From start-up to
scale: A conversation with Box CEO Aaron Levie PART II
Simon London:But that’s really interesting,
isn’t it? It shows that there is patient capital out there, but you have to
align the investors.
Aaron Levie:And it can be very scary at times.
Because if you go off course for one or two quarters, then all of a sudden the
whole model changes in some fundamental ways. When you’re burning cash, the
model is very, very sensitive to what your assumptions are, and the moment
those are wrong and either your growth is faster than you expected, so now you
need more cash, or the growth is not there, but you spent the money. In both of
those scenarios, it’s very dangerous. We have been blessed by a very strong
finance and strategy-planning function. Without that, I think we’d be in a very
different position.
Simon London:Right. Can we talk a little bit
about technology trends?
Aaron Levie:I love those.
Simon London:You were born on the right side of
history with respect to cloud, right?
Aaron Levie:Yeah.
Simon London:Then you got on the right side of
history with mobile, as I understand it.
Aaron Levie:Yeah.
Simon London:That was, you saw that coming, and
you moved on it. So what’s coming next, and how do you make sure you’re on the
right side of history? What’s the big thing?
Aaron Levie:I think today’s version of those
is, how are you or how is any company thinking about AI and machine learning?
One of the really important things is, it’s not enough to just say, “OK, we’re
doing AI” or “We’re doing machine learning.” The dependency of doing AI or machine learning really well is, do you have your data set
in a form that you can make use of and make sense of?
And a lot of companies
are not thinking through their long-term technology strategy to say, “Is my
information being managed, stored, organized in a way that I’ll eventually get
the kind of accretive benefits of AI on top of this data?”
Simon London:I think it’s what people call data
strategy, isn’t it? You’ve got to get your data strategy right before you even
really start rolling out.
Aaron Levie:That’s exactly right. And you have
too many organizations that have fragmented data where you don’t have the
connection between different objects and between different data sets. For us,
we are benefiting from the architecture decisions we made 13 years ago about
being in the cloud. It means we have all the data in one place. I think a lot
of customers have to think through, in three, or five, or ten years from now,
are you going to be able to leverage best-in-class AI or machine-learning technology? Is your data in a
format? Is it stored and managed in a manner that lets you take advantage of
that? So that’s a big one.
When we think about our
overall strategy, some of it is becoming one part technology as it relates to
the deep technology architecture and one part more the science of management
and how that is changing. The coupling of technology and business culture—and
are we setting our product up and are we setting our business up to be at the
center of where we see the future of work?
That obviously is super
important to us because our whole product is 100 percent driven by, can we
enable companies to work in a modern way? Which means we have to make sure we
understand and we see what that modern way of working is all about. That’s
where we spend the majority of our time.
Simon London:Let’s talk about the future of
work, because it’s an interesting topic that has a number of different
meanings. A lot of the stuff you see written about the future of work is just how
much work there is going to be ten years down. But I’m guessing that’s not
really what you’re talking about. You’re talking about how work will get done
within enterprises.
Aaron Levie:To that point, there’s a future of jobs. So the jobs
themselves: What are the job categories? Who is going to do what? Then to us,
when we say future of work, we think about, OK, what does work look like? How
does work get done inside of an organization? Whether that’s knowledge work or
industrial, mechanical work, whatever that work tends to be.
We think we’re at this
fundamental juncture where the 100-plus years of industrial-age management
systems and practices are showing signs of not being able to scale for the
digital age and not being able to translate well into the digital age. When you
look at the hierarchies of organizations, when you look at the workflow patterns
and processes of organizations, the waterfall methodology of product
development and decision making, the asynchronous flow of data throughout an
organization—all of these things we think are going to be rendered completely
useless in the digital age. And not just useless, but in most cases slowing
down companies and how they operate.
