WEBVTT - AI Impact on the Future of Work

0:00:00.120 --> 0:00:03.920
<v Speaker 1>These sees Bloomberg Business Week with Carol Messer and Tim

0:00:03.960 --> 0:00:07.680
<v Speaker 1>Stanovic on Bloomberg Radio. All right, so it's been a while.

0:00:07.720 --> 0:00:09.240
<v Speaker 1>In fact, the last time we talked with our next

0:00:09.240 --> 0:00:11.440
<v Speaker 1>guest about his company, the world was in the thick

0:00:11.440 --> 0:00:15.240
<v Speaker 1>of the pandemic. It's a very different environment today, yet

0:00:15.240 --> 0:00:17.319
<v Speaker 1>one with as you know, as you heard from our

0:00:17.360 --> 0:00:20.439
<v Speaker 1>Stephanie Flanders earlier, with a lot of concerns out there.

0:00:20.440 --> 0:00:22.759
<v Speaker 1>But the company we're talking about is Box. It's a

0:00:22.800 --> 0:00:25.720
<v Speaker 1>four point two billion dollar market cap company gained nearly

0:00:26.560 --> 0:00:29.159
<v Speaker 1>last year with rally games last year. Yep, it was

0:00:29.200 --> 0:00:32.800
<v Speaker 1>an outperformer. Well maybe it's a bug on the charge.

0:00:32.840 --> 0:00:35.280
<v Speaker 1>I didn't know there were any of those. The voice

0:00:35.320 --> 0:00:37.680
<v Speaker 1>you here is Aaron Levy. He's co founder and CEO

0:00:37.760 --> 0:00:40.640
<v Speaker 1>at the online storage and document management software company Box.

0:00:40.960 --> 0:00:43.599
<v Speaker 1>He's in our Interactive Broker studio. Welcome, Welcome, How are

0:00:43.640 --> 0:00:45.880
<v Speaker 1>you good? Good? You got good to be here actually

0:00:45.920 --> 0:00:48.640
<v Speaker 1>in person, Um, so good to see you, and yeah,

0:00:48.640 --> 0:00:50.720
<v Speaker 1>thanks for having me. How's the world changed since when

0:00:50.760 --> 0:00:54.160
<v Speaker 1>we talked? In the world has has certainly changed, you know,

0:00:54.240 --> 0:00:56.320
<v Speaker 1>quite a bit. It's actually interesting reflecting on being in

0:00:56.320 --> 0:00:58.240
<v Speaker 1>New York versus the Bay Area. I do think that,

0:00:58.760 --> 0:01:00.000
<v Speaker 1>you know, it's a little bit of a tale of

0:01:00.000 --> 0:01:02.040
<v Speaker 1>two cities in terms of actually, you know, kind of

0:01:02.080 --> 0:01:04.399
<v Speaker 1>how much is back in both environments. We're back here

0:01:04.440 --> 0:01:08.080
<v Speaker 1>more maybe by about in order of magnitude. Yeah, so

0:01:08.160 --> 0:01:10.800
<v Speaker 1>it's it's definitely different environments. But we are seeing this

0:01:10.840 --> 0:01:13.760
<v Speaker 1>across our customer base of companies coming back, returning to

0:01:13.840 --> 0:01:17.240
<v Speaker 1>offices sort of you know, establishing new work patterns, um

0:01:17.360 --> 0:01:19.720
<v Speaker 1>and it's it's definitely going to be different than pre pandemic,

0:01:19.760 --> 0:01:22.200
<v Speaker 1>but it's certainly, um equally going to be more different

0:01:22.240 --> 0:01:24.240
<v Speaker 1>than during the peak of the pandemic as well. What

0:01:24.319 --> 0:01:26.200
<v Speaker 1>makes you say that, just just walking down the street,

0:01:26.280 --> 0:01:28.840
<v Speaker 1>seeing the subways, what's going on. I mean, every every

