable traveling again, then the company will do very well because they’re going to stand to gain a lot of that growth, as the hospitality industry is able to reemerge. And so it’s one of these stocks where almost no matter what the environment is, they’re going to have a lot of great use cases for customers, whether it’s because of travel and leisure or if it’s from working from home in a new Airbnb location.
ANDY SERWER: Hmm. Interesting there, too. So big tech has gotten a lot bigger during COVID. Is that something that’s good or bad?
AARON LEVIE: [LAUGHS] I guess it depends on if you’re in big tech or a very happy customer of big tech. But, you know, I think in general, it was almost an inevitability that the leading technology platforms of our time were only going to get bigger and bigger. Our lives are only becoming more dependent on digital technologies, whether those are social networks, whether those are the mobile devices we use or the marketplaces that we purchase from, like e-commerce platforms, or cloud infrastructure from Amazon or Microsoft or Google.
All of these underlying platforms were only going to get bigger over time. And what COVID did was sort of accelerated that adoption that maybe would have played out over a five or 10-year period, into a matter of quarters or a one-year timeframe. But I don’t think that that acceleration is either good or bad. I think that it’s going to cause us to ask questions about, you know, how should we regulate these platforms in the digital age.
We already knew that these were the most powerful platforms in our lives and in the economy. Now, the question is, what type of regulation is going to be required to keep these companies in check to make sure that we protect consumers, to make sure that there’s a fair and open competition within these ecosystems? And these are going to be really important questions, obviously, for the Biden administration, for Congress in the coming years. And it’ll be really interesting to see, like, where do we actually end up in from a regulation standpoint.
I think for the most part, we’ve sort of treated this as a kind of a one-size-fits-all type of issue, where, you know, the conversation is we break up big tech. I tend to think that that’s probably not the right solution for a lot of the issues that we deal with. I think we actually just need modern regulation and modern forms of regulating the digital economy, whether that’s in the form of, again, marketplaces or social media.
But I don’t think the issue is necessarily just the size of these companies in terms of their market capture or their revenue. I think it’s really the powerful position that they play in our daily lives today. And we need modern forms of regulation to ensure that these platforms are being used appropriately and being run for the good of consumers.
ANDY SERWER: Aaron, can I ask you to drill down into that a little bit? Do you have any specific ideas as to how that can be accomplished?
AARON LEVIE: You know, I think that part of the issue is that if you look at how these congressional hearings have played out, they’ve combined companies like Amazon, Apple, Google, and Facebook into one conversation. And the reality is, is that the issues that each of those companies are dealing with from a competitive standpoint or their position of power are completely different, right?
For Facebook and Twitter, the issue is around the information that we see, the censorship, or lack thereof in some cases, and how do we make sure that we are ensuring that the right kind of information is being spread on those platforms, and we don’t get disinformation and we don’t end up having harmful information spreading on those platforms. The way you would regulate that is entirely different from how you would regulate, you know, Apple or Amazon because of the success that they have as a at-scale marketplace.
And so, for instance, probably in something like Facebook or Twitter, we need regulation that maybe looks more like when we had seatbelts become law. Like, what do we do to protect consumers? And how do we have guardrails in these platforms, as opposed to somehow breaking up these companies, is going to be the solution to this. And so, I think on social media, we need one set of regulations to deal with the spread of information.
In terms of large marketplaces, I think the question is, are we– are these platforms so powerful that they can stamp out competition in an unfair way that would obviously raise antitrust concerns? And, you know, what are the rules, then, of how those marketplaces need to be regulated and governed? And I think what we need is modern digital approaches to that, as opposed to taking laws that were written for the 1800s or the 1900s and trying to apply them to the 21st century.
ANDY SERWER: One defense the CEOs of these companies make, Aaron, is that, boy, if you fetter us in any way, hinder us in any way, we won’t be able to compete against China. And so it’s in the national interest to leave us the heck alone. Do you buy that?
AARON LEVIE: Well, you know, I’m of two minds on this issue. I actually think that– I think it’s a great example of American ingenuity and of capitalism that you actually have trillion dollar companies that have been able to build amazing products that we all love and that we consume every day. It’s the reason that we can do this Skype call right now, is it’s the MacBook that I’m– it’s the Mac that I’m using. It’s the cloud technology from Microsoft that we’re using. It’s the internet and fiber that was built out because of people wanting to invest in that infrastructure.
