Speaker 1: Who are listening to Bloomberg Business Week. Jason Kelly and
Speaker 1: Paul Sweeney here wrapping up a Friday show, and who
Speaker 1: better to do it with then our pal Aaron Levy,
Speaker 1: he's the co founder as CEO of Box, joining us
Speaker 1: on the phone from California. Aaron, how are you? How
Speaker 1: are things out there? Because it's a it's been quite
Speaker 1: a week. Yeah, it's um. Uh, you know, certainly in
Speaker 1: a lot of context, has been quite a week. And UM,
Speaker 1: you know, we're we're we're hanging in there. Um. Fortunately
Speaker 1: we're able to avoid the impact of the fires. But um,
Speaker 1: you know, no questionable lot going on in California and
Speaker 1: across the country right now. Yeah, and so tell us,
Speaker 1: you know, you give an update to your investors this week.
Speaker 1: Reported earnings was the big thing that you think people
Speaker 1: should be taking away there. Yeah, we're we're very happy
Speaker 1: about the performance in UM in Q two. We were
Speaker 1: able to beat on UM, you know, every metric that
Speaker 1: we guide to and consensus on revenue growth, UM, operating margin,
Speaker 1: ep S, and buildings. So we're we're halfy about the
Speaker 1: performance in Q two. UM we're really driving study growth,
Speaker 1: deliver above UM your year revenue growth and um an
Speaker 1: over fiftcent operating margin um in the business, and that's
Speaker 1: up from about zero percent a year ago, so uh,
Speaker 1: you know, very steep increase in operating margins for the company,
Speaker 1: which has been just a path we've been on to
Speaker 1: try and better balance growth and profitability. And then we
Speaker 1: were able to raise guidance for the second half around
Speaker 1: both revenue and our profitability targets. So, Aaron, your company,
Speaker 1: other tech timies, particularly those UH with cloud exposure, really
Speaker 1: putting up some good numbers in the last quarter and
Speaker 1: even obviously before that. Some concern, as I talked to
Speaker 1: some tech investors, is that maybe you and some other
Speaker 1: tech companies are pulling some of that revenue or that
Speaker 1: revenues being pulled from next year as companies really trying
Speaker 1: to ramp up their UH their tech stack to cope
Speaker 1: with the changing works style. Is that a concern that
Speaker 1: next year could be weaker than and maybe expect as
Speaker 1: some of the revenues pulled forward. You know, I'm sure
Speaker 1: there are examples of that um UH in in in
Speaker 1: some particular software categories. It's hard to make a general
Speaker 1: statement across the cloud category, um UH and industry broadly UM.
Speaker 1: And the reason I think you're seeing so much growth
Speaker 1: right now is that these markets UM, we're often actually
Speaker 1: far larger than what most investors and the market generally realized.
Speaker 1: You know, if you take a product like Zoom or
Speaker 1: Slack or WebEx or these types of technologies, you know,
Speaker 1: we're used to thinking about enterprise software as maybe being
Speaker 1: able to be used by tens of millions of knowledge
Speaker 1: workers that come into large corporations. And yet today when
Speaker 1: you have billions of people on the Internet, whether that's
Speaker 1: for healthcare reasons or home schooling reasons or being able
Speaker 1: to work from anywhere, UM, you have billions and billions
Speaker 1: of potential users of these technologies, and you have a
Speaker 1: set of products and services, whether it's again companies like
Speaker 1: Zoom or Salesforce or Microsoft that have been around for
Speaker 1: a long time and they think they are really in
Speaker 1: a strong position to go and serve these customers. So
Speaker 1: I think you have much larger markets than what people realize.