0:01:28.880 --> 0:01:31.679
<v Speaker 1>office building I've been in this week has been you know,

0:01:31.760 --> 0:01:33.959
<v Speaker 1>fairly packed and uh and maybe a little bit more

0:01:34.040 --> 0:01:36.280
<v Speaker 1>muted than pre pandemic. But if you compare that to

0:01:36.480 --> 0:01:38.520
<v Speaker 1>you know, sort of the Bay Area in California, it's

0:01:38.560 --> 0:01:41.320
<v Speaker 1>it's definitely still pretty different. Okay. What's interesting about this though,

0:01:41.440 --> 0:01:43.600
<v Speaker 1>is that we heard this week that Bob iger and

0:01:43.600 --> 0:01:45.400
<v Speaker 1>this is not a Silicon Valley company by any means,

0:01:45.400 --> 0:01:46.880
<v Speaker 1>but he wants people to come back to Disney four

0:01:46.920 --> 0:01:49.320
<v Speaker 1>days a week, and Caroline, I've talked about this quite

0:01:49.320 --> 0:01:51.920
<v Speaker 1>a bit that you know, as the economy weekends and

0:01:51.960 --> 0:01:54.480
<v Speaker 1>the workers not in as much control, we could start

0:01:54.480 --> 0:01:56.120
<v Speaker 1>to see more and more people coming back. What are

0:01:56.120 --> 0:01:58.640
<v Speaker 1>you seeing with with your data at box in terms

0:01:58.680 --> 0:02:01.600
<v Speaker 1>of where people are accessing the product? Are they increasingly

0:02:01.600 --> 0:02:04.320
<v Speaker 1>accessing it at home permanently? Do you think? Yeah? I

0:02:04.360 --> 0:02:08.480
<v Speaker 1>think absolutely down from the pandemic peak in terms of

0:02:08.520 --> 0:02:10.560
<v Speaker 1>work from home. I do think companies are sort of

0:02:10.600 --> 0:02:12.600
<v Speaker 1>all trying to figure out what are their rituals in

0:02:12.720 --> 0:02:15.640
<v Speaker 1>terms of how people work and where they work from? Um,

0:02:15.680 --> 0:02:18.280
<v Speaker 1>you know Bob iger um at at Disney, you know

0:02:18.280 --> 0:02:20.240
<v Speaker 1>Tim Cook at Apple, what we just saw from Howard

0:02:20.240 --> 0:02:23.200
<v Speaker 1>Schultz at at at Starbucks, you know, pushing pushing down,

0:02:23.280 --> 0:02:24.560
<v Speaker 1>you know some of these sort of three or four

0:02:24.639 --> 0:02:27.400
<v Speaker 1>date policies. I think, Um, you know, it is sort

0:02:27.400 --> 0:02:28.880
<v Speaker 1>of just now the tip of the iceberg of what

0:02:28.960 --> 0:02:32.440
<v Speaker 1>might you know come next across fortunate hundred companies and

0:02:32.440 --> 0:02:34.440
<v Speaker 1>and uh and more generally. But I do think, no

0:02:34.480 --> 0:02:37.520
<v Speaker 1>matter what, some version of hybrid work, some version of

0:02:37.560 --> 0:02:40.639
<v Speaker 1>more distributed work, some version of more flexibility is here

0:02:40.680 --> 0:02:42.720
<v Speaker 1>to stay. UM and what that all is going to

0:02:42.800 --> 0:02:45.560
<v Speaker 1>point to is the need for digital technologies and cloud

0:02:46.120 --> 0:02:48.760
<v Speaker 1>to be able to actually mediate how people work from

0:02:48.840 --> 0:02:51.040
<v Speaker 1>any device or any location that they're working from. So

0:02:51.280 --> 0:02:53.320
<v Speaker 1>we kind of are sort of fine with any outcome,

0:02:53.360 --> 0:02:55.720
<v Speaker 1>whether everything's fully remote or partially back to the office,

