Box turned fast growth into a unicorn-sized IPO, and the even more elusive post-IPO success. Things didn’t always look so good for the company...
Box turned fast growth into a unicorn-sized IPO, and the even more elusive post-IPO success. Things didn’t always look so good for the company, dogged by press & industry voices that questioned Aaron’s credentials & Box’s prospects. We dove into why it’s so easy to have the outside view of a company be at odds with what’s happening on the inside, how to know if you’re on the right path, and how to shape your culture to succeed when things get rough.
This interview has been edited & condensed for clarity. A unedited video of our interview is available on YouTube. To be alerted of new tapes sign up for the newsletter.
“Those things are frustrating”
Tim Anglade, Executive-in-Residence at Scale Venture Partners: There was a phase where I, and many people, would go: “Dropbox is leading, Box is the ugly cousin, Aaron’s too young”, all that stuff was happening. Now obviously I feel dumb having even thought that, because you’ve built something very big. I wonder if there was a huge difference between the inside narrative & the outside narrative at Box during those times. (Which I’ve also seen go the other way around, where the public feels really good about you, but on the inside you feel really really bad about what’s happening.)
Aaron Levie, Founder & CEO at Box: It’s funny that you say that. I think you always live in fear inside your own company. And the best companies perform, I think, at their peak when they’re always paranoid of survival and where the competition is going to come from, what the future is gonna look like. So even when we’ve gotten the outside narrative right, we’ve been, scared internally, and when we’ve gotten it wrong we’ve been scared internally because you’re always facing this pressure of “how do we make sure we don’t get disrupted”, “how do we make sure we’re moving faster”, “how do we make sure that we’re building the absolute best product and the most innovative solution”.
Tim: Did that simply drive you? Did you internalize this kind of pressure from the outside, and go “we’re just gonna prove them wrong”. “We’re gonna show them”.
"We’re not doing that to prove anybody wrong, we’re doing it because we want to build a meaningful company."
Aaron: I think that you certainly can get annoyed by misunderstandings, externally. Particularly if it’s a misunderstanding that you believe you’re in control of. Does the market understand your strategy? Do customers understand what really differentiates you? Does the stock market understand what is different about your product from your competition? Those things are frustrating because you know you have a good story that you’d like to be able to tell the market you know something that is much more accurate, much more substantive. But rarely have we ever felt like we were trying to prove somebody wrong. I think what makes us so passionate about what we do and what gets us so energized is about delivering innovation and being able to build a very very different kind of product than anyone else in this market and we’re not doing that to prove anybody wrong, we’re doing it because we want to build a meaningful company that can be longstanding and can deliver amazing value to our customers. So, even at the moments where we were most misunderstood, I think our passion was still focused on, let’s go build an amazing company and at the right time people will understand why that’s so different. Why GE, Procter & Gamble, Eli Lilly and Goldman Sachs have chosen our platform over all the other ones that are out there.
Look! Sexy Consumer Thing!
Tim: That’s something actually that you get a lot of credit even to this day at Scale — people always mention how you just focused on creating value, and didn’t get distracted by the press going, “look! sexy consumer thing!” I feel that’s something that entrepreneurs really struggle with. How did you know you were building the right thing?
"You’re going up against so many different forces that want to prevent you from succeeding… You have to have just an unbelievable amount of conviction about what you’re building."
Aaron: I think this is where conviction and passion is so important to building any kind of business and more importantly for a start up because you’re going up against so many different forces that want to prevent you from succeeding. Big incumbents, investors, and their interest in investing in you. Having to go out and recruit people all of these forces and this tension that often are limiting your ability to go succeed or to be able to build up your company, and so you have to have just an unbelievable amount of conviction about what you’re building.
"A lot of it is, in many ways, probably just delusional. That you just so deeply believe something that you know to be true."
So, a lot of it is, in many ways, probably just delusional. That you just so deeply believe something that you know to be true. And in our case, the thing that we knew to be true was the future was gonna be about the cloud. The world was going to become more and more connected over time, people and organizations were going to become far more collaborative. Businesses were gonna become way more data driven and to do all of that, you’re going to need modern platforms that enterprises ran off of. And the time when we were just scaling up so, 2006, 2007, 2008, 2009 and so on you know, investors, and the market, and sometimes customers believed well, eventually Microsoft will get there eventually Oracle will get there, eventually EMC will get there. But for us, we believe that we had the right solution we had the right product, we could be there first with the absolute best technology in the market. And we just deeply believe that and when you believe in something so much, and you can rally enough great people around that vision, you can actually ultimately make that become true and so, so, you know, even when people said well, isn’t consumer sexier or isn’t there a better market to go after? To us, we were completely unfazed by that because we just deeply believed in what we were building and nobody could convince us that it was the wrong strategy or the wrong pattern.