Speaker 1: And so even though there has been an accelerant to
Speaker 1: growth in some cases in UM in some of these
Speaker 1: product lines, you're also going to continue to see them
Speaker 1: go and and uh and reach the full potential of
Speaker 1: their TAM over the coming years. So I think there's
Speaker 1: still a lot of growth left in a lot of
Speaker 1: these product categories. And so Aaron, when you think about
Speaker 1: different verticals that you guys serve, you know, the pandemic
Speaker 1: has has laid there a lot of weaknesses through no
Speaker 1: fault of of people's own with this in terms of
Speaker 1: your customers. Where are you seeing strength? Where are you
Speaker 1: seeing weakness? I think, you know, we're we're seeing a
Speaker 1: lot of strength in sectors like financial services, healthcare, life sciences,
Speaker 1: professional services, the technology and digital sectors, um, even retailers
Speaker 1: that are experiencing growth right now or consumer brands. Uh.
Speaker 1: You know, any company right now that is able to
Speaker 1: either work remotely or serve their customers via you know,
Speaker 1: social distance measures are probably companies right now that are
Speaker 1: investing in digital technologies that are investing in the cloud
Speaker 1: because they have to keep their operations running, they have
Speaker 1: to keep their operations resilient, and they're looking for cloud
Speaker 1: platforms to be able to help them do that. If
Speaker 1: you look at salesforces the last quarter this week, which
Speaker 1: was obviously, you know, one of the strongest quarters they've
Speaker 1: ever put up as a company, but now at a
Speaker 1: five billion dollar quarter scale was was almost unprecedented. Um,
Speaker 1: you're seeing still the market demands for these types of
Speaker 1: technologies where companies can go and better serve their customers,
Speaker 1: better empower their employees, and run their operations in a
Speaker 1: more resilient way. UM. Companies that can go and deliver
Speaker 1: on those types of experiences for their clients are going
Speaker 1: to do well in this environment. That leads a lot
Speaker 1: of organizations to to really going and investing in proud technology.
Speaker 1: Aaron Levy, CEO of Box, you are staying with us,
Speaker 1: we'll talk you more about what is going on in
Speaker 1: the world of technology again, Jason. We're seeing in the
Speaker 1: marketplace technology continuing to drive this market. Some of the
Speaker 1: performance of these companies with cloud exposures has been extraordinary.
Speaker 1: It's not just the pandemic, it's pre pandemic as well.
Speaker 1: And companies going public tech companies actually going public a
Speaker 1: lot of them, uh, in manyway. So we're gonna talk
Speaker 1: to Aaron Levy about that and much more. You know, Jason,
Speaker 1: as we've just heard about just today, there's been some
Speaker 1: real winners and losers here from an economic perspective, from
Speaker 1: a business perspective, from this pandemic. We had Andy Alexander
Speaker 1: to CEO of Red ruf on uh, just kind of
Speaker 1: highling the challenges facing the hotel motel business. Aaron Levy,
Speaker 1: CEO of Box, He rejoins us here in the technology industry,
Speaker 1: many of the verticals within tech have really been beneficiaries
Speaker 1: of kind of how business is changing, life is changing. Uh,
Speaker 1: it's really fascinating. Aaron love to see to get your
Speaker 1: thoughts all about how you think the funding environment is
Speaker 1: for the technology industry these days. Again, one could argue
Speaker 1: that many of the verticals uh in technology are in
Speaker 1: fact clear winners and beneficiaries economically, business process wise from
Speaker 1: this this endemic. Is it a good time to raise
Speaker 1: private capital here venture capital in the tech space? I
Speaker 1: think it's um, it's definitely a uh, you know, probably
Speaker 1: a tale of two cities in terms of there's there's
Speaker 1: absolutely some companies where they're very primed because of the
Speaker 1: market environment, where they have products or services that will
Speaker 1: help companies run more effectively, or consumer services that are
Speaker 1: in high demand. Of course, it's it's hard to make
Speaker 1: a general statement across all of technology because you do have,
Speaker 1: you know, some startups that are in the travel space
Speaker 1: and other categories that might be more directly impacted because
Speaker 1: of COVID, but in general, uh, it's it's certainly if
Speaker 1: you are aligned with where the trends are going from
Speaker 1: a digital acceleration standpoint. Um, it definitely, you know, could
Speaker 1: be a great time to be a startup right now.
