Speaker 1: These sees Bloomberg Business Week with Carol Messer and Tim
Speaker 1: Stanovic on Bloomberg Radio. All right, so it's been a while.
Speaker 1: In fact, the last time we talked with our next
Speaker 1: guest about his company, the world was in the thick
Speaker 1: of the pandemic. It's a very different environment today, yet
Speaker 1: one with as you know, as you heard from our
Speaker 1: Stephanie Flanders earlier, with a lot of concerns out there.
Speaker 1: But the company we're talking about is Box. It's a
Speaker 1: four point two billion dollar market cap company gained nearly
Speaker 1: last year with rally games last year. Yep, it was
Speaker 1: an outperformer. Well maybe it's a bug on the charge.
Speaker 1: I didn't know there were any of those. The voice
Speaker 1: you here is Aaron Levy. He's co founder and CEO
Speaker 1: at the online storage and document management software company Box.
Speaker 1: He's in our Interactive Broker studio. Welcome, Welcome, How are
Speaker 1: you good? Good? You got good to be here actually
Speaker 1: in person, Um, so good to see you, and yeah,
Speaker 1: thanks for having me. How's the world changed since when
Speaker 1: we talked? In the world has has certainly changed, you know,
Speaker 1: quite a bit. It's actually interesting reflecting on being in
Speaker 1: New York versus the Bay Area. I do think that,
Speaker 1: you know, it's a little bit of a tale of
Speaker 1: two cities in terms of actually, you know, kind of
Speaker 1: how much is back in both environments. We're back here
Speaker 1: more maybe by about in order of magnitude. Yeah, so
Speaker 1: it's it's definitely different environments. But we are seeing this
Speaker 1: across our customer base of companies coming back, returning to
Speaker 1: offices sort of you know, establishing new work patterns, um
Speaker 1: and it's it's definitely going to be different than pre pandemic,
Speaker 1: but it's certainly, um equally going to be more different
Speaker 1: than during the peak of the pandemic as well. What
Speaker 1: makes you say that, just just walking down the street,
Speaker 1: seeing the subways, what's going on. I mean, every every
Speaker 1: office building I've been in this week has been you know,
Speaker 1: fairly packed and uh and maybe a little bit more
Speaker 1: muted than pre pandemic. But if you compare that to
Speaker 1: you know, sort of the Bay Area in California, it's
Speaker 1: it's definitely still pretty different. Okay. What's interesting about this though,
Speaker 1: is that we heard this week that Bob iger and
Speaker 1: this is not a Silicon Valley company by any means,
Speaker 1: but he wants people to come back to Disney four
Speaker 1: days a week, and Caroline, I've talked about this quite
Speaker 1: a bit that you know, as the economy weekends and
Speaker 1: the workers not in as much control, we could start
Speaker 1: to see more and more people coming back. What are
Speaker 1: you seeing with with your data at box in terms
Speaker 1: of where people are accessing the product? Are they increasingly
Speaker 1: accessing it at home permanently? Do you think? Yeah? I
Speaker 1: think absolutely down from the pandemic peak in terms of
Speaker 1: work from home. I do think companies are sort of
Speaker 1: all trying to figure out what are their rituals in
Speaker 1: terms of how people work and where they work from? Um,
Speaker 1: you know Bob iger um at at Disney, you know
Speaker 1: Tim Cook at Apple, what we just saw from Howard
Speaker 1: Schultz at at at Starbucks, you know, pushing pushing down,
Speaker 1: you know some of these sort of three or four
Speaker 1: date policies. I think, Um, you know, it is sort
Speaker 1: of just now the tip of the iceberg of what
Speaker 1: might you know come next across fortunate hundred companies and
Speaker 1: and uh and more generally. But I do think, no
Speaker 1: matter what, some version of hybrid work, some version of
Speaker 1: more distributed work, some version of more flexibility is here
Speaker 1: to stay. UM and what that all is going to
Speaker 1: point to is the need for digital technologies and cloud
Speaker 1: to be able to actually mediate how people work from
Speaker 1: any device or any location that they're working from. So
Speaker 1: we kind of are sort of fine with any outcome,
Speaker 1: whether everything's fully remote or partially back to the office,
Speaker 1: or fully back to the It doesn't matter for you
Speaker 1: what the mixes does it in terms of your business growth. Now,
Speaker 1: in all cases, you're going to be creating more digital
Speaker 1: content than ever before, and there's an explosion of video content,
Speaker 1: there's an explosion of written content as a result of
Speaker 1: companies getting more distributed, more collaborative, working in new ways.