So I actually think that the size of these companies isn’t really the problem. The only question is, in the digital age, what types of modern forms of regulation do we need? It’s the same reason why we’ve had regulation over many years. There’s– the media is regulated. You know, cars are regulated. The networks that we– you know, our transport on in the air or on the ground are regulated.
So there’s a question of, should digital platforms continue to be completely unfettered in how they work and how they operate and how they can compete? Or should there be some guardrails that are meant to protect consumers, as well as ensure fair competition? And I do think that it’s a real risk if we don’t create an environment where you can build massive companies. And I do think that China and India will be more significant threats for us.
But again, I think this is something that requires a surgical approach, as opposed to broad-based solutions, like let’s break up these companies. I don’t think that will actually accomplish much. And I think that that’s more of a distraction than the underlying issue.
ANDY SERWER: Do you can have any idea of how by the Biden administration is considering moving forward on this front, both with regard specifically to the tech companies and with regard to that relationship to China?
AARON LEVIE: Well, I think, you know, from the limited interactions that I’ve had with, you know, with parts of the team over there, the thing I’m very optimistic about is the thoughtfulness of the approaches that the Biden administration will take. I think we’ve been in an environment for four years where we’ve only had these very heavy handed and, again, kind of blunt force types of solutions to global trade, to internet censorship, to things like immigration.
And when I look at the Biden administration, already the team that has been assembled, as well as just, I think, the general thoughtfulness that Biden has, as well as Vice President Harris has on these issues, I think we’re going to see a very, very different kind of approach, one that is much more nuanced to these topics, one that takes in more feedback and collaboration from the tech industry, as well as other industries that are impacted. And I think we’ll end up having, again, much better either legislation or policies that are enacted.
If you just take, for example, the immigration issue that we’ve been facing, you know, the Trump administration has really dealt with immigration in a very, very archaic type of fashion that doesn’t really take into account the fact that America needs talent coming in from all around the world to come build amazing companies and to work at our amazing companies. And Trump has set us back many, many years in terms of being able to bring talent into this country.
And that’s just an example of these small decisions seemingly on the administration side that end up having a massive ripple effect over time, where the next Apple, the next Google, the next Facebook doesn’t get created here. It gets created in China or India or another country. And that is going to set our economy back many, many years if we’re not able to accelerate some of these solutions. So, again, I have a lot of faith that the Biden and Harris administration will be much more effective at dealing with these issues.
ANDY SERWER: You haven’t been afraid to be critical of President Trump. And I’m wondering, A, do you think he’s really ever going to concede, and B, do you think the business world should be prepared for him to run again in 2024?
AARON LEVIE: Well, you know, I think we’re going to all have to probably have a new definition of what conceding looks like at this point. And I think we probably shouldn’t anticipate that there’s ever a moment where he accepts that he lost the election. I’m guessing that he’s going to claim that the whole process was fraudulent until the very end. So I don’t hold out much hope, nor do I really care whether he officially concedes at this point.
I think the businesses– you know, what’s been interesting about this environment is, every– I think the market generally recognizing that policy and business go hand in hand. You know, immigration policy is what created the ability for Silicon Valley to exist and for Silicon Valley to be at the forefront of technology globally. So you can’t have an innovation economy without thinking through immigration, without thinking through an internet and privacy and encryption policy, without thinking through global trade.
And so, you know, a lot of people say, well, why do companies have to be so political? Well, no company wants to be political. But policy impacts our ability to build successful companies, our ability to hire and retain talent in our country. That is where policy ends up intersecting with the economy. And so, I think what businesses want, and even over the past four years, even when in public, maybe a lot of business leaders wouldn’t have been as comfortable to say these things, in private, business leaders, I think, were incredibly frustrated with just the level of volatility that was happening and the level of chaos that was occurring within the Trump administration.
This is not– you know, you want to be able to trust that your government is thinking over many, many years or many, many decades in terms of the policies that they’re enacting. Not that you’re going to wake up one morning, and all of a sudden, you’re going to have a new trade war with a country that now is going to impact your own ability to execute your business.
And so, what I think business leaders want is that stability, that consistency, that thoughtfulness of policy and approach. And that’s what– and whether that’s Democrat or Republican, I think, matters a lot less than just the ability to have a much more stable political and governance environment.
