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SaaStr Podcasts for the Week with Justin Bedecarre, Jen Nguyen, Jason Lemkin, and Aaron Levie

Ep. 365: The Office of the Future, How Everything’s Changed and What 2021 Will be Like with Justin Bedecarre, CEO @ HelloOffice and Jen Nguyen, Founding Partner @ TEAMWERC Centralized…
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Ep. 365: The Office of the Future, How Everything’s Changed and What 2021 Will be Like with Justin Bedecarre, CEO @ HelloOffice and Jen Nguyen, Founding Partner @ TEAMWERC

Centralized HQs with all the perks and amenities “under one roof” have traditionally been used as recruiting tools to attract and retain top talent. In this episode, Justin and Jen discuss what the Office of the Future will be like.

This episode is sponsored by Linode.

SaaStr’s Founder’s Favorites Series features one of SaaStr’s best of the best sessions that you might have missed.

This episode is an excerpt from a session at SaaStr Summit: Enterprise. You can see the full video here, and read the podcast transcript below.

Ep. 366: The buzz that accompanies digital transformation trends is infinite. Cut through the noise with Aaron Levie, CEO of Box and Jason Lemkin, CEO & Co-founder of SaaStr as they share insights on what will make a lasting impact and what may fail to materialize in the future of work.

This episode is sponsored by Guideline.

This episode is an excerpt from Jason and Loren’s session at SaaStr Summit: Enterprise. You can see the full video here, and read the podcast transcript below.

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
SaaStr
Justin Bedecarre
Aaron Levie

We’ve shared the transcript of episode 365 below. You can also jump down to the transcript of episode 366.

Transcript of Episode 365:

Jen Nguyen:

Hi everyone, thank you for joining us today and giving us this platform to share the thoughts on what we love, the office. I’m Jen Nguyen from TEAMWERC. And at TEAMWERC, our mission is to deliver workplace as a service, helping companies navigate the company’s changing working environments. And I’m joined by…

Justin Bedecarre:

Justin Bedecarre, co-founder and CEO of HelloOffice. We’re a full-stack technology-powered brokerage helping usher in the hybrid workplace and the office of the future.

Jen Nguyen:

So Justin, it’s so great to be co-hosting this session with you.

Justin Bedecarre:

Totally.

Jen Nguyen:

It feels like deja vu. Six months ago in January, you and I were nerding out talking all things workplace and how the workplace ecosystem was broken. Everything from how workplace office space is delivered to workplace services end to end, from how workplace tools are often the last adopted tools by companies, often cut out of the annual budget, actually, and how the real estate brokerage industry was antiquated, lost in a century of manual workflow process.

Jen Nguyen:

And I clearly remember back then you told me, “Jen, this isn’t scalable. The future of workplace is going to be hybrid.” And fast-forward, here we are today, the pandemic has woke us all up and has accelerated our need to change our mindset about the workplace and all things workplace. And personally, it’s actually been very scary to think about as what I love to do, building workplaces, will no longer exist. And I’ve had a lot of my peers in the industry who have been impacted and laid off.

Jen Nguyen:

And what I found is this silver lining in that we all want the ability to come back, we want the choice to come back and we actually want hope. And that’s a really big thing. And companies are looking for guidance for us to pave that way.

Justin Bedecarre:

Totally. I mean, I remember that conversation back in January. And what we were planning on five years of that it would take to really usher in the hybrid workplace, well that condensed into what? Five months, judging by the length of my hair and my COVID haircut.

Justin Bedecarre:

It is truly amazing how fast the mindset around the future of office has changed. Pre-pandemic and going into the pandemic has been really tough. We’ve seen a lot of layoffs, a lot of people hurt. But at the same time, there is a silver lining in all of this, that coming out of the pandemic, a lot more people are going to have the choice of how they work, where they work.

Justin Bedecarre:

And yesterday’s workplace is going to get catapulted to the future of office. And so, that’s something to be really excited about. This industry, in many ways, has been broken, right? And there’s things that have worked and there’s things that really need to change. And a lot of our assumptions around yesterday’s workplace are going to be challenged.

Justin Bedecarre:

Some would say that it’s too rigid, that the 9:00 to 5:00, 40 hour workweek, what you were telling me, right? That started in the Ford era.

Jen Nguyen:

A hundred years ago.

Justin Bedecarre:

A century ago. And so, things do need to change. And decisions can be led by employees. And it doesn’t have to be a 100% office-centric. And so, when thinking about yesterday’s workplace, which is really important to touch on before we get into the future workplace, you have built workplaces for some of the most iconic brands in the world; Pinterest, Zynga, Tesla, what has been your experience? What have you learned from building yesterday’s workplace?

Jen Nguyen:

Well, first, I still love yesterday’s workplace, and I truly believe that it’s not going anywhere. But yesterday’s workplace from my previous company is we focus a lot about being a hundred percent HQ-centric, constantly being under one roof. And the purpose, obviously, was to enhance face-to-face collaboration, innovation, and productivity.

Jen Nguyen:

And we create this entire infrastructure to support this 1-to-1 seating model so that everyone under one location could be there at the same time. But it created this huge subset of issues that we’re constantly trying to solve for. For one, there was never enough real estate, given we were in San Francisco and Zynga on Pinterest weren’t the only companies with a real estate strategy of being under one roof. There just wasn’t enough square footage. And there wasn’t enough space to accommodate that.

Jen Nguyen:

We also created this huge commuting congestion problem, driving thousands of employees to the city, which also had an impact on affordable housing. And honestly, we’re limiting ourselves by proximity on recruiting a diverse best-in-class team. And we also had multi-generational issues with people working with different lifestyles, with different obligations, whether it’s childcare, taking care of elderly parents. We just never were able to solve for that. And then there was this great workplace experience of 2020, which we’re still living now. And somehow it unintentionally solved a lot of this friction.

Justin Bedecarre:

Right. I mean, think about, like you said, the infrastructure needed to be a single HQ-centric workplace, right? I mean, thousands of people being shuttled around the Bay Area for hours every day. I remember growing up and my neighbor’s dad would literally read the newspaper on the freeway because it was bumper to bumper to get into the city and not much has changed.

Justin Bedecarre:

And so, the idea that how many people would get shuttled down to Facebook, it was only a couple of years ago that they introduced their first San Francisco office. And so, things are really changing. And we have to think about, you have yesterday’s workplace a hundred percent office-centric, the pendulum is going to be swinging back and forth, right? So now we’re in this, like you call it, the great workplace experiment of 2020, where we’re forced to be a hundred percent remote.

Justin Bedecarre:

And the pendulum has swung the entire other direction. And now, after a few months, the novelty of being 100% remote is wearing off. And so, we’re all starting to realize what works and what doesn’t, right? What we miss out of the office, the serendipity, the collaboration, just being around our colleagues in person. And so, what we have to do to build the office of the future is take the best of the hundred percent office-centric world and the best of remote, where there is more transparency, there could be more productivity, and basically combine those.

Justin Bedecarre:

And it’s a really inspirational thing to add technology and innovation to the workplace, how you find space, how you manage space, and build the office of the future.

Jen Nguyen:

Well, going back to this one-on-one seating and the workplace of yesterday, I actually now miss, after being in back to back Zoom calls, being able to walk between conference rooms and taking that few minutes break to feel normal and bump into a peer of mine. And the other thing that it also reminds me of too is, in this whole one-on-one seating model, what actually didn’t work was that I realized for myself, I was never at my desk.

