From start-up to
scale: A conversation with Box CEO Aaron Levie PART III
Simon London:So just get a little more specific,
if you don’t mind, about AI, machine learning. There’s a lot of hand waving
about it. I know you’ve started to build this into the product and platform
already. But what’s it going to allow the product and the platform to do that
it doesn’t do today?
Aaron Levie:Box stores tens of billions of
files, hundreds of petabytes of data. Most of that information is relatively
unstructured. So you take a Word document, or an image, or a video, and you
store it in Box. You share it with somebody. But it’s a relatively closed,
contained object that we and you don’t know much about at an abstract level.
You can look at your file, but you don’t know the essence of the data.
Simon London:No, you don’t know what’s in there,
apart from the file name.
Aaron Levie:Exactly.
Simon London:Usually. It could be anything.
Aaron Levie:Exactly. And so you have to go and
read it manually to know what’s going on inside that piece of content. The
power of AI is that you can extract information and data from the content
itself. If you take an image that a CPG [consumer packaged goods] company has
of a new product, you would be able to extract what the objects are in that
image. So what are all the product names? What SKU number is it? And be able to
take that information.
If you were a bank and
you had a customer record or a contract, you’d be able to pull out all of the
important data about that contract from that customer. So the power of AI is
that you can begin to create structure and context from all of your
information. And then the question is, what could you do with that? Can I
automate business processes based on different rules? As certain images come
into the system, I want to be able to route those images to the right person to
approve them or review them.
I want to be able to
automate an insurance-claims process by taking in all of the video or an image
from an insurance adjuster or from the consumer themselves and automate that
entire process. Or, going as far into some of the more mission-critical aspects
of it, I want to be able to understand how my data’s being shared, because
there might be security events that are happening where somebody’s sharing a
previously unknown-to-be-confidential document, but with AI, I now know that
there’s confidential information inside that document. That person’s sharing it
with somebody that they’re not supposed to be. I can now alert the security
team or block that off.
Simon London:So it’s things like optical
character recognition, image recognition, basically creating this sort of
metadata layer that’s autogenerated. And then, as you say, what can you do with
that?
Aaron Levie:Natural-language processing.
Simon London:Natural-language processing. And
then can you start to trigger automated business processes as the information
moves through the system?
Aaron Levie:That’s exactly the vision. So take
a whole bunch of work flows that were either being done in a highly manual way
or never being done at all, because they would be cost prohibitive to do. And
begin to take the power of AI, structure your information, and then begin to
automate those processes. Again, everything in a healthcare-delivery process to
an insurance-claims process to a digital-asset-management-review process for a
CPG company, that’s how we are approaching AI.
But I think the
exciting thing is to start to think through all of the tasks that we spend time
on inside of a workplace that you just know a computer could do better. A
computer can connect the dots between our collective calendars way faster than
we can. A computer can connect the dots between different information systems
much faster than we can as we’re searching for data.
Why does it takes us
hours just to be able to pull up the latest business results when we’re looking
for our Q2 [second quarter] business performance? Why can’t I just ask a
question to Siri and say, “What was our revenue in Q2?” and it spits out the
answer? We know that computers can do these things, there just has never been
elegant software to be able to connect it all together and deliver that from a
user-experience standpoint.
These are the things
that we see as being incredibly exciting about where AI is going in the
workplace. Then we want to begin to make sure that we can spend our time on the
areas that humans are, frankly, way better at than computers and are the more
fulfilling parts of our job: the creative tasks, the tasks where we’re
collaborating with other people, where we’re creating new products and ideas
and not just searching for information or doing things that computers are going
to be way better at.
Simon London:Let’s go back to the question I
asked around big technology trends and moments being on the right side of
history. Building all of these things into the product: These are your bets to
be on the right side of history when it comes to AI, right?
Aaron Levie:Correct. We feel like the way that
we are going to manage, share, and collaborate our information in three, or
five, or ten years from now is going to look unbelievably different than how it
has in the past. And AI is going to be at the center of that.
Simon London:The other interesting thing,
looking at your AI strategy, is, you’re working with Google. You’re working
with IBM. You’re working with Amazon. You’re working with just about everybody,
right?
Aaron Levie:Yeah.
Simon London:That raises a question about
ecosystems, which again is something that you’ve written about. Just talk to me
about ecosystem strategy.
Aaron Levie:This is one of the areas that,
especially for a lot of incumbent companies, whether they’re in software or
whether they’re not digital, companies are going through this evolution. In a
world of platforms, you need to interoperate with other platforms. Furthermore,
in a world where we are still relatively early on this journey of digitizing
the globe, and all of our businesses, how everything around the world works,
we’re in a world of non-zero-sum gains and growth in so many different spaces,
which means that you have a lot less time to compete. You have to start to
collaborate to go after these markets. And so a lot of incumbents are realizing
that the competitors that they once had are now going to be their partners in
this new era. Because there’s simply no way for any one company to deliver an
innovation to solve all of the world’s problems, because of just how much
growth and how much opportunity there is.