Speaker 1: So in our case, these all point to long term
Speaker 1: tail ones um because of just the massive digitization of
Speaker 1: our business processes and the way that we work. So
Speaker 1: so we're sort of independent of whatever outcome happens um
Speaker 1: but but ultimately what we're really focused on is helping
Speaker 1: customers collaborate in new ways. Eron, you talk big, broad
Speaker 1: and we do too, but remind our audience exactly like
Speaker 1: get down to the nitty gritty what you do for
Speaker 1: a company. Yeah. So Box works with over a hundred
Speaker 1: thousand companies, uh, and we have a platform that helps
Speaker 1: them securely manage their most important data, so their contracts,
Speaker 1: their financial documents, their presentations, their media content. We help
Speaker 1: you store it, share its secure it collaborate on that
Speaker 1: data from any advice anywhere. So it's a cloud platform
Speaker 1: that the powers how you work with your information. Bulks
Speaker 1: still small, mid, large, all size organizations. The majority of
Speaker 1: the revenue comes from large enterprises, so um so we
Speaker 1: tend to sort of be waded toward, you know, the
Speaker 1: fortunate five hundred type organizations, but we support businesses of
Speaker 1: all sizes with with over a hundred thousand customers. Based
Speaker 1: on what you're seeing, sorry, I'm not about I'll like
Speaker 1: to and based on what you're seeing recession, no recession
Speaker 1: globally US. What are you seeing? You know? I think
Speaker 1: you know, these guys have to order, they have to
Speaker 1: work with you. They've got to say, hey, this is
Speaker 1: what we're thinking. I mean, I'm the last person that
Speaker 1: should decide the definition of a recession, but I'm asking
Speaker 1: no trend. Yeah, yeah, I think there's there's clearly a
Speaker 1: muting of um, you know, some degree of a muted
Speaker 1: kind of aspect of just sheer kind of corporate growth
Speaker 1: that does tie into I T spend um and um
Speaker 1: and and can push down I I T budgets. Uh. Fortunately,
Speaker 1: we're in a position where we can help customers save
Speaker 1: money and drive up productivity and improve their security. So
Speaker 1: because we do see when people like I was just
Speaker 1: looking at lending Tree, they cut workers in the stock
Speaker 1: like initially bopped, bopped, you know, went higher. So I
Speaker 1: do understand this idea of technology helping a company. Yeah,
Speaker 1: so technology will help companies get more efficient, but we
Speaker 1: obviously want there to be a very robust, you know
Speaker 1: environment form for companies to grow. And I think there
Speaker 1: is a muting a little bit of the consumer economy,
Speaker 1: certainly in some of the consumer tech companies. You know,
Speaker 1: advertising dollars are are lessening a little bit. But our
Speaker 1: job is just to help companies no matter where they are,
Speaker 1: and that continuum to get more efficient, be more productive,
Speaker 1: stay more secure. Okay, something weird is happening because you know,
Speaker 1: most software stocks, most software stocks just got crushed. Okay
Speaker 1: last year, you guys are up nineteen Yeah, you're in
Speaker 1: fact close to record highs right now. How this is
Speaker 1: a high interest rate environment? What's really rough environment? I
Speaker 1: think connected with the cloud. Yeah, it is it is
Speaker 1: a rough environment, particularly if you are a high growth
Speaker 1: company UM, where your stock was largely bolstered by your
Speaker 1: growth rate and UM and that with with kind of
Speaker 1: higher interest rates. UM. You know, the valuation of those
Speaker 1: companies have come down naturally. UM. You know, it's an
Speaker 1: interesting you know, UM almost bitter suite dynamics. So we
Speaker 1: never really had an inflated valuation, so that meant there
Speaker 1: was sort of less um less room to come down.
Speaker 1: At the same time, we've been working pretty um, you know,
Speaker 1: significantly on improving our profit margin in the past three years.