Jen Nguyen:

I was in conference meetings and back to back, very reflective of what I’m doing now. And so, my desk sat empty almost full time. And so, what it means is we just need to retrofit and recalibrate how we use this space and change the purpose of why we come into work. So, Justin, so now that we know all this, and for everyone listening, what does this mean? How are you and how have you been advising your clients on this hybrid strategy?

Justin Bedecarre:

I think that it’s such an important question, right? And what people have to realize is that it is different for everyone. One of our clients has over 500 employees with offices around the world, right? And in major hubs like San Francisco and New York, what we’re doing is helping create the vision for a more experiential space, almost like a cafe where they can come and go as they want, they can bring clients, they can bring customers.

Justin Bedecarre:

And so, it’s just going to be like, in these major hubs, no one’s going to have assigned seating, but in their Salt Lake City, everyone wants to come into the office five days a week. And so, we’re still positioning that space for a hundred percent office-centric.

Justin Bedecarre:

So, even within some of our clients, they’re thinking about what their employees want in any given market. Another client of ours, most of their employees came from the South Bay and commuted into San Francisco because they just felt like they had to be there. Now that that assumption is being challenged, we’re going to help them find an office in Palo Alto. Their employees are going to be able to come and go. And they’re going to reduce their commute by 45 minutes.

Justin Bedecarre:

And then another client of ours is an international company that has decided that they truly want to scale up in San Francisco. And they’re moving forward with really a significant lease because they get to save so much money because rents have stabilized and there are so many subleases on the market.

Justin Bedecarre:

And so, through all of this, we have so many different client stories about how they’re planning, how they’re figuring out, how they’re getting back into the office. And so, it’s not one-size-fits-all. We’re going to learn so much about ourselves, about how we should and can run our companies, how we run our day-to-day lives. Right? The challenge is that there’s a lot of uncertainty, right? We don’t know when we’re going to be able to get safely back at scale.

Justin Bedecarre:

Some of your clients, I would imagine, are actually going back into the office already. Some of them are like a wait and see approach, right? We have Slack saying, “Hey, we’re not going to consider going back into the office until 2021.” We have Google saying, “Look, we know we’re going to get back into the office, but we’re going to put a hard date at mid-’21 of next year. And so, how do people in the session figure out how to plan? What do we think about?

Jen Nguyen:

I think just like we think about the pendulum of how we think about real estate 100% in-office, 100% remote, it’s not one or the other. And as we hear companies like Google are saying that they’re going to push out the return to office till sometime next year, I think we’re all forgetting that they’re also still planning when that time happens. And they’re taking the time now to create those workplace resilient playbooks as part of their business continuity plan.

Jen Nguyen:

I’ve also heard, “Well, why plan, if things are going to change tomorrow? We’re already in this like a new gen.” But it’s important to plan that it’s flexible enough so that you can pivot those realities of today and tomorrow. And quite honestly, it is a corporate responsibility to start planning now for the well-being of your employees to implement COVID-19 guidelines into your workplace.

Jen Nguyen:

And really, I think companies should really focus on the fact that both current and future employees will be closely tuning in, on how companies navigate through this change and then adopting a hybrid employee choice philosophy. This will be a really strong indicator of retention and recruiting. Whereas before, the old workplace that we know it of yesterday, we built these huge HQ anchor buildings for recruiting purpose, now giving the employees choice, and this hybrid approach is going to be what’s going to make a big difference in terms of recruiting intention.

Justin Bedecarre:

Right. I mean, these decisions have a lot of implications, right? If you are temporarily remote, but you don’t really have a solid strategy for when we can return to the workplace, families are going to be making decisions whether they move or not. Are you going to ask them to move back after the pandemic? People will decide to rent versus buy because they need to decide what their workplace is going to be like.

Justin Bedecarre:

And so, it’s really, really important to plan and understand what your employees want. Going through a few of the points on our slide, it’s not solely based on health and safety, but that is a big issue right now, right? Planning for long-term means a lot of implications for how employees live and work, how they work together, and engagement and collaboration is now a preference. It’s really important, but we all want to choose when we do that versus when we go heads down work and can be flexible.

Justin Bedecarre:

And another really important point that we really believe in is that you have to use data to drive decisions, right? You have to use data on how people are using the space. One of our good friends actually just raised a big brand called Density, where they can track. We’re implementing that in all of our workplaces where you can track how many people are coming and going in conference rooms, and different things.

Justin Bedecarre:

And so, we really need to layer on meaningful and efficient technology into our workplaces to understand how people are using it. What never changes is that the space has to represent your culture. It has to represent what you want to achieve as a company, right? If you’re building automation for trucking or whatever, you need to be in the space, and so you need to figure that out.

Justin Bedecarre:

Whereas if you’re a software company, you can wait until, you don’t have to compel people to come in sooner than they feel safe. And so, there’s a lot of implications for that.

Jen Nguyen:

Yeah. Justin, you actually made a really good point on data. What was really interesting in working with a lot of these clients on the return to office, 60% had workplace tools, 40% didn’t. And in that 60% that actually had workplace tools, we could only use 80% of that data. So, we haven’t done a really good job using analytics, and the time is now to do that, to make the right decisions. How do we unpack this? How do we unpack what hybrid means? What does it look like? What is it and what is it not?

Justin Bedecarre:

Well, let’s start with what it is, right? So, it’s employee-led, which means that we’re really going to need to take a pulse of what employees want and how they work best and help them make decisions on, whether it’s an individual contributor or if you’re on a team and your team has the right cadence. Right?

Justin Bedecarre:

So, it truly has to be employee-led and it emphasizes choice. Something that’s so important right now for everyone to realize is that for most of us, we don’t have a choice right now. Right? And so, once we’re given that choice, what do we actually decide? And it can’t be a rash decision, right? You have to continually take a pulse of your team and how they’re feeling. Right? We’re, what, five months into the pandemic and for many of us it’s been five months since we’d been into an office.

Justin Bedecarre:

And so, the novelty, like I said, is wearing off and now we’re starting to recognize, “Okay, maybe I don’t want to be a hundred percent remote, but I do want to come into the office four days a week, or one to two days a week.” It’s going to differ employee to employee, and so you have to give choice and flexibility. Right? Flexibility is so huge.

Justin Bedecarre:

Aaron Levie just did a poll on Twitter that thousands and thousands of people responded to on what is the future of work, right. Is it, get me back into the office as soon as possible? Is it remote forever for the win, or is it flexibility? And over 70% of people said, just give me the flexibility, from thousands and thousands of people.

Justin Bedecarre:

And so, the data is starting to prove that the hybrid is here to stay and that people really want it. One of the things that you and I talk about a lot is hiring for skill and impact over proximity, right? You don’t have to live in a short drive distance away or a long drive distance away from HQ to contribute and have a big impact.

Justin Bedecarre:

During the pandemic, HelloOffice, my company has promoted engineering manager, [Jaziel 00:17:46] out of Dallas, our first remote engineering manager. And it’s been working out phenomenally. And so, we have to really think about how people can have an impact, not just their proximity. And it has to be purpose-driven, right? You have to go about this with a lot of purpose.

Justin Bedecarre:

So, let’s talk about what it’s not, right? It’s not prescriptive, right? Earlier I gave three examples of all technology companies, all with very dramatically different approaches. And so, it’s not one-size-fits-all. It’s not the death of the office despite the narrative that’s been going around, but it’s also not the death of remote, right?