So our approach to this
is no different, which is to say, we are going to be, hopefully, the world’s
best product and company at managing, structuring, organizing, and securing
information. But it turns out that Google has more engineers than us. And it
turns out that they’re going to be spending billions of dollars every year on
AI. And IBM is going to be spending billions of dollars every year on AI.
Why would we want to be
in a world where we are trying to compete with those players and their R&D
budgets, in a space where they’re going to do unbelievably well, instead of
flipping the model on its head and taking all of the strength of their technologies
and letting our customers leverage those capabilities? That’s the architecture
that we’ve built.
The idea is to take
advantage of all the unbelievable innovation happening in AI and to start to
incorporate and include that in Box, so that customers can turn on any of those
services for all of the data that they have inside their platform. It’s not
natural for a lot of organizations to be so open and so dependent on other
companies and on an ecosystem for their strategy. For us, we were, as you mentioned
earlier, born into this new way.
We were born on the
right side of this era of ecosystems, and interoperability, and integrations.
The kinds of companies, again, whether they’re digital or not digital, that
think that they’re going to somehow be able to build all of the technology
themselves, they’re going to control all of the architecture themselves, that
is a fool’s errand in the digital age. The amount of innovation that is
happening from so many companies—if you can’t take advantage of all of that and
allow all of that to become a tail wind for your strategy, then you’re just not
going to be able to compete with the companies that do take advantage of that.
You see some of companies these days that say, “Hey, I really want to move to
the cloud, but the best cloud-computing provider might be one of my
competitors.” That doesn’t mean that you shouldn’t leverage their technology.
They’re going to compete with you whether you like it or not.
One of the most
profound examples of this is Netflix, where they run primarily on Amazon web
servers. Amazon is one of their most significant competitors, but that didn’t
change the fact that architecturally, Amazon is the better cloud-computing
provider. That has no bearing on how they’re going to compete with Amazon,
which is on a completely different part of their business.
That ability to say,
“OK, we’re going to compete in one area; we’re going to complement each other
and partner in another area” is what we see as the way organizations are going
to have to operate in the digital age, because of how interdependent all of our
technologies and all of our products are.
Simon London:Before we run out of time, I want
to talk a little bit about business. I also read somewhere that every year you
reread Clayton M. Christensen’s book Innovator’s
Dilemma: When New Technologies Cause Great Firms to Fail (Harvard
Business Review Press, 1997). Is that true?
Aaron Levie:I don’t know if I’ve kept up with
it every year. For the sake of accuracy, I would say it is not true. However,
more or less, every couple of years, I reread it as a reminder about, again,
how important these moments are when you’re thinking through, is that a
competitor that’s coming up behind you, is that an actual disruptive threat, or
is more of a sustaining innovation that you’re going to be able to adapt to?
Is there something that
you’re not responding to in the market because your organization finds it
unattractive to respond to that thing? Or are we just not moving fast enough?
These are fundamental decisions that teach you when you are at risk of being
disrupted. But then, conversely, are there areas where you can be more
disruptive to competition? And how do you take advantage of that? That’s why I
think it’s always important to be grounded in the core of Innovator’s
Dilemma and why it matters.
Simon London:I think it’s a massively wise book.
Over the years, Clay and the book have taken a lot of stick because people
throw around “disruption” as a buzzword. But actually, if you really read it,
particularly the tensions inside companies, smart people in companies often
fail at this.
Aaron Levie:I would say 98 percent of the time.
Simon London:And it’s not because they’re stupid
or they didn’t see it coming. It’s all to do with incentives, and processes,
and how you navigate it.
Aaron Levie:That’s exactly right. It’s funny,
because being a digitally born company, you’d think you would know how to avoid
this type of issue from happening in your company. But I see it every day,
where you can just start to subtly see how one organization’s, or an entire
business’s, incentive model is built around something that is now going to
leave us in a position to be flanked in one particular area.
How do you mitigate
that preemptively, before maybe even the competition arrives in terms of
attacking you in that area? But it’s all people. It’s all organization. It’s
all how people are incentivized. What are people’s goals? The best position to
be in is where you’re using Innovator’s Dilemma as an
offensive technique to be able to be disruptive in other markets. But at a
minimum, understanding it so deeply [helps you understand] why people are not
responding to disruptive threats in their organization. And how you make sure
that you can avoid that, from a defensive measure, is also equally important.
Simon London:Well, thank you. This was a
wonderfully nerdy, pleasurable conversation.
Aaron Levie:Thank you. Hopefully we don’t lose
too many people in your audience after this one. I don’t want the
podcast-subscriber count to drop after this.
Simon London:No, this is in our sweet spot. This
is great stuff.
Aaron Levie:OK, cool.
Simon London:So Aaron Levie, thank you very
much.
Aaron Levie:Thanks a lot. Really good to be on.
https://www.mckinsey.com/industries/high-tech/our-insights/from-start-up-to-scale-a-conversation-with-box-ceo-aaron-levie?cid=podcast-eml-alt-mip-mck-oth-1810&hlkid=1756dd30b9cb4e6cbc29a409c3a8bc57&hctky=1627601&hdpid=71c5f6b5-d1aa-4b55-bbd4-5e64bb6ce71e
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