0:02:55.800 --> 0:02:57.440
<v Speaker 1>or fully back to the It doesn't matter for you

0:02:57.480 --> 0:02:59.920
<v Speaker 1>what the mixes does it in terms of your business growth. Now,

0:03:00.600 --> 0:03:02.760
<v Speaker 1>in all cases, you're going to be creating more digital

0:03:02.760 --> 0:03:05.919
<v Speaker 1>content than ever before, and there's an explosion of video content,

0:03:05.960 --> 0:03:08.640
<v Speaker 1>there's an explosion of written content as a result of

0:03:08.680 --> 0:03:12.400
<v Speaker 1>companies getting more distributed, more collaborative, working in new ways.

0:03:12.440 --> 0:03:14.840
<v Speaker 1>So in our case, these all point to long term

0:03:14.880 --> 0:03:18.480
<v Speaker 1>tail ones um because of just the massive digitization of

0:03:18.520 --> 0:03:20.880
<v Speaker 1>our business processes and the way that we work. So

0:03:20.880 --> 0:03:24.640
<v Speaker 1>so we're sort of independent of whatever outcome happens um

0:03:24.680 --> 0:03:27.480
<v Speaker 1>but but ultimately what we're really focused on is helping

0:03:27.520 --> 0:03:30.080
<v Speaker 1>customers collaborate in new ways. Eron, you talk big, broad

0:03:30.160 --> 0:03:32.560
<v Speaker 1>and we do too, but remind our audience exactly like

0:03:32.600 --> 0:03:34.240
<v Speaker 1>get down to the nitty gritty what you do for

0:03:34.280 --> 0:03:37.040
<v Speaker 1>a company. Yeah. So Box works with over a hundred

0:03:37.120 --> 0:03:39.800
<v Speaker 1>thousand companies, uh, and we have a platform that helps

0:03:39.840 --> 0:03:42.760
<v Speaker 1>them securely manage their most important data, so their contracts,

0:03:42.800 --> 0:03:46.680
<v Speaker 1>their financial documents, their presentations, their media content. We help

0:03:46.720 --> 0:03:48.920
<v Speaker 1>you store it, share its secure it collaborate on that

0:03:49.040 --> 0:03:52.240
<v Speaker 1>data from any advice anywhere. So it's a cloud platform

0:03:52.320 --> 0:03:54.480
<v Speaker 1>that the powers how you work with your information. Bulks

0:03:54.520 --> 0:03:59.200
<v Speaker 1>still small, mid, large, all size organizations. The majority of

0:03:59.240 --> 0:04:01.920
<v Speaker 1>the revenue comes from large enterprises, so um so we

0:04:01.960 --> 0:04:04.160
<v Speaker 1>tend to sort of be waded toward, you know, the

0:04:04.200 --> 0:04:06.960
<v Speaker 1>fortunate five hundred type organizations, but we support businesses of

0:04:07.000 --> 0:04:09.760
<v Speaker 1>all sizes with with over a hundred thousand customers. Based

0:04:09.760 --> 0:04:12.200
<v Speaker 1>on what you're seeing, sorry, I'm not about I'll like

0:04:12.320 --> 0:04:14.960
<v Speaker 1>to and based on what you're seeing recession, no recession

0:04:15.000 --> 0:04:17.560
<v Speaker 1>globally US. What are you seeing? You know? I think

0:04:17.720 --> 0:04:19.520
<v Speaker 1>you know, these guys have to order, they have to

0:04:19.520 --> 0:04:21.240
<v Speaker 1>work with you. They've got to say, hey, this is

0:04:21.279 --> 0:04:23.960
<v Speaker 1>what we're thinking. I mean, I'm the last person that

0:04:24.000 --> 0:04:27.120
<v Speaker 1>should decide the definition of a recession, but I'm asking

0:04:27.360 --> 0:04:29.800
<v Speaker 1>no trend. Yeah, yeah, I think there's there's clearly a