"That’s the only lesson there is — if you’re right, then having lots and lots of conviction will eventually let you land on the right side of what happens next."
Now we could’ve been wrong. We’re fortunate that we look back on the many decisions and we’re lucky that we made the right decisions so we could’ve been having this conversation with a very different set of lessons. But fortunately, we had such strong conviction about what we were building, and we happened to be right. I think that’s the only lesson honestly there is — if you’re right, then having lots and lots of conviction eventually you should be able to land on the right side of what happens.
Metrics Guide you through Storms
Tim: Do the metrics kinda help you, after a while?
Aaron: Yeah, 100%. There’s only so much time that you can have an unverified conviction, right? This is why I love the internet. You get very quick feedback loops, very quick verification that your strategy’s correct and that you’re on the right path in the internet even in enterprise software, because of how quickly customers can adopt your technology and your products, I don’t know, what it would be like if you had conviction about building a nuclear power plant and you didn’t get to find out for twenty years. For us, we built software, we get into the market, and we get to hear nearly in realtime, i.e three or six months after making some of these bets, whether it’s working out. And then you’ve gotta adapt very quickly you have to course correct because not all of our individual bets are correct. We’re wrong all the time on the incremental things, but I think you gotta have feedback loops, right? You gotta be able to hear from customers that you’re going down the right path
"There’s only so much time that you can have an unverified conviction."
I would say, there’s only been a couple things in our strategy where we had to wait two of three years to find out if they worked. Most things are sort of three or six month increments. For the things where we had to wait two or three years, those are tough because the organization always wants to sort of pull resources from that thing that you’re betting on, but you have to see it through, because that’s the only way, again if you’re right it’s that conviction that will have led you to actually getting the benefits of being right.
Tim: What are some things that maybe that didn’t work out?
Aaron: we’re fortunate that mostly we’ve never gotten a fundamental bet wrong. But always you’re iterating and you’re optimizing the incremental bets. So things like you know, we went into a market once in terms of a geography, that just wasn’t ready for our technology. The customer adoption of cloud solutions was just too early, and so we had to pull back from that market and that meant that we spent a couple years in a market building energy and hiring people that didn’t end up working out. There’s a bunch of those kinds of things. Fortunately on the grand scheme of the business on the strategy, those tend to be fairly incremental and not sort of fundamental.
Keeping Everyone Energized
Tim: You gotta hope that some of most of your bets work out and the ones that don’t work you’re able to kinda hedge and move past them.
Aaron: In general, and this isn’t a principle that we run off of, but in general, if we’re not having those kinds of failures, we’re not testing the limits of our strategy. So I want to have those kind of incremental failures because that’s the only way that you know if you’ve reached the sort of limit of what to do. The moment that 100% of what you’re betting on is working you can guarantee that you’re not doing enough because there’s always some delta between where you’re at and what’s possible, and until you start failing at things, you don’t know that you’ve reached that limit.
Tim: So how do you deal with the outside narrative being like really, really good but then internally, things not looking so good, and that conviction slipping away?
Aaron: I’m very fortunate where I don’t think I’ve ever had sort of you know the burn out period. I know entrepreneurs that have had it and it’s tough. It means that you keep running into the same problem over and over over again you can’t find a solution, you can’t find a way you get re-excited about something you’re doing, you just can’t solve it. That’s happened again on incremental things but I’m very fortunate that it just hasn’t happened overall, but there are periods, like you’ll go a quarter where you just didn’t like how you executed as a company. And you have to go look at that execution and do a postmortem and say what was wrong were we not tied out on a certain strategy did we not have the right people in certain kinda roles, did we not resource our strategies as effectively as we should’ve. And then, hopefully, again if you’re a sort of regularly iterating kind of company you’ll just come back, the next quarter with a set of solutions to that and that’s sort of always happening in our organization, so there’s absolutely, in any given organization or any given department some quarters off, some quarters on, and we’re always just trying to constantly improve things.
Tim: Right and that’s kind of such a great underlying thing right. This idea that we’re gonna make a bunch of bets. We’re gonna hope most of them work out. Some of them are not gonna work out, some of them are gonna work great. And you gotta have that fluidity internally and with your team as a whole otherwise you’re never gonna make it you’re never gonna be able to conserve your energy And get there. thanks a lot
Aaron: Hey, thank you very much!