Speaker 1: So Aaron, I do wanna maybe take it in a
Speaker 1: slightly different direction and talk to you about being a
Speaker 1: CEO right now because I think and we talked a
Speaker 1: little bit about this. I think the last time you
Speaker 1: were with us, and you were very thoughtful about it,
Speaker 1: you know, sort of leading a team right now, choosing
Speaker 1: your spots in terms of when to be outspoken, when
Speaker 1: to take a stand. I feel like more pressure in
Speaker 1: some ways is on leaders and specifically CEOs and specifically
Speaker 1: CEOs of publicly traded companies to take a stand on things,
Speaker 1: whether they're social justice issues or others. How do you
Speaker 1: assess that and how do you deal with it as
Speaker 1: a leader? Yeah? I think, you know, there's certainly no
Speaker 1: question with the rise of social media, the fact that
Speaker 1: that you know, companies have to take on greater responsibility
Speaker 1: with their broader communities. Also the fact that at this
Speaker 1: point kind of politics and um and corporate success are
Speaker 1: almost intertwined. When you think about world trade, if you
Speaker 1: think about immigration reform, if you think about the health
Speaker 1: of our of our communities. Uh, these are no longer
Speaker 1: just domains of the government or just domains of of
Speaker 1: you know, purely the political sphere. These are issues that
Speaker 1: affect our our employees and our communities and our ability
Speaker 1: to succeed as businesses. So I do think this is
Speaker 1: an environment, especially given the multitude of challenges, whether it's
Speaker 1: the healthcare crisis, racial injustice um uh and other issues
Speaker 1: going on that that that CEO is especially but that
Speaker 1: companies do have to step up and do have to
Speaker 1: make sure that the views of their employees are well
Speaker 1: represented and that there you know, that that that we're
Speaker 1: able to you know, push forward hopefully a vision for
Speaker 1: the future that that's going to be able to make
Speaker 1: our businesses and communities to be able to thrive. So
Speaker 1: it's a it's an environment where um you do have
Speaker 1: to step up as a as a ceor leader because
Speaker 1: of the fact that the these issues are just too
Speaker 1: important to be silent about and there are these issues
Speaker 1: they could have some real business ramifications for lots of
Speaker 1: difference industries. Does it rise to the board level as well?
Speaker 1: Does a board come to you and say, hey, Andy,
Speaker 1: how are you in the company dealing with some of
Speaker 1: these issues, whether it's you know, how you're dealing with
Speaker 1: your workforce diversity, so on and so forth trade issues?
Speaker 1: How exposed are we to some of these countries where
Speaker 1: there may be some trade disputes that go up to
Speaker 1: the board level. Uh? Absolutely, I think you know, the
Speaker 1: board at least, you know, for for our company, is uh,
Speaker 1: you know, always having ongoing conversations around things like diversity
Speaker 1: and inclusion. Um, you know, how do we make sure
Speaker 1: that we're building up a company that has a resilient
Speaker 1: talent pool. Uh, you know, getting given the you know,
Speaker 1: dynamics from an immigration standpoint. Um, you know, I think
Speaker 1: the I think the board and investors look to c
Speaker 1: e o s to make sure to have a clear
Speaker 1: perspective and a clear stance on where their company stands
Speaker 1: on these issues. I've I've had numerous public market investors
Speaker 1: reach out saying, you know, thank you for taking a
Speaker 1: stand on immigration, and thank you taking it first, taking
Speaker 1: a stand on some of these social issues because you know,
Speaker 1: ultimately businesses can't succeed, we can't thrive, and we can't
Speaker 1: build UM you know, uh, you know, strong organizations. If
Speaker 1: if the community around us is in UM is in
Speaker 1: you know, state of arrests, and and if we have
Speaker 1: you know, challenges in the broader you know, social and
Speaker 1: healthcare landscape. So I do think this is an environment
Speaker 1: where businesses and and CEOs in particular, do you have
Speaker 1: to step up to make sure that their their views
Speaker 1: are all well known in the market. And so Aaron,
Speaker 1: as you think about some of the big issues facing
Speaker 1: Silicon Valley specifically, as as I'm sure as you may
Speaker 1: be aware, Bloomberg and others have done a lot of
Speaker 1: reporting around the diversity or lack thereof in in Silicon
Speaker 1: Valley companies. Is there a greater sense of urgency around
Speaker 1: Silicon Valley to fund more black entrepreneurs to understand a
Speaker 1: little bit more about a not a perceive but in
Speaker 1: actual lack of diversity when it comes both to funding
Speaker 1: and hiring in tech companies. Yes, and so um you
Speaker 1: know this is this is something that there has been
Speaker 1: a growing spotlight put on this topic over the past
Speaker 1: certainly you know, a few years, and it's been even
Speaker 1: more pronounced this year over the past few months given
Speaker 1: the broader conversations around racial injustice in the in the country,
Speaker 1: and tech is not immune, you know, from that that issue.