Justin Bedecarre:

There is the combination, like the sweet spot, where you can have the best of both worlds. That being said, as we know, it is not the easy choice. Hybrid is not the easiest path, right? A hundred percent office-centric, we have playbooks for that. We’ve been doing it for over a decade. Right? And for the playbooks for fully remote, with GitLab and WordPress, those are relatively well-established albeit less companies have done that at scale.

Justin Bedecarre:

And so, the combination of both, you have to be really great at both, and you have to be really intentional. And the final thing that it’s not is, it’s not standard or homogenous. We all know the open office has just taken off over the last decade. And requiring everyone having 1-to-1 seating, like you talked about. The days of homogenous offices are over and every company is going to have to purposely build and design the workplace and how they run their companies that best fits them.

Jen Nguyen:

Mm-hmm (affirmative). Well, the irony that you mentioned how we’re currently in a pandemic and we don’t have choice, this lack of choice actually gave us a taste, just like our first time trying sugar, of what it’s like to work at home and having the flexibility of working anywhere.

Jen Nguyen:

And so, now we can’t untaste it, right? And so, the idea of having that flexibility, and the other thing that you point out is pulse your employees, but it takes courage for a company to ask, really ask, what it is that employees want, because you have to be prepared for what the [crosstalk 00:20:00] are.

Jen Nguyen:

But I think a really, really great example of implementing a hybrid workplace that we’ve seen recently this week is Siemens announcing that they’re allowing 140,000 of their employees globally, across 200 countries to work two to three days, work from anywhere. And their focus is not time spent in the office, but the focus really is on impact, which is so amazing.

Jen Nguyen:

And I think they did two things really, really well, to your point, Justin, is that they took a forward-looking approach, not a wait and see. And second and most important is, they actually pulsed and surveyed their employees, they heard what they asked, and those employees highlighted the preference for greater flexibility in their approach to work.

Justin Bedecarre:

Right. I mean, that is so pivotal. I truly believe that with the hybrid approach, having two to three days of being together, two to three days of work from anywhere, wherever you do your best work, that still could be in the office. It could be at home, it could be at a co-working spot or a coffee shop. But it’s truly like giving people the option, but also like having some structure around when people actually come into the office, right?

Justin Bedecarre:

For the office to be valuable for the things that we’re talking about; serendipity, collaboration, just being around your team in person and having those in between meetings where you can throw out an idea and let it ruminate, that requires people to be in the office too.

Justin Bedecarre:

And so, you can’t just work from anywhere. It doesn’t just mean that you don’t have any kind of structure around it, right? So, you have to intentionally manage through this, which is really important. And Siemens is a great example.

Justin Bedecarre:

Well, that is the presentation for today. We understand this is a confusing time and it’s really hard for a lot of folks. But there is a silver lining in all of this and there is a balance between not having to worry about the office being dead or being forced to be remote forever, right? The hybrid solution, we believe, is the future and a really big opportunity to achieve a lot of things for your companies and your employees. 

****

Transcript of Episode 366:

Jason Lemkin:

The end of a great day in the enterprise. It’s always fun to be with Aaron, but for this topic, The Real Future of Work, I think it’s especially fun because I can’t think of anyone who we’ve been talking more about digital transformation, future of work, when will things go online, the office 2.0, when will the office finally go on the internet? I mean, I can’t think of anyone. You and me have been talking about this stuff for the better part of two decades, right?

Aaron Levie:

Oh, man, you just brought up like six terms I haven’t heard in 15 years.

Jason Lemkin:

Yeah. But now everyone’s a future of work fan, right? But it’s the same idea, isn’t it? It’s just finally happening.

Aaron Levie:

Well, it helps when the internet is about like 100 times faster and computing and storage is about 100 times cheaper. So, it turns out that that’s really important to be able to enable these technologies.

Jason Lemkin:

But long.

Aaron Levie:

Certainly, for anyone younger in this video than us, nobody will ever have respect for how much work it took back in the day. We would have to go fly around to conferences all throughout the country and stand at our little booth as founders. I literally remember handing out like T-shirts just to try and get signups just to promote where work is going. Those were the days, but I’m a little bit glad that some of those days are over.

Jason Lemkin:

Yeah, so there’s a bunch of things I want to chat about. I grabbed a bunch of your tweets to use as props.

Aaron Levie:

Oh boy.

Jason Lemkin:

I want to talk about, we chatted about a little bit backstage before we started, the almost the different phases we’ve been in through March 15, because you have even a different lens. But to me, this is an interesting chart. This was obviously right after we went into shelter, but this is Box and Zoom, right? So, this is super interesting because this isn’t me using Box in my left monitor and then firing up a Zoom call in the right. This is a new workflow, isn’t it? This is a new use case that looked interesting before we all worked from home but exploded, right? So, what does this mean? What are we doing actually differently now than before March 15, for reals?

Aaron Levie:

Yeah, well, I think first of all, the one dynamic is that I think for probably anybody who would be paying attention to the SaaS universe and joining us today, probably actually less has changed about our daily lives than the vast majority of the world.

Jason Lemkin:

You and I, we’re working the same.

Aaron Levie:

We’re working more or less the same. We’re in Slack channels, we’re in Zoom calls. We’re using digital workflows and storing data in the cloud, but the rest of the world, this was an overnight just shift in how people worked and how they communicated. The easiest way for us to think about it is just if you took eight hours of in-person meetings a day that maybe we previously would have been if we were at a big CPG company or a bank or a retailer or a life sciences company, that whole model has blown up. Now obviously, everything that you’re doing has been virtualized or digitize. Previously, it just wasn’t the case.

Aaron Levie:

So, we thought really early in our data, one of the earliest signals was sort of our change in IP address. So, people moving from their primary work location to a remote location, and obviously, that just sort of became exponential right around the middle part of March to the end of March. And then we saw a bunch of other characteristics that were changing in how people working. I think it’s ones that now we’re all collectively experiencing together. I think it’s really how big of a shift this was for the worker that traditionally was working on analog business processes with in-person settings, how big of a change this was in their world where were all of a sudden, now their job is on a computer all day long interacting with all their colleagues and how big of a shift this is in terms of what that work looks like.

Aaron Levie:

One thing that I’m optimistic about is that even as the health environment hopefully gets better as soon as possible and we’re back in offices, I’m optimistic that this shift in how we work continues forward, even kind of post the pandemic dynamic. Just because I think people are going to see like, “Well, wait a second, I can just get on a video call and talk to my partner in a different country. I don’t need to actually go and get an airplane every time I want to do that type of interaction.”

Jason Lemkin:

Yup. Have you been talking to the customers, especially where you’ve seen acceleration since March? Are there new use cases of Box or an increase of prior use cases where maybe people are using Box a lot more for certain reason than we might have in a traditional office environment or before all this? Has something changed with some of your bigger customers?

Aaron Levie:

Yeah, so we have seen that there has been frankly just a much more accelerated push to, obviously, in our buzzword terms, digital transformation, but for most companies, this is a very real idea, which is I maybe had a roadmap that was two or three or five years of projects I was going to go implement. I have to now both accelerate and reprioritize that list of projects. It’s interesting, when you look at the environment we’re in, it’s actually incredibly clarifying for most IT organizations exactly what they need to go focus on. Compared to a year ago, digital transformation actually had way too many sort of both nuances and sort of vectors you could go down that actually weren’t as strategic.

Jason Lemkin:

Everyone had a pet project, right?