0:04:29.920 --> 0:04:32.360
<v Speaker 1>muting of um, you know, some degree of a muted

0:04:32.800 --> 0:04:35.279
<v Speaker 1>kind of aspect of just sheer kind of corporate growth

0:04:35.279 --> 0:04:38.560
<v Speaker 1>that does tie into I T spend um and um

0:04:38.800 --> 0:04:41.679
<v Speaker 1>and and can push down I I T budgets. Uh. Fortunately,

0:04:41.680 --> 0:04:43.520
<v Speaker 1>we're in a position where we can help customers save

0:04:43.560 --> 0:04:46.480
<v Speaker 1>money and drive up productivity and improve their security. So

0:04:46.600 --> 0:04:48.200
<v Speaker 1>because we do see when people like I was just

0:04:48.200 --> 0:04:50.440
<v Speaker 1>looking at lending Tree, they cut workers in the stock

0:04:50.640 --> 0:04:53.360
<v Speaker 1>like initially bopped, bopped, you know, went higher. So I

0:04:53.640 --> 0:04:57.159
<v Speaker 1>do understand this idea of technology helping a company. Yeah,

0:04:57.240 --> 0:05:00.520
<v Speaker 1>so technology will help companies get more efficient, but we

0:05:00.560 --> 0:05:02.680
<v Speaker 1>obviously want there to be a very robust, you know

0:05:02.800 --> 0:05:04.880
<v Speaker 1>environment form for companies to grow. And I think there

0:05:04.920 --> 0:05:07.200
<v Speaker 1>is a muting a little bit of the consumer economy,

0:05:07.520 --> 0:05:09.800
<v Speaker 1>certainly in some of the consumer tech companies. You know,

0:05:09.839 --> 0:05:12.839
<v Speaker 1>advertising dollars are are lessening a little bit. But our

0:05:12.920 --> 0:05:14.720
<v Speaker 1>job is just to help companies no matter where they are,

0:05:14.720 --> 0:05:17.400
<v Speaker 1>and that continuum to get more efficient, be more productive,

0:05:17.440 --> 0:05:21.560
<v Speaker 1>stay more secure. Okay, something weird is happening because you know,

0:05:21.600 --> 0:05:25.280
<v Speaker 1>most software stocks, most software stocks just got crushed. Okay

0:05:25.440 --> 0:05:28.000
<v Speaker 1>last year, you guys are up nineteen Yeah, you're in

0:05:28.080 --> 0:05:32.240
<v Speaker 1>fact close to record highs right now. How this is

0:05:32.240 --> 0:05:35.000
<v Speaker 1>a high interest rate environment? What's really rough environment? I

0:05:35.080 --> 0:05:37.760
<v Speaker 1>think connected with the cloud. Yeah, it is it is

0:05:37.760 --> 0:05:40.760
<v Speaker 1>a rough environment, particularly if you are a high growth

0:05:40.800 --> 0:05:44.200
<v Speaker 1>company UM, where your stock was largely bolstered by your

0:05:44.240 --> 0:05:47.000
<v Speaker 1>growth rate and UM and that with with kind of

0:05:47.080 --> 0:05:49.640
<v Speaker 1>higher interest rates. UM. You know, the valuation of those

0:05:49.680 --> 0:05:52.520
<v Speaker 1>companies have come down naturally. UM. You know, it's an

0:05:52.520 --> 0:05:55.880
<v Speaker 1>interesting you know, UM almost bitter suite dynamics. So we

0:05:56.160 --> 0:05:58.800
<v Speaker 1>never really had an inflated valuation, so that meant there

0:05:58.839 --> 0:06:01.080
<v Speaker 1>was sort of less um less room to come down.

0:06:01.320 --> 0:06:04.920
<v Speaker 1>At the same time, we've been working pretty um, you know,

0:06:05.000 --> 0:06:08.320
<v Speaker 1>significantly on improving our profit margin in the past three years.