Speaker 1: If you look at the reverse and the underrepresented groups
Speaker 1: getting ventured capital, um it's happening, you know, far uh,
Speaker 1: you know, far less than than proportionately should be happening.
Speaker 1: If you think about the the number of people starting
Speaker 1: businesses out there, so um so you know, whether it's
Speaker 1: new entrepreneurs getting funded, whether it's you know, hiring at
Speaker 1: leadership levels of of our organizations. I think the tech
Speaker 1: industry has a huge role to play in improving the
Speaker 1: diversity of of of our companies and of the industry.
Speaker 1: And um uh. And I know that, you know, certainly
Speaker 1: a lot of companies are paying a lot more attention
Speaker 1: to this. Venture capitalists are starting to pay more attention
Speaker 1: to this. But there's so much more I think collectively
Speaker 1: as an ecosystem that we need to do. All right, well,
Speaker 1: we're gonna leave it there. We really appreciate your time.
Speaker 1: Good to catch up with you, come back and see
Speaker 1: us soon. Aaron Levy is the co founder as CEO
Speaker 1: of Box, joining us on the phone from Silicon Valley
Speaker 1: and uh, Paul Sweeney man, Uh, it's a different time
Speaker 1: to be running a company. It feels like it really is. Um.
Speaker 1: It's you know, always challenging, particularly the technology space where
Speaker 1: the technology is always is always changing. You need to
Speaker 1: be uh, you know, creatively paranoid. I guess to make
Speaker 1: sure that you're on the edge there. But now you've
Speaker 1: got these other issues, whether it's global trade and kind
Speaker 1: of you know coming to the forefront over the last
Speaker 1: nine to twelve months. Uh two, Now, um, you know,
Speaker 1: kind of really thinking looking inward at your organization and saying,
Speaker 1: doesn't really reflect the markets that I served as reflect
Speaker 1: the communities which I work. Um, is it really to
Speaker 1: the point where we're maximizing our potential here? That's another
Speaker 1: thing that as CEO and a board That's why I
Speaker 1: raised the board questions. You know, you want to make
Speaker 1: sure And I heard that from David Rubinsteinel many of
Speaker 1: his conversations. He'll ask a question, does this get board attention?
Speaker 1: And I think that's really kind of goes to the
Speaker 1: issue for a lot of companies. No, it's a great point,
Speaker 1: and uh, yeah, it'll be interesting to see. I feel
Speaker 1: like more CEOs more boards. They don't want to be
Speaker 1: on the wrong side of history. I mean it's that big,
Speaker 1: it feels that weighty in many ways. Well it was
Speaker 1: a weighty week, but we made it. Um really appreciate
Speaker 1: you hind that more than a double shift here. Hopefully back. Yeah,
Speaker 1: she'll come back. She'll come back next week. Alex Steele
Speaker 1: is going to be in that seat, looking forward to
Speaker 1: having her in the meantime. For Paul Sweeney, the rest
Speaker 1: of the Bloomberg Business Week team, I'm Jason Kelly. Have
Speaker 1: a great weekend. Everyone, stay safe.