Aaron Levie:

Everybody had their digital team. Five people in the digital team were looking at blockchain projects and three people on that digital team were looking for long term AI transformation. At the exact same time, that company hadn’t moved basic applications to the cloud. So, what this environment is doing is every enterprise is taking inventory of how they work, how their people in their organization can collaborate, how they work across their supply chain. It is, to some extent, a bit of back to basics.

Aaron Levie:

I mean, it’s incredible that the mainstay technologies of this era have been technologies that we’ve had for 20 plus years. It’s just they finally work well, and they have the ability to be ubiquitous all at once, because we all have to use them to survive. So, whether it’s cloud storage or cloud video or messaging. Ray Ozzie somewhere is out there being like, “What the fuck, guys? I came up with all this stuff in the 90s. Why is this now finally happening?”

Jason Lemkin:

Sort of my question, yeah.

Aaron Levie:

So, I think there’s definitely a lot of cognitive dissonance if you’ve been doing this for so long, but the reality is most of the world hasn’t been doing this for more than the past couple of years or the past couple of weeks.

Jason Lemkin:

Yeah. So, let’s talk about the pet project, it’s interesting. I didn’t mean it as a pejorative term, but it’s true, right? Digital transformation has led every stakeholder in the enterprise, every C-level or senior person to throw a chip in the table. What do they want to accelerate this year? There’s a fixed budget. There’s only so much capital out there for these projects. Tell me a little bit about the CIO level conversations you’ve had since March. You don’t hear about the blockchain initiatives anymore. Is it really just like three projects that I need? I need like sales, procurement, collaboration. What are the actual conversations like?

Aaron Levie:

I think the easiest way to think about that we kind of got keyed in on early on was almost like a Maslow’s Hierarchy of Needs for IT, right? Before you get to kind of total enlightenment, what are the fundamentals that you’re going to need? What’s the shelter of IT? That’s your basic cloud infrastructure. That’s being able to do flawless video calls. That’s being able to have a means of communicating in real time. I mean, I literally cannot imagine how we could run our company if we were only on email and we had sort of phone conference calls. I just actually don’t know how you would run a business.

Aaron Levie:

Before you had Slack, before you had Zoom or WebEx or Google Meet or whatever, I don’t know how you could actually get your teams together virtually. But there are literally thousands and tens of thousands and hundred thousands of companies out there where that’s either being implemented right now for the first time or frankly, it hasn’t even been implemented yet. These companies are still trying to coordinate and triage all of their work over email and over legacy ways of working. So, there’s a Maslow’s Hierarchy of Needs, which is like, “I got to get my fundamentals for work. How do I store data? How do I communicate? How do I have core applications, like you said, CRM, being able to work across the supply chain?”, the kind of foundational ERP systems.

Aaron Levie:

I think what’s happening is, is companies are realizing that the really big sort of flip the business model on its head project and we’re going to go and do a distributed ledger technology and all this, that’s going to have to get punted because we’re in core survival mode right now. So, the way I would sort of deduce it is, core productivity, data security, and cost savings have been the three big areas that we’ve seen companies focus on and CIOs focus on. If you don’t have something aligned up to one of those three, it’s going to be really hard to get the attention-

Jason Lemkin:

Slow those down again. Sometimes you’re a little fast, just so I catch up.

Aaron Levie:

Yeah, yeah, I’m sorry with that. I’m trying to pack in like four hours of content right now.

Jason Lemkin:

It’s okay, it’s good.

Aaron Levie:

Productivity, you’ve got to make your business be able to function better and faster, smoother. Security, because now everybody is in this remote and distributed world and data security privacy is only going to get amplified. And then be able to save money, you have to be able to prove that you’re going to save my business money. Those are the only three that are going to get funded in this environment. So, you have to make sure that from a software standpoint, that you’re able to help with those angles.

Jason Lemkin:

So, actually, that’s fun. Let’s dig into those three but let me step back. Let’s talk about content and Box. Boxes are pretty rich application today, which we can chat about. But let’s talk about kind of the nuclear element of content, right? Again, I’m not a CIO, but I’m struggling with content. I mean, the Slack and the Zoom is an obvious, how would we run our companies without Zoom or Google Meet? But I’m even struggling to find content in ways that even though I’ve always been on the web, right? I’ve had people.

Jason Lemkin:

I could ask my friends, ask Brendon or Emilia, “Where is that prospectus?” It’s not really that funny, because we may be stuck at home for years. So, is content in the core? Are people thinking about some of these core pieces of Box a little differently than in March? Are some things going from elective to mandatory that’s different?

Aaron Levie:

That shift is definitely starting. I think, video and kind of core communications was at the lowest level on [crosstalk 00:11:29]-

Jason Lemkin:

Day one.

Aaron Levie:

Because you just couldn’t even get your teams together until you can do a video conference or kind of channel conversation. This idea of content fragmentation and my data is in 3 or 5 or 10 different places is now being absolutely kind of amplified and becoming front and center for a lot of companies. If you go to an average life sciences company or a bank or a health care provider or a global manufacturer and you say, “I want to get the latest financial document,” or “the latest manufacturing file,” or “the latest marketing campaign,” there could be a dozen places where that content could live, which means a dozen different ways where you need to secure that data, a dozen different systems that you have to maintain, a dozen different platforms you have to back up and make sure are redundant.

Aaron Levie:

So what we’re trying to do with Box is basically wipe out all that mess and say, “What if you had one platform that connects to all of your applications, whether it’s Zoom, or WebEx or Teams or GSuite or Office 365 or Slack?” That’s our whole strategy. Fortunately, I think companies are now paying more and more attention to that. I mean, we’ve only been at this 15 years, but I think people are starting to realize that “Oh, wow, there’s actually an unbelievable amount of value in this data. I have to protect it, I have to secure it. I have to drive business process around it.” We’re certainly trying to make sure that we can support our customers as much as possible.

Jason Lemkin:

So, I want to talk about that second piece you had which I think was security, right? The first one was productivity. When you’re having CIO level conversations today, which of those buckets are you from framing Box in?

Aaron Levie:

I would say that security is probably the most impactful that where our differentiation shows up the greatest. This is 15 years of innovation in data security, compliance, and protection of content. That happens to coincide with obviously some of the biggest challenges around cybersecurity, data compliance and privacy, GDPR, CCPA, who has access to your information? All of those issues, those are front and center for every organization.

Aaron Levie:

So, we probably differentiate the greatest on our security and advanced capabilities around that. However, more and more customers are saying, “I want to go and simplify my IT environment, so I can reduce spend and get onto a common platform to manage all my content.” So, I do think we hit all three, but security probably is the biggest driver within our customer base.

Jason Lemkin:

Okay, I do want to dig in on that and ask you some thoughts, but on the third one on saving money, the third factor was saving money, right? How does Box, just as a use case, as a case study… I should know this, but I don’t. How does Box save an enterprise money?

Aaron Levie:

What? You’re not thinking about it all day long?

Jason Lemkin:

Well, there’s some things I can intuit, right? In all seriousness, right? But there’s some subtle elements too here. It’s not just soft costs, it’s hard cost. What’s the pitch to save money?

Aaron Levie:

So, it’s different by company size. But if you go to a company that has 5,000 or 10,000 or more employees and you were to get this perfect sort of bird’s eye view of where information is stored, what you’re going to find is effectively a plethora of SharePoint sites, document management systems, network storage arrays, FTP servers, data rooms, and-

Jason Lemkin:

Twenty systems, 20 systems.