Speaker 1: So how do you do that? Just uh, just hyper
Speaker 1: focus on efficiency across the business UM. Actually not not
Speaker 1: really about cutting but but you can kind of grow
Speaker 1: into um your your head count in a lot of cases,
Speaker 1: largely by just remaining extremely focused on the areas that
Speaker 1: are working in the business. So doubling down in sort
Speaker 1: of the products that are are generating the greatest returns
Speaker 1: as opposed to diluting your bets. UM, doubling down in
Speaker 1: the regions that are most productive and so our case
Speaker 1: by region, I mean, you know where the most sort
Speaker 1: of you know, the largest i T spending markets and
Speaker 1: and not deluding our focus from a regional standpoint, UM
Speaker 1: getting really really focused on gross margin and the efficiency
Speaker 1: of our platform. So starting about three years ago, we
Speaker 1: kind of had a bunch of work streams across the
Speaker 1: business to get more efficient. And you know, fast forward
Speaker 1: to today, that's actually in vogue, but it wasn't at
Speaker 1: the time, and so we never got that inflate evaluation.
Speaker 1: But as valuations came down, I think across the sector,
Speaker 1: ours Biken Harrison was was holding up, you know, pretty nicely.
Speaker 1: You know, I want to ask you about something because
Speaker 1: this week are we was that with some research they
Speaker 1: anticipate the three year will or will be kind of
Speaker 1: two has for US software stocks, and they talked about
Speaker 1: kind of overall what they see, but they did cut
Speaker 1: Box to underperform. They cut the price target to from
Speaker 1: they're concerned about the sustainability of your turnaround, particularly of
Speaker 1: Japan growth slows. Your stock was down about six percent
Speaker 1: on that call. Can you address it? And they did
Speaker 1: also talk a lot about the Japanese market, which has
Speaker 1: been good for you. Yeah, so we we've seen tremendous
Speaker 1: growth in Japan. UM we kind of got you know,
Speaker 1: sort of the right place, right time, and at the
Speaker 1: beginning of a kind of a SASS or cloud supercycle
Speaker 1: about you know, nearly ten years ago. So we had
Speaker 1: all the right partners, We had a great team on
Speaker 1: the ground, and we rode this wave of large companies
Speaker 1: adopting SSASS and so that that's actually been a very
Speaker 1: strong tail into our business. Um. Almost by definition, as
Speaker 1: that business get larger, the growth rate will come down.
Speaker 1: So so that you know, was in this sort of note, Um,
Speaker 1: it's actually something that we already anticipate and it's sort
Speaker 1: of built in to our general model. Um. But but overall,
Speaker 1: you know, we we we obviously care about the health
Speaker 1: of the global business. Even if the Japan growth rate
Speaker 1: comes down. Our job is to make sure that we
Speaker 1: manage that at a global level. Before we let you go,
Speaker 1: we got forty seconds your joage on Twitter two point
Speaker 1: four million followers. Obviously you've been following with Elon. What
Speaker 1: are your thoughts on on what Elon Musk has done
Speaker 1: to the platform? Um, So, I'm I'm always a fan
Speaker 1: of kind of moving fast, innovating quickly, and so some
Speaker 1: of the some of the changes have been you know,
Speaker 1: exciting to see some changes. Maybe I don't agree with
Speaker 1: as much. In general, I think that the platform should
Speaker 1: say very very focused on getting to a global population
Speaker 1: of consumers. I think maybe less focus on the paid
Speaker 1: subscription product, more focused on more features at the free level.
Speaker 1: Still useful to you, Yeah, absolutely, I mean it's just
Speaker 1: as useful as it was indispensable. Okay, there, it is cool.
Speaker 1: Your your timeline is not messed up like my timeline
Speaker 1: is just destroyed. Have you swiped? I gotta swipe. Okay,
Speaker 1: you can show me everyone telling to change my timeline.
Speaker 1: You gotta change your time. Abou it will all give
Speaker 1: you some mints. All good luck this year, come back
Speaker 1: and talk. The paths are going. Really appreciate it. Aaron Levy.
Speaker 1: He is co founder, chief executive officer of Box. Joining
Speaker 1: us in our interactive broker's studio, Carol Master, Tipstadovick. This
Speaker 1: is Bloomberg