ANDY SERWER: Yeah, but you’re out there. I mean, you’re outspoken. I’m just looking at another laptop here. We got 2.4 million followers on Twitter. And you’re not shy about making your opinions known. And so I’m wondering what you think about those CEOs who privately convey their feelings to you, their displeasure with what happened. Are those people cowards?
AARON LEVIE: No, I don’t think so. I think it’s probably more of just a personality trait that I have, where I feel comfortable saying, you know, random stuff on the internet. But I don’t fault anybody for not making public statements when they don’t feel comfortable.
I think that I’m very happy to see so many companies and CEOs and other business leaders that will stand up for important issues, whether it was the immigration ban, whether it was for Black Lives Matter. I think that was great to see. But again, I don’t think it’s an expectation that we have to have for all CEOs that they have to stand up for these issues, or, you know, there’s cowardice.
ANDY SERWER: Did you take any heat from any customers or potential customers, Aaron [INAUDIBLE] I love to be a Box customer, or I was. But then I saw what you were saying, and so I’m not going to do that anymore. I’m not going to do business with you anymore.
AARON LEVIE: You know, maybe there’s a couple examples here and there. But for the most part, I saw the opposite. We would see a lot of customers, either publicly or privately, reach out, saying, you know, thank you for taking a stand on this issue. This is super important to us. And we appreciate that there are voices in Silicon Valley and the tech community that are driving this.
You know, what’s interesting is, we think about Silicon Valley as sort of this isolated region that has its own set of political views and, you know, we’re in a bubble. And, you know, frankly, we are in a bubble. There’s no question that we have our own kind of universe out here. However, the issues that are impacting technology companies, let’s say, immigration issues, social issues, that we have within our communities, these are issues that every organization, every company is going to be facing.
You know, when I talk to, you know, an industrial company or a large bank or an automotive company, they care about immigration as much as a tech company does. Because what they recognize is that in the 21st century, their businesses are going to be defined by their technology strategies.
So if Silicon Valley is having a hard time bringing in amazing technical talent from all around the world, you can be sure that Detroit and New York and Chicago and other epicenters of other major industries, they’re going to be facing the exact same issues. Because they need amazing engineering talent. They need to make sure that we’ve got modern privacy regulation and global trade figured out from an internet standpoint.
And so, the issues that we think of as our tech industry issues, these are issues that are going to affect every single industry. And so what I hear from a lot is that, you know, CEOs and other business leaders will say, you know, we’re glad that the tech industry is stepping up for these types of topics, again, immigration reform and otherwise, because these are the exact issues that go and impact their own businesses outside of Silicon Valley.
ANDY SERWER: At one point, Aaron, immigration was a bipartisan issue. It was something that Democrats and Republicans could, more or less, agree on. Not true today. Do you have any hope that we can bring this back together where we can accomplish something on immigration, maybe just more broadly speaking, in terms of a political perspective, where we can get things done in Washington?
AARON LEVIE: You know, I think on the broad-based, you know, political point, it’s– that one is way above certainly any of our pay grades to try and figure out. I think that’s a– it’s super difficult to imagine that, all of a sudden, Congress becomes very functional and great relationships. You know, you saw Marco Rubio’s tweet today already attacking, you know, obviously, very high quality Cabinet members, you know, from the Biden administration. So that’s not a great sign that things have gotten any more collaborative, you know, within this transition period.
That being said, if you take something like immigration reform, you know, I was on a video with a number of senators on the right just three months ago, where everybody basically uniformly agreed that we should have improved high skilled immigration reform in the US so we can bring in talent from all around the world.
So the only reason that that’s not taken up as a topic is that it was, you know, politically not expedient if you went and actually tried to bring this up as an issue. Because the Trump administration had that as one of their biggest issues, was making sure that they don’t talk about or solve any issues on immigration reform. So what I’m hopeful for is, is that, you know, that hopefully more rational behavior, more objective approaches will start to take form under the Biden administration and that we do get more collaboration within Congress. But I’m certainly going to be cautiously optimistic on that front.
ANDY SERWER: So we had COVID, the election, and then the other big issue of the year, of course, has been racial and social justice and the reckoning that discussing those issues has brought to bear. How are your things– how are you doing at Box? And how are things? How diverse is your company? And how satisfied are you with that diversity?
AARON LEVIE: Yeah, you know, I think this has been an effort that we’ve had for a number of years now to put a greater focus on diversity and inclusion within our organization. I think like all companies, we have more work to do on this front. I’ve been happy about some of the progress that we’ve made, but we obviously have more that we can do.