Aaron Levie:

… back-up to all those systems. I blame myself that it’s taken this long, but for whatever reason, when you think CRM, you think, “Okay, there’s one platform for CRM.” When you think ERP, you think, “There’s one platform in the cloud with ERP.” When you think HR, you think, “There’s one platform in the cloud, I’m going to move to Workday or SAP or Oracle.” When you think content, people are totally fine with, “That can be my data center. I’ll have it in my back-office systems. I’ll keep paying these exorbitant rates for managing all that infrastructure.”

Aaron Levie:

We are really ultimately trying to be the platform where you can manage all that content and then connect it up to all of your applications. Just as you would not accept having multiple CRM systems or multiple ERP systems or multiple email systems, we don’t think the future is going to be about having multiple content silos in an enterprise.

Jason Lemkin:

I think it’s terrifying from data leakage and security and a whole bunch of pieces. Do you have to sell it ahead or CIOs and CTOs coming to that conclusion on their own? Where are we in that journey of seeing that?

Aaron Levie:

We’re getting closer. I think part of the challenge has been, most of the focus has been, “Okay I got to protect my network. I got to protect my email. I got to protect my kind of core databases.” And then what’s funny is you’ll spend millions, tens of millions, hundreds of millions of dollars securing all of your network, all of your on-premises systems, and then an employee will just send an email attachment of all of your banking data to a client.

Jason Lemkin:

They will, they will.

Aaron Levie:

So, how do you protect that flow of information? How do you protect the pre-release patent document that you need to be able to share with your partners? How do you protect the marketing asset that is going to turn into the marketing campaign? How do you protect the movie script before it turns into a film? That is what we effectively are enabling for our customers, the ability to ensure all that data is protected even as it gets shared inside and outside the enterprise.

Jason Lemkin:

Yeah, Box in many ways has become a security company in the space and you’re thinking about it more than I have. When I see Evil Corp, literally, Evil Corp taking Garmin down for four days, I thought Evil Corp was just part of whatever that TV show was. I’m so sorry. I didn’t even know there was a real Evil Corp. I mean, Evil Corp took Garmin down, including partially airplanes, for multiple days, right? I mean, cyber ransom, it’s getting crazy out there, right? So how are you thinking about that and the value proposition? Because I think this is going to get crazy the next couple years, it’s going to be much worse than it ever was.

Aaron Levie:

Yeah, it’s pretty crazy. So, the amazing benefit that the cloud offers is, is when you have your data stored in the cloud, you can effectively bring an infinite amount of technology to that data to be able to protect it. So, for instance, just yesterday, we announced a new feature with this product called Box Shield.

Jason Lemkin:

Yup, I saw it.

Aaron Levie:

You can upload a Word document or a PDF or a PowerPoint file into Box. If you turn this feature on, we’ll scan that data and we’ll tell you that there’s a social security number in that file or there’s a credit card number. And then you can classify that data. When you classify that data with whatever classification level you want, you can decide then what types of security controls you want with that content. So, you can prevent that file from being downloaded or for being shared or from being edited on a different computer.

Aaron Levie:

So, when data is stored in a central platform, we can bring to bear all of the malware detection, data scanning technology, IP alerting features that we’re building, that partners are building. And then in one common platform, you can store your file at once and get all that extra security and protection. So, that’s effectively what we’re working on.

Jason Lemkin:

Box Shield has a rule-based hire, I can pick rules. If there’s a social security number and other pieces of AI, then automatically it’s limited to this org or this subset of the org.

Aaron Levie:

Exactly.

Jason Lemkin:

Yeah, I still can’t believe that in 2020, you can just email out anything or you can leave an unencrypted elastic database in the cloud. Every week, it’s like 15 million names are leaked. Someone forgot to turn the security on, the elastic database. You didn’t ask my opinion, I feel like that’s a winner for Box. The next five years are sort of terrifying for security, because I’ll tell you, one of my CTO, one of the early things he said to me back in the day that Adobe Sign/Echo Sign. He said, “You know why we haven’t been hacked?” He says, “Nobody cares,” right? He’s like, “You don’t even want to know. You don’t even want to know back in the days all the issues we have.” He was thinking about them, right? Hopefully, there was no unencrypted data elastic database out there.

Jason Lemkin:

But now that the cloud is becoming the dominant part of our economy, everyone’s picking, right? Everyone’s looking for holes and issues. It’s good for Box but it’s scary because everything’s going to be found. I think all the issues are going to be found.

Aaron Levie:

Yeah, I think this only increases an order of magnitude that we’ve never seen, especially with a distributed workforce that by definition has to share completely digitally. So, now everything’s getting digitized and now the question is, “Do you know where all that stuff is?” That’s what we’re trying to offer our customers.

Jason Lemkin:

All right, I want to get your thoughts on this one and the phases we’re going through. I asked Rob Bernshteyn this morning, who helped kick it off. He had no idea what the world’s going to be looking like. I asked Loren Padelford and in his view in eCommerce, it’s been 10 years since March 15. I actually missed a cycle there, 10 years of digital transformation literally, in whatever, 100 and some odd days. How are you seeing this? Are we ever going back? Are we going back to a hybrid world? What’s the future look like from where you sit?

Aaron Levie:

Yeah, I mean, I think it’s always so hard because the debate is always including this issue of, “Well, has the pandemic been resolved? Do we have a vaccine or not?” So, I can only really imagine a post-pandemic world because anything pre-post-pandemic, you’re making health and social kind of judgments that are so impossible to predict at this stage. So, in a post-pandemic world, I do think we go back, but I think we go back differently. I think what happens is you get much more flexibility in how companies think about the workplace. They think about the hours in the office, and they think about the business travel. They think about which days you have to go to the office.

Aaron Levie:

Certainly, representing Box, but more and more customers that I talked to, I think people imagine a bit of a hybrid future. Where offices are still incredibly important, because you want to be able to see people and be able to work with colleagues, especially if you’re earlier in your career and your company is more of your community and you want mentorship. It’s your place of meeting friends and you don’t want to be kind of holed up in your apartment working all day, then I think an office environment can actually be incredibly important to a company culture and company execution. At the same time, there’s literally no reason why we have to have a classic 9:00 to 5:00. There’s no reason why meetings and teams have to arbitrarily be the number of people that can fit into a conference room.

Aaron Levie:

So, I think you’ll see much more digitization of work that happens in the office. So, that will mean more distributed work, more video calls, less business travel, more hopping on just a quick sync with a partner as opposed to saying, “Hey, can I fly to you next week?” And then you’ve got hundreds of hours of logistics of complexity that surrounds just that one little decision. In many respects, I actually think the world is moving faster, because of this sort of complete virtualization. Because at any given day, I can hop on a call with a customer in Japan and Australia and multiple parts of the US in the same day. So, think about how much business that propels forward and how many decisions that begins to propel.

Aaron Levie:

So, I don’t think people want to go back to the old way of working, where every single thing that we did had to result in an in-person conversation and in-person meeting. At the same time, I think there’s a bit of fatigue of saying, “Okay, I’d like to get out of my house now. It’d be great to be able to go into an office and see people.” So, it feels like okay, total compromised position, but I think the reality is, is that there are mixed modes of how you want to work and what kind of people are inside of your organization. We have to support a future that is hybrid, ultimately. I think what’s at the center of the hybrid future is digital, and digital is the thing that bridges these two worlds together.

Jason Lemkin:

Yup. I want to talk about that, but just a detail, remind me, what’s your current policy? What are you thinking on this point of remote work for Box as a policy?