0:06:08.680 --> 0:06:12.120
<v Speaker 1>So how do you do that? Just uh, just hyper

0:06:12.120 --> 0:06:15.680
<v Speaker 1>focus on efficiency across the business UM. Actually not not

0:06:15.720 --> 0:06:17.720
<v Speaker 1>really about cutting but but you can kind of grow

0:06:17.760 --> 0:06:20.800
<v Speaker 1>into um your your head count in a lot of cases,

0:06:21.200 --> 0:06:24.280
<v Speaker 1>largely by just remaining extremely focused on the areas that

0:06:24.320 --> 0:06:26.800
<v Speaker 1>are working in the business. So doubling down in sort

0:06:26.839 --> 0:06:29.080
<v Speaker 1>of the products that are are generating the greatest returns

0:06:29.120 --> 0:06:31.600
<v Speaker 1>as opposed to diluting your bets. UM, doubling down in

0:06:31.640 --> 0:06:34.120
<v Speaker 1>the regions that are most productive and so our case

0:06:34.240 --> 0:06:36.400
<v Speaker 1>by region, I mean, you know where the most sort

0:06:36.440 --> 0:06:38.840
<v Speaker 1>of you know, the largest i T spending markets and

0:06:38.839 --> 0:06:41.680
<v Speaker 1>and not deluding our focus from a regional standpoint, UM

0:06:41.720 --> 0:06:44.760
<v Speaker 1>getting really really focused on gross margin and the efficiency

0:06:44.760 --> 0:06:47.160
<v Speaker 1>of our platform. So starting about three years ago, we

0:06:47.240 --> 0:06:49.000
<v Speaker 1>kind of had a bunch of work streams across the

0:06:49.040 --> 0:06:51.760
<v Speaker 1>business to get more efficient. And you know, fast forward

0:06:51.760 --> 0:06:53.760
<v Speaker 1>to today, that's actually in vogue, but it wasn't at

0:06:53.800 --> 0:06:56.039
<v Speaker 1>the time, and so we never got that inflate evaluation.

0:06:56.400 --> 0:06:58.800
<v Speaker 1>But as valuations came down, I think across the sector,

0:06:59.360 --> 0:07:02.320
<v Speaker 1>ours Biken Harrison was was holding up, you know, pretty nicely.

0:07:02.640 --> 0:07:04.159
<v Speaker 1>You know, I want to ask you about something because

0:07:04.200 --> 0:07:06.440
<v Speaker 1>this week are we was that with some research they

0:07:06.480 --> 0:07:09.960
<v Speaker 1>anticipate the three year will or will be kind of

0:07:10.040 --> 0:07:13.040
<v Speaker 1>two has for US software stocks, and they talked about

0:07:13.120 --> 0:07:15.320
<v Speaker 1>kind of overall what they see, but they did cut

0:07:15.560 --> 0:07:18.160
<v Speaker 1>Box to underperform. They cut the price target to from

0:07:18.880 --> 0:07:21.960
<v Speaker 1>they're concerned about the sustainability of your turnaround, particularly of

0:07:22.040 --> 0:07:25.119
<v Speaker 1>Japan growth slows. Your stock was down about six percent

0:07:25.200 --> 0:07:27.160
<v Speaker 1>on that call. Can you address it? And they did

0:07:27.200 --> 0:07:29.400
<v Speaker 1>also talk a lot about the Japanese market, which has

0:07:29.400 --> 0:07:32.440
<v Speaker 1>been good for you. Yeah, so we we've seen tremendous

0:07:32.440 --> 0:07:35.000
<v Speaker 1>growth in Japan. UM we kind of got you know,

0:07:35.000 --> 0:07:37.040
<v Speaker 1>sort of the right place, right time, and at the

0:07:37.040 --> 0:07:40.120
<v Speaker 1>beginning of a kind of a SASS or cloud supercycle

0:07:40.120 --> 0:07:42.360
<v Speaker 1>about you know, nearly ten years ago. So we had

0:07:42.400 --> 0:07:44.080
<v Speaker 1>all the right partners, We had a great team on

0:07:44.080 --> 0:07:46.520
<v Speaker 1>the ground, and we rode this wave of large companies

0:07:46.560 --> 0:07:49.160
<v Speaker 1>adopting SSASS and so that that's actually been a very

0:07:49.200 --> 0:07:52.280
<v Speaker 1>strong tail into our business. Um. Almost by definition, as

0:07:52.320 --> 0:07:54.640
<v Speaker 1>that business get larger, the growth rate will come down.