And I think, more broadly, this is just a massive topic of concern for most business leaders, is, how do we ensure that there isn’t any type of systemic inequity within our hiring practices within, you know, how people are paid within the places that we recruit from? How do we make sure that we’re able to avoid any of those types of differentials? And that’s something that we care a lot about at Box and I know that is becoming a greater concern for the broader industry.
ANDY SERWER: As we look to recover from COVID and the pandemic, we obviously have had a number of government programs to address economic issues. What do you think the best way forward is there? Do we need another stimulus program? And if so, what form should it take, Aaron?
AARON LEVIE: Yeah, I– definitely not an area of extreme expertise on my end, but I’m more biased toward things that give people money, as opposed to the large businesses money. I think we should do whatever we can to ensure that people that are out of work or that have been paid less because of this environment, that we’re able to effectively make them whole as much as possible to no fault on somebody’s end.
You know, if you were working at a movie theater before or at a hotel chain or at an airline, and you’re out of work, I think the government absolutely should– it should create stimulus to be able to ensure that you’re able to get through this period. And I think that we should do it rapidly and hopefully very– you know, again, in a fairly aggressive way. I think it’s super important, especially as you get through the holiday season, and at least until a point where we have mass adoption of a vaccine. So I would absolutely favor that and put a lot of emphasis on that effort.
ANDY SERWER: You are, I guess, we could call you a slightly older wunderkind at this point. What are you, 34 years old right now?
AARON LEVIE: I’m 35 now, so I’m way past any of those terms that you can use now.
ANDY SERWER: Anyway, you started Box when you were at USC, right?
AARON LEVIE: Yeah.
ANDY SERWER: And so, I’m curious, for people who are in school or just getting out of school, what advice would you have for people who are trying to start a business maybe even right now during the pandemic?
AARON LEVIE: Yeah, I think most of my business advice is probably advice you would use at any stage of your career or pandemic or not, economic collapse or not, which is, the best businesses are started because you’re solving a new and important problem that is just emerging. And I think, you know, what is the optimism I have in this environment is, I’m seeing, on a daily basis, amazing new companies get started and be able to scale and grow because there’s an all new set of problems that are emerging.
You know, what social distancing has created is a new set of problems and issues that consumers and businesses are dealing with, whether it’s new technology for remote work, whether it’s new consumer services that help people be entertained or communicate. I think there’s all new types of companies and opportunities that have just emerged right now. So ultimately, my advice is, you have to find problems that are just emerging that people care about and are a big enough problem to warrant a new solution to those problems.
And when you find that, when you find that magic, you sort of section a Venn diagram, that’s where great entrepreneurial endeavors exist. And before Box, I had many, many companies that failed miserably. And it’s because I didn’t find a new problem that was important that was just emerging. And we got very lucky with Box at the right time– we started the company at the exact right time for when this idea of accessing data from anywhere was emerging. And we had the right solution at the right moment. But really, you know, there is never a bad time to start a company. But there are plenty of– but yet, that all means that you have to have the right idea at that time.
ANDY SERWER: And finally, Aaron, what about the future of Box? It’s kind of a medium-sized tech company right now, I guess you could say. And, you know, some people have said, wow, you’ve got to become an ecosystem and a mega platform to survive. So where do you see the company going forward over the next several years?
AARON LEVIE: Yeah, so we’re super focused on our core vision that we started the company with. We believe that with billions of people globally working on digital technologies to be able to collaborate, to be able to share, you know, whether that is they’re making a movie, they’re serving a client, they’re launching an ad campaign, you know, they are building a new car or a new consumer product, that they’re going to need technology that helps them collaborate and manage their most important digital assets in a secure way, in a way that is real time, in a way that lets them share across all of their partners and their colleagues.
So our job is just to continue to build the best platform that helps people manage their digital content, wherever they’re working from and whoever they’re working with. And so, that problem has only increased in terms of importance and in terms of the challenge that businesses are facing. And our job is to make sure we continue to build the best platform that helps our customer solve those problems.
ANDY SERWER: OK, Aaron Levie, co-founder and CEO of Box, thank you so much for your time.
AARON LEVIE: Thanks, Andy.
ANDY SERWER: You’ve been watching “Influencers.” I’m Andy Serwer. We’ll see you next time.
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