Aaron Levie:

So, we announced a couple months ago that people don’t have to come back, at a minimum until January of next year. That if people want to move long term, we have a very flexible policy on that and people that want to raise their hand and go do that. We’re basically supporting every request that’s happening. And then obviously, I think there’ll be more remote hiring in this environment.

Jason Lemkin:

Yeah. How are you thinking about that? Is that a strategic hiring initiative yet, or is it still early to figure all that out?

Aaron Levie:

Certainly, as time goes on in this situation, I think it’ll have to become the strategic decision. I’ve tried to not make wholesale changes to how we operate in the midst of this being kind of very temporary crisis mode and really wait to see like, “How do we think settle back in when it’s not the crisis, but it’s actually can be a voluntary way of working as opposed to… Right now, it’s involuntary. So, there’s not really many decisions to make.

Aaron Levie:

But the question is once it becomes voluntary, what kind of corporate culture are you trading off between having a strong office hub versus a fully distributed team? I don’t know that we know the answer to that. Right now, we have the luxury of not having to make any of those decisions because nobody’s going back. So, it almost doesn’t really matter that much.

Jason Lemkin:

At a tactical level going back just for the founders, as you say, obviously, it’s much more efficient for you to talk to existing and new customers over Zoom or Google Meet, right? It’s much more efficient. Back in the day, we all wanted to sell everything remotely on a GoToMeeting or WebEx. No one wanted to get on planes and then we learned it mattered, right? We learned it mattered. I remember I told you the story, you’ll forget because you hear a lot of stories. But you were kind enough to have me be a panel at Box works in 2012 when I was recovering from Adobe.

Jason Lemkin:

One of your customers came up and grabbed me on the arm and she violently disagreed with something I said in the panel, which I thought was very tame. She’s like, “That’s not what Aaron told me.” That was like a magical moment to see. She probably met you for 20 minutes, right? But that magical connection from that face to face, right? Is this sufficient? We’re going to go back, what’s your gut on this now that you become very enterprise? More importantly, are buyers okay taking more risk? Has the rules change? Does this count as meeting for a seven-figure deal?

Aaron Levie:

Yeah, it’s a great question. I mean, a couple things to consider. I’ll give you one example. We are one of the larger SaaS providers that leverages public cloud. So, we spend a healthy amount of capital on the public cloud. I have never met in person the sales rep of… Maybe I have in passing or whatever. I don’t think I’ve ever met the sales rep of those public cloud deals, but I’m on video calls with them or conference calls.

Aaron Levie:

You just know, okay, Google or Amazon or IBM, whatever, these are going to be substantial platforms that you can trust, and you care way more about, “Are they there for you when there’s a problem? Are they able to hop on a call? Are they able to go solve one of your core issues?” Not “Did they take the time to drive to your office and deal with all the kind of perfunctory stuff that kind of goes into that?” I would flip it a little bit.

Aaron Levie:

I think that we as a selling ecosystem think of in-person interaction as being very customer centric, which is very intuitive for a long list of reasons I don’t need to get into. However, what I would posit is, is that that’s maybe customer centric for that one customer you’re meeting that day, but what about all the other customers that you could have been helping to support that day that now you had not been able to?

Jason Lemkin:

Because that’s the question, right?

Aaron Levie:

Right. So, the question is can I trade five video calls with customers for one or two in-person meetings, and overall, actually building much more customer centric organization, because now I can be supporting many more of our customers in a single day? So, in the past couple of months in this environment, I’ve spoken with more customers than I ever have certainly in an equivalent time period, in a kind of pre-pandemic world. It’s because it’s trivially easy for both sides to say, “Hey, let’s just jump on a video call tomorrow to hash this out for 30 minutes.” That’s actually more customer centric than me getting on an airplane and coming in and doing a one-hour sort of full presentation that, again, a day later, everybody kind of forgets anyway.

Aaron Levie:

This is actually to me a much better way to be able to serve our customers at scale, but I don’t think it fully replaces the in-person dynamic. I think we will be on airplanes at some point, we will be going to meetings, but I think that the question will be like “What really is the value of that dynamic versus being able to serve your customers virtually?” I think that that remains missing.

Jason Lemkin:

Yeah, we did a little event right after we went into shelter when things were crazy, right? Stewart Butterfield came, and he said he’d spoken to more customers already in the first three weeks than he had in years. So, he said, “One of his customers said, ‘Oh, Slack must be really struggling.’” He said, “Why?” “The CEO’s on the Zoom. That’s a really bad sign when the CEO has to get on the Zoom and sell me the product.”

Aaron Levie:

That’s funny. I imagine even at $1.6 trillion, Satya is on many, many video calls with top accounts.

Jason Lemkin:

Yeah, I mean, who knew that would be such a competitive space? It’s fascinating, isn’t it? That the way Microsoft, Google, and Amazon compete, it’s bare knuckles in the trillions. We didn’t know that that you could compete that way.

Aaron Levie:

Yeah, no, I’ve talked with customers and it’s like, “Yeah, last week, I talked to Satya and I talked to Thomas Green. It’s like, “Wow, we are all trying to grow.”

Jason Lemkin:

Yeah, I remember when Diane Green went, I’m like, “I guess, cloud’s going to be pretty big. It must be worth her time to kind of get this Google Cloud thing really going.” But yeah, it was all bigger than we thought, I think. Just a couple things I want to make sure, so we have a few minutes for time. Also, go ahead.

Aaron Levie:

I want to underscore that point though, it’s all bigger than we thought. I think that anytime that we thought about cloud and this is always a tricky thing with analysts is like, well, you have to take some baseline to then imagine how big this thing is. I think the baseline we took was like, “Okay, well, how big is the software industry today? How many servers are sold today? Well, let’s say data centers move to the cloud at this rate or whatever.” That all makes sense. I don’t think what we imagined though is like flip it and you basically say imagine a world where everything that could become digital became digital, how big would the internet need to get and how many use cases would there be for the internet? Not “What do we have today?”, and then that moves to the cloud.

Aaron Levie:

But what could the world do with unlimited computing? You’re just now seeing that play out. I think that there is probably another couple orders of magnitude of growth in these markets, which is why I don’t get that energized by like, “Okay, is Azure in the lead? Is AWS in the lead? Is the Google in the lead?” I don’t think it actually matters to any of these players. They could all grow 10 times the current size, and they’re probably still be growth left.

Jason Lemkin:

Yeah, I mean, we didn’t realize that every process that could run in the cloud would run, right? That’s why I almost teased out in the first slide like Box and Zoom. Maybe there’s no magic combination with Box and Zoom, but there could be next year that could create a workflow that didn’t really make sense before as standalone apps. That’s what I’m looking for, these interesting combinations that before everything was in the cloud, we couldn’t even predict that these combinations would happen.

Aaron Levie:

Yeah, totally.

Jason Lemkin:

Right. We might have hit this one before. I put a lot of slides, but I want to make sure at least we hit this one in terms of unexpected change. This is a tweet from a little while ago, but it’s interesting because it’s across industries, right? So, when we had Rob Bernshteyn this morning, we looked at the spend index for Coupa, which if you haven’t seen in a while, it’s rather depressing when you see how deeply impacted industries are, right? When we look at the cloud index, we’re like, “Wow, that index was up 11% yesterday.”

Jason Lemkin:

You pop into a Coupa scene underline, and I mean, the impact of 33% unemployment, which is like a different galaxy than what we’re living in the cloud, isn’t it? It wasn’t even the point I meant to make, which we could chat about. We could talk about that. but let’s talk about this one first and maybe that one, if you want, because I’d love to get your thoughts. But what are you seeing across industries that’s maybe different than people see or would expect? You see any special insights here?