We think that,
interestingly, a lot of the lessons to be learned are from software start-ups
and the practices that smaller start-ups have had to learn in the software-development
practice of being agile, being able to iterate quickly, having a tremendous
amount of data to make decisions from, making sure that you have small teams that can move rapidly, being very, very close to the customer . Those
practices that were built out for software and for the internet translate now
into every part of a business, whether that’s HR, finance, product development,
and marketing. That’s the profound change in business, which is taking these
agile, team-based practices of building things and now translating and having
that manifest into every part of an organization.
Simon London:It’s moving from what I like to
think of as agile with a capital “A,” or actual hardcore agile software-development
methodology, to agile with a small “a,” or agility.
Aaron Levie:Yes.
Simon London:And how do you take some of these
practices and that whole ethos and spread it out across a company?
Aaron Levie:Now, the question is, are large
enterprises prepared both culturally and technically to be able to get there?
We spend a lot of time with large-enterprise customers that are going through
that journey, and they’re kind of saying, “OK, it’s not enough to just have
modern technology. I can buy every cool new Silicon Valley software start-up
product, but if my culture doesn’t change, I actually can’t get that much use
from this technology.”
Conversely, you can
have the world’s best HR leader and the world’s best CEO driving
transformation, but if your technology stacks mean that people can’t share
data, they can’t work in real time, they can’t collaborate across the
traditional divisions in their organization, then no amount of “cultural
change” is going to manifest in real productivity.
The thing that we’re
seeing, which is a pretty interesting trend, is the complementary
transformation that’s being driven from the IT technology organization as well
as HR and operations. These things are feeding off of each other in a profound
way and that we think are going to collude to then ultimately transform how
companies will operate, which is that you have to get to smaller teams that
move much more rapidly and that have permission to fail but iterate constantly.
They have to have data to get their jobs done. They have to be able to connect
up to the rest of the business, so people know what’s going on. That creates an
environment of a lot more transparency, a lot more openness, and a lot more
inherent accountability, because you can see what’s going on.
There are a lot of
cultures that are not prepared for that. That’s going to be one of the biggest
tests of which companies in the Fortune 500 make it to the digital age, or make
it through the digital age, and those that don’t.
Simon London:How do you think about that in terms
of Box’s own operations? Because, increasingly, you are delivering at scale, it
has to be an incredibly reliable, secure service. So in many ways, you’ve got
that foundation that you need to operate. It means we are totally reliable and
secure. But on the other hand, as you say, you’re trying to move fast. You’re
trying to iterate. You’re trying to learn quickly in agile-type practices. How
do you marry those two things together? Which is the challenge that a lot of
big companies face.
Aaron Levie:This is absolutely the paradox of
the digital age, which is that you have to move insanely quickly to stay
competitive. At the same time, there are a lot of business processes that were
not built for that kind of speed of iteration: if you’re building a car, if
you’re building a jet engine, if you’re delivering a new medical treatment.
Simon London:Yeah. Is it even desirable?
Aaron Levie:Right.
Simon London:I’d rather have my plane made
slowly. I don’t want it to fail fast.
Aaron Levie:This is definitely the challenge
that a lot of organizations face. I think the key is to be very, very clear on
which business processes you can afford to have this kind of level of
iteration, agility, and fail-fast mentality. We don’t have a take-risks
approach in our accounting process. However, we still use a lot of agile
practices when we are closing the books.
We effectively have
scrum team meetings where everybody’s getting together, standing up, talking
about what are the latest activities that we have to do. The failing fast is,
if something’s off track, we’re going to iterate, and we’re going to know
within a day or two of that happening, as opposed to the very typical process,
which is, I only find out three weeks later that somebody upstream from this
process ended up doing something in a way that had the numbers wrong or created
some problem.
The idea of agility,
and the idea of agile with the capital “A,” is, you get people much closer to
the work and much closer to the ultimate customer. They are sharing information
on a more frequent basis. They are much more accountable and fully own the
problem. That transcends whether you’re building the most trivial software or
doing jet-engine design or missile design.
CONTINUES IN PART III
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