0:07:54.760 --> 0:07:57.320
<v Speaker 1>So so that you know, was in this sort of note, Um,

0:07:57.320 --> 0:07:59.480
<v Speaker 1>it's actually something that we already anticipate and it's sort

0:07:59.480 --> 0:08:02.800
<v Speaker 1>of built in to our general model. Um. But but overall,

0:08:02.920 --> 0:08:05.080
<v Speaker 1>you know, we we we obviously care about the health

0:08:05.120 --> 0:08:07.520
<v Speaker 1>of the global business. Even if the Japan growth rate

0:08:07.560 --> 0:08:09.640
<v Speaker 1>comes down. Our job is to make sure that we

0:08:09.680 --> 0:08:11.840
<v Speaker 1>manage that at a global level. Before we let you go,

0:08:12.160 --> 0:08:14.760
<v Speaker 1>we got forty seconds your joage on Twitter two point

0:08:14.760 --> 0:08:20.000
<v Speaker 1>four million followers. Obviously you've been following with Elon. What

0:08:20.040 --> 0:08:21.680
<v Speaker 1>are your thoughts on on what Elon Musk has done

0:08:21.680 --> 0:08:25.400
<v Speaker 1>to the platform? Um, So, I'm I'm always a fan

0:08:25.440 --> 0:08:27.840
<v Speaker 1>of kind of moving fast, innovating quickly, and so some

0:08:27.880 --> 0:08:29.240
<v Speaker 1>of the some of the changes have been you know,

0:08:29.240 --> 0:08:31.240
<v Speaker 1>exciting to see some changes. Maybe I don't agree with

0:08:31.240 --> 0:08:33.720
<v Speaker 1>as much. In general, I think that the platform should

0:08:33.760 --> 0:08:36.439
<v Speaker 1>say very very focused on getting to a global population

0:08:36.679 --> 0:08:39.480
<v Speaker 1>of consumers. I think maybe less focus on the paid

0:08:39.520 --> 0:08:42.880
<v Speaker 1>subscription product, more focused on more features at the free level.

0:08:42.920 --> 0:08:45.760
<v Speaker 1>Still useful to you, Yeah, absolutely, I mean it's just

0:08:45.760 --> 0:08:49.400
<v Speaker 1>as useful as it was indispensable. Okay, there, it is cool.

0:08:49.600 --> 0:08:51.960
<v Speaker 1>Your your timeline is not messed up like my timeline

0:08:52.080 --> 0:08:55.720
<v Speaker 1>is just destroyed. Have you swiped? I gotta swipe. Okay,

0:08:56.080 --> 0:08:58.679
<v Speaker 1>you can show me everyone telling to change my timeline.

0:08:59.080 --> 0:09:01.040
<v Speaker 1>You gotta change your time. Abou it will all give

0:09:01.040 --> 0:09:03.600
<v Speaker 1>you some mints. All good luck this year, come back

0:09:03.600 --> 0:09:06.839
<v Speaker 1>and talk. The paths are going. Really appreciate it. Aaron Levy.

0:09:06.880 --> 0:09:09.199
<v Speaker 1>He is co founder, chief executive officer of Box. Joining

0:09:09.280 --> 0:09:12.840
<v Speaker 1>us in our interactive broker's studio, Carol Master, Tipstadovick. This

0:09:13.160 --> 0:09:13.760
<v Speaker 1>is Bloomberg