Aaron Levie:

I think mostly, it’s been intuitive but in a surprising way. So, it’s like not at the full level of counterintuitive, but it’s kind of fun and intuitive, which is the least digitized industries, we saw the fastest growth from a collaboration standpoint. You would sort of think that “Okay, the laggards are going to really take a long time to come into the cloud and get digitized.” Where we saw some of the fastest pops were from the laggards, because all of a sudden you had government agencies that quite literally couldn’t run their functions. They couldn’t go and process loans or they couldn’t go in and work with… We did a deal in Q1 with the US Department of Agriculture. They couldn’t work with their farmers because they didn’t have cloud technology. So, that was actually where we saw these immediate bursts of–

Jason Lemkin:

That’s interesting on the left that the some of the slowest moving organizations traditionally became the fastest.

Aaron Levie:

Exactly. So, you kind of had this massive reversal, which is why in tech, largely we’re not working that differently. I think this is consistent with this other… It’s deeply unfair on every dimension. I think it’s worth acknowledging the tech industry is dealing with a complete bizarre world environment right now, which is the companies are able to operate smoothly because we’ve been working this way for a decade and a half. That business models are holding up better than almost every other industry, because most of the time, the customer are already on credit card and already all the information. It’s easy to buy more and it’s easy to have recurring subscriptions. The services are obviously entirely digital, so you don’t have to usually go into a physical area to get them.

Aaron Levie:

So, it truly is unfair, but it does, unfortunately, again, kind of correlate to why we’re seeing this divide in business performance and market caps in the digital industry versus the non-digital industry. That is why in the tech industry, the way we work is not changing dramatically, because this is already again-

Jason Lemkin:

[crosstalk 00:35:08].

Aaron Levie:

… a part of how we operate.

Jason Lemkin:

We’re a cloud of privilege. That’s the strangest thing. It is so privileged. We were privileged before and we didn’t appreciate it. I don’t know that we appreciate it today, because our lives have been changing. But the privilege in the cloud, it’s unprecedented I think in our lifetimes, the privilege we have working in the cloud, having a business from the cloud in a country with 33% effective unemployment and everyone’s hiring, not everyone. Maybe there’s a few Eventbrites and TripActions, but there’s open reqs in the Box site, I’m sure, right? The privilege is crazy.

Jason Lemkin:

I do want to at least finish this tiny bit of thread on the state and local governments because it’s interesting, but is this going to solve itself? Can the cloud grow when the country doesn’t work, when Boeing’s losing a billion dollars a week or whatever it’s losing, when our airlines are shut down? I mean, how long can this split, this dichotomy exist?

Aaron Levie:

Well, that’s like 100 times above my paygrade as a question.

Jason Lemkin:

Well, you’re above my paygrade.

Aaron Levie:

[inaudible 00:36:16] be above everybody’s paygrade.

Jason Lemkin:

It might be, right?

Aaron Levie:

I watched some of these New York Economic Council talks, and they’ll have Stanley Druckenmiller. When he’s confused about how the economy is playing out, I’m like, “Oh, God. I don’t know who has this thing figured out.” I think the answer has to be no, this can’t continue. Unless you have just some economic recovery. I do think it’s incredibly important that the government find ways of making sure that the individual employees are protected. I have no real opinion about kind of the business stimulus side, but at least, people’s paychecks are covered. And then frankly, obviously, the bigger issue is our country needs to grow up and fucking deal with the health crisis and wear masks and do social distancing and not do stupid stuff and start to actually take this thing seriously.

Aaron Levie:

It’s been this really unfortunate thing to have this dimension of people being like, “Well, the health safety measures are what’s going to impact our economy. So, we’re not going to do those things,” and then we kind of open up. And then our economy is impacted even worse because of the health issue blowing up on us. So, it’s like we have to address the health issue first, and then hopefully, the economy will follow. But yeah, it seems unsustainable, certainly. But again, I think the Shopify numbers are a great example, which are 100% growth, massive scale, which has just continued evidence that some of these markets, they’re way bigger than we realized. These companies are way smaller than the market size than we realized. That’s sort of what’s playing out in some of these categories.

Jason Lemkin:

Yeah. Essentially Rob said this morning from Coupa, they’re coming up on $500 million ARR. He said, “That’s already larger than the market was, first of all, category.” So, he’s like, “It just changes,” right? That’s a very tactical, but it’s the exact same point.

Aaron Levie:

Totally.

Jason Lemkin:

Yeah. So, two quick bits of advice, and then I want to open up to questions more tactical. So, state local governments, I imagine some of this is like the Jedi contract. It takes 10 years to wrangle out a decision in some cases, right? When I was briefly at Adobe, this was like their secret sauce. They could drive alignment with these governments. Just for folks struggling with this, what did you see? What did you learn? How do they drive internal alignment? How do these old companies make a decision in 30 days? Yes, you need to, of course, but it doesn’t mean you will.

Aaron Levie:

Yeah. I think the advice here is probably what any entrepreneur should always be kind of thinking about is, “Are you solving a problem that is urgent and painful for the customer?” If they don’t solve this problem and if they don’t get it immediately solved. In some customers, we are fortunate enough to line up to an urgent pain point. In other customers, we aren’t. A lot of the growth that we saw in Q1 from our enterprise segment was situations where we happen to line up with an urgent need. When you do that, companies have a funny way of aligning behind those needs very quickly.

Aaron Levie:

It’s our job to make sure that we’re as customer centric as possible. We’re having all the conversations with line of business, with security, with the CIO, with legal. The sales process has looked exactly the same. It’s just been in some cases accelerated and other cases completely on pause. The good news about this environment from a selling standpoint is you kind of figure out which mode you’re in really early in sales.

Jason Lemkin:

The discovery process has been shortened.

Aaron Levie:

The buyer doesn’t have enough time to waste your time. So, you really quickly can qualify in or out, whether this is a real opportunity and whether you’re going to be able to be helpful for that customer.

Jason Lemkin:

Yeah, last one I want to hit and then make sure we can just do one or two questions, because this will be interesting to founders and others about of products changing. So, I don’t exactly know what you mean by this, but it’s super interesting. In the middle of March, you pivoted the Box roadmap to just two features that would transform work while being remote. That sort of makes sense, but what do you mean by totally changing your roadmap? Are you building software differently than you have for the last 15 years? Is there some insights here that other folks can take away?

Aaron Levie:

I would say that not our software development process, but just the product roadmap. So what we did was we looked at what we wanted to build in coming into the year versus in March, April, once we knew that people were going to be doing remote work. We basically said, “Anything that doesn’t relate to sort of remote and distributed collaboration and data security, we’re not going to focus on.”

Jason Lemkin:

You dropped it, you dropped it.

Aaron Levie:

We’re going to put all of our chips on things that only help people while they’re in this work from home, collaborate anywhere type of dynamic. That was the bet that we made, it was highly focusing of the product strategy. What we saw was lo and behold, we actually were shipping software faster in some cases than we even anticipated, because we just had this hyper focused approach of “What do we have to build? What are customers going to need right now? How do we make sure we’re going and solving those problems?”

Jason Lemkin:

Yeah, that’s interesting. Yeah, that focus really does accelerate the roadmap, doesn’t it? Because everyone’s got a pet feature. It’s like a pet IT project, pet CIO project, right?

Aaron Levie:

This is definitely-

Jason Lemkin:

They’re all right. They’re all correct that you want to build all these things.

Aaron Levie:

They’re all correct but for different timescales. What became very clarifying was the stuff that was needed right now based on the urgency of our customers’ problems. So, that helped us prioritize very, very efficiently.

Jason Lemkin:

Yup. All right, just a couple and then I’ll let you go because you’re so kind to give us the time. One sort of fun one, but I think you’ll find it interesting. When Loren was on just before from Shopify, do you know how much revenue his enterprise at Shopify? Do you know what much your Shopify Plus?

Aaron Levie:

Just to break this out, what’s the distinction of the revenue groupings?

Jason Lemkin:

Well, Shopify Plus is the enterprise group. The line might be like $10 million of revenue, I forget what, but it’s clearly enterprise. It’s selling to big brands, big names.

Aaron Levie:

Knowing Shopify, I’m going to say 20%.

Jason Lemkin:

It’s gone from 20 to 29. Anyhow, we had a little fun, because if you go that fast, you’re going to be like Slack. You’re going to be all enterprise before you know it, right? Even if the product doesn’t feel like… I mean, Slack is enterprise today, right? Now, Loren’s point, he said, “Don’t do SLAs, don’t do RFPs. Build a safe and secure product. Resist doing SOC 2, push all of it off, because most of it doesn’t matter.” He says, “Don’t even do contracts.” I actually believe SLAs and contracts are stupid. Because if the customer wants to leave, let them go, right? An SLA doesn’t bring the site back up, does it? It does nothing.

Aaron Levie:

[inaudible 00:43:27].

Jason Lemkin:

It does nothing, but what do you think? Do we need RFPs and SLAs and all these things in 2020? Do you still do them? Does your team still do all this?

Aaron Levie:

We do all those. When I was [inaudible 00:43:41], if we can kill RFPs, I would donate anything to anybody.

Jason Lemkin:

That was his point is don’t fill them out. But I said, “I’m going to ask Aaron because I think we’re not past those yet.”

Aaron Levie:

Unfortunately, there’s too many things you just lumped in. So, RFPs, we should kill as an industry and we should end [inaudible 00:44:01]. There’s no way to compare two software products from two different vendors using any kind of classic RFP that I’ve ever seen. The biggest thing with RFPs is they don’t ever track trajectory of the vendor, they always track point in time feature requirements. It’s hilarious the amount of times when a customer will buy a solution, because on that day of that month of that year, one feature existed in one product and didn’t from another. But then literally, three months later, the other product just blew past that other company, because you don’t get a sense of the momentum of the vendor from a typical RFP process, so I hate RFPs.

Aaron Levie:

SLA is very different. I am very pro-SLAs. So, I’m going to take the other side of this one, Jason. We would not be comfortable relying on an infrastructure provider behind the scenes in our setup that wasn’t going to sign up for very significant SLAs. We can debate the kind of recourse of an SLA, should you just leave, should you sue the vendor, whatever different debate there, but I do think having a shared agreement of “What is my service level going to be of your product?” is actually really important. I think there’s a big difference between 99.8, 99.9 and 99.9999999. [crosstalk 00:45:29]-

Jason Lemkin:

It could be epic.

Aaron Levie:

… SLA really matters no matter what so.

Jason Lemkin:

I’m with you. It was a good challenge, your thought. I also think it’s something you should just give, right?

Aaron Levie:

Yeah.

Jason Lemkin:

You should stand behind it, right? It’s not even that complicated. You put it on your website, you put it in the contract. It’s not nearly as complicated as infrastructure changes and a whole bunch of other things that are part of it. So, last question before we run out of time, I want to get some [inaudible 00:45:58]. There’s a whole bunch of things in this question about Box infrastructure and bare metal and hybrid and cloud but let me simplify them. You’ve gone from all of your own infrastructure.

Jason Lemkin:

Maybe because in the old days, we had no choice to be running on multiple clouds to thinking through this piece to move into security and performance changing. Just give us your insights on all these pieces, on all the clouds, on hybrid clouds, on multiple clouds, on your own infrastructure. What have you learned? Maybe the more interesting question is, what have you learned circa 2020 to 2022?

Aaron Levie:

Yeah, I think certainly, we started the company in 2005. So, we had to build our own infrastructure. You fast forward 15 years and you just do the math. You realize that a Google or an Amazon or somebody else is going to put 100 times the capital or 1,000 times the capital into their infrastructure strategy, than you’re going to be able to do. And then you really have a decision point, which is am I going to be able to shave out those margins, the 5% or 10% extra margin, that you might be giving up that that vendor is going to be extracting from just your infrastructure expense? It’s not your company margins, just on your infrastructure margin. Would you want to trade that for possibly the uptime benefits, the scalability, the additional features that that cloud provider has?

Aaron Levie:

I think more and more the argument is going in favor of leveraging the cloud more and more, certainly, for us it is and lets us focus more of our attention and energy on software. We want to be a software company. We want to have the behind the scenes parts of what’s running Box be obviously incredibly robust and performant and secure. But whether that’s something in our data center, something in another major very large company’s data centers, as long as we’re securing, protecting that data, I think we’ve got a level of flexibility in how we do that.

Jason Lemkin:

And then just last follow-up question and then I will let you up, because you’re right in the center what’s your practical learning on multi-clouds, the practical learning on running on Amazon and Azure? I mean, it’s a lot of work.

Aaron Levie:

It’s a lot of work.

Jason Lemkin:

It’s so much work. They’re not the same. It’s so much work, right?

Aaron Levie:

It’s funny, they really wanted to differentiate from each other and not make it easy to be portable between systems.

Jason Lemkin:

Yeah. Does this get us anything? Is it just the world we’re in, is just a crazy tax of the cloud? Does it make any sense? What have you learned from this multi cloud world? But a lot of CIOs want it. They want to pitch the vendors again. They want security, they want trust. But it’s like an SLA, I get it, but I don’t get all of it.

Aaron Levie:

Yeah, I think there should be a limit. You should never do it because of some academic reason. We want competition between the vendors or whatever. I mean, that’s probably not academic, but that’s a very expensive price to pay for managing a multicloud environment. I think the only main argument is that there’s different features of different cloud providers and that there are sometimes a reason why you want to be able to leverage a unique feature of one major service. Then you have to decide, “Is that unique feature worth a split architecture?”, then your software team is going to have to go in and figure out a way to abstract.

Aaron Levie:

Sometimes it’s worth it, and sometimes it’s not. But I would generally say simplicity in architecture is always a good North Star to have, because it’s just going to free up your time and energy in the company. And I think we need more simplicity in architecture in most environments that we see.

Jason Lemkin:

All right, that’s helpful. All right, everybody, we’re out of time. Everyone in the enterprise, check out Box Shield. I’m terrified of security. I’m terrified of Evil Corp. I am terrified of content being everywhere. I’ve just lived in the content world, right? The signatures actually, we had a single unified place for your contracts. We actually had all these benefits early because of the nature of the service. I’ve seen all the issues, right? So, check out Box Shield, it’s a great choice. Sign up, sign the contract this quarter. Aaron, thank you for your time. It’s always wonderful that you’re here with us.

Aaron Levie:

Thank you. Appreciate it.

Jason Lemkin:

All right, talk to you soon.

Aaron Levie:

[inaudible 00:50:27]

Published on August 22, 2020

Source: https://www.saastr.com/saastr-podcasts-for-the-week-with-justin-bedecarre-jen-nguyen-jason-lemkin-and-aaron-levie/

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