Aaron Levie, CEO and “Chief Magician” at Box, tells CXOTalk about digital transformation in cloud computing and the impact of technology on the enterprise. What do customers want? And how does the public company maintain its pace of innovation from its startup days?

Levie is chief executive officer, co-founder, and chairman at Box, which he launched in 2005 with CFO and co-founder Dylan Smith as a file-sharing and cloud content management service. He is the visionary behind the Box product and platform strategy, incorporating the best of secure content collaboration with an intuitive user experience suited to the way people work today.

Transcript

Michael Krigsman: Welcome to Episode #278 of CxOTalk. I am Michael Krigsman. I'm an industry analyst and the host of CxOTalk. I'm so excited because digital transformation is one of those buzzword terms that we hear a lot about. But, today we're speaking with somebody who is working with the senior execs from the largest organizations in the world on these business and digital transformation topics.

Before we begin, I want to say a heartfelt thanks to Livestream because they provide our video streaming infrastructure. If you go to Livestream.com/CxOTalk, they'll give you a discount.

One other heartfelt request: Please tell a friend right now to watch and also like us on YouTube and Facebook. There's a tweet chat that's going to be taking place right now using the hashtag #CxOTalk. Join us there, and you can ask questions of our guest, Aaron Levie. He is the Chief Magician and the CEO of Box.

Aaron Levie, how are you? This is your second time here. Thanks for joining us.

Aaron Levie: Hey, thanks for letting me come back. I'm glad to be lucky number 278, so this is feeling good.

Michael Krigsman: Hey, 278 is the magic number.

Aaron Levie: I've always felt that way. [Laughter]

Michael Krigsman: [Laughter] Aaron, tell us about Box.

Aaron Levie: Yeah, I guess just a little bit of brief background and history of the company and then I'll take you into today. We started Box about 13 years ago. The idea was really simple. We wanted to make it very easy to store, share, and collaborate on information from anywhere, any device, any location, and be able to work with anyone.

We first started focusing on really kind of consumers and small businesses, professional end users. What happened was end users started bringing the technology into the workplace, so bringing it into enterprises. Companies like Proctor & Gamble and others were initial adopters. We realized that our fate was much more aligned to powering how companies worked and share and manage information as opposed to solving all of the consumer side. Those problems, we decided to let Google, Apple, Facebook, Microsoft, and Dropbox kind of take on the consumer market.

About 11 years ago now, we pivoted to the enterprise. Our entire focus became, how do we build a modern content management platform that could replace and retire the legacy infrastructure, the network file shares, the storage technology, the document management systems, the DRM tools? What if we could take all of that technology that companies were spending millions or tens of millions of dollars and, globally, tens of billions of billions of dollars on? How do we take all that technology, compress it into one system, and then customers have a single platform where they can store, manage, share, and govern their information from?

That's the path that we've been on now for a little over 11 years since we pivoted to the enterprise. We're now in about over 67% of the Fortune 500, so companies like General Electric, Proctor & Gamble, or Eli Lilly use Box to be able to do everything from, how do they share, work, and collaborate within their organization to how do they end up powering business processes and deliver better experiences to their customers when those business processes--

Michael Krigsman: Right.

Aaron Levie: --deal with information, content, and documents? That's what we've been up to.

Michael Krigsman: Apparently, this has worked out pretty well. [Laughter]

Aaron Levie: [Laughter] It probably always looks a little bit easier from the outside, but I'd say once you're inside, you get a sense that it's constant chaos and we're always dealing with lots of fun ups and downs. It's been certainly a lot of fun. We've been able to achieve more than our wildest expectations in terms of the impact that we've had.

What I think is most exciting and hopefully we'll be able to talk about it is when we look at what we've accomplished thus far. We see ourselves as being very, very

Michael Krigsman: Welcome to Episode #278 of CxOTalk. I am Michael Krigsman. I'm an industry analyst and the host of CxOTalk. I'm so excited because digital transformation is one of those buzzword terms that we hear a lot about. But, today we're speaking with somebody who is working with the senior execs from the largest organizations in the world on these business and digital transformation topics.

Before we begin, I want to say a heartfelt thanks to Livestream because they provide our video streaming infrastructure. If you go to Livestream.com/CxOTalk, they'll give you a discount.

One other heartfelt request: Please tell a friend right now to watch and also like us on YouTube and Facebook. There's a tweet chat that's going to be taking place right now using the hashtag #CxOTalk. Join us there, and you can ask questions of our guest, Aaron Levie. He is the Chief Magician and the CEO of Box.

Aaron Levie, how are you? This is your second time here. Thanks for joining us.

Aaron Levie: Hey, thanks for letting me come back. I'm glad to be lucky number 278, so this is feeling good.

Michael Krigsman: Hey, 278 is the magic number.

Aaron Levie: I've always felt that way. [Laughter]

Michael Krigsman: [Laughter] Aaron, tell us about Box.

Aaron Levie: Yeah, I guess just a little bit of brief background and history of the company and then I'll take you into today. We started Box about 13 years ago. The idea was really simple. We wanted to make it very easy to store, share, and collaborate on information from anywhere, any device, any location, and be able to work with anyone.

We first started focusing on really kind of consumers and small businesses, professional end users. What happened was end users started bringing the technology into the workplace, so bringing it into enterprises. Companies like Proctor & Gamble and others were initial adopters. We realized that our fate was much more aligned to powering how companies worked and share and manage information as opposed to solving all of the consumer side. Those problems, we decided to let Google, Apple, Facebook, Microsoft, and Dropbox kind of take on the consumer market.

About 11 years ago now, we pivoted to the enterprise. Our entire focus became, how do we build a modern content management platform that could replace and retire the legacy infrastructure, the network file shares, the storage technology, the document management systems, the DRM tools? What if we could take all of that technology that companies were spending millions or tens of millions of dollars and, globally, tens of billions of billions of dollars on? How do we take all that technology, compress it into one system, and then customers have a single platform where they can store, manage, share, and govern their information from?

That's the path that we've been on now for a little over 11 years since we pivoted to the enterprise. We're now in about over 67% of the Fortune 500, so companies like General Electric, Proctor & Gamble, or Eli Lilly use Box to be able to do everything from, how do they share, work, and collaborate within their organization to how do they end up powering business processes and deliver better experiences to their customers when those business processes--

Michael Krigsman: Right.

Aaron Levie: --deal with information, content, and documents? That's what we've been up to.

Michael Krigsman: Apparently, this has worked out pretty well. [Laughter]

Aaron Levie: [Laughter] It probably always looks a little bit easier from the outside, but I'd say once you're inside, you get a sense that it's constant chaos and we're always dealing with lots of fun ups and downs. It's been certainly a lot of fun. We've been able to achieve more than our wildest expectations in terms of the impact that we've had.

What I think is most exciting and hopefully we'll be able to talk about it is when we look at what we've accomplished thus far. We see ourselves as being very, very early in the potential of what we can do with the cloud, what we can do with how we power the future of what work looks like. We're certainly happy about what we've done, but we know that, in many respects, we're just getting started.

Michael Krigsman: One of the things that I find most interesting about Box is you essentially replaced established, on-premise systems and processes with this new type of software. When you think about digital transformation, you think about the future of work and, as you said, where this is all going, how do you place it in context? What's the trajectory from your perspective?

Aaron Levie: Yeah. I think the way that we think about, and every couple of years we sort of step back and we say, "Okay. What is happening in the world, and how do we make sure that we're aligning our strategy and our technology to the broader landscape, the broader set of changes?" That was the very way that we started the company in the first place.

When we started the company in 2005, we looked at, okay, we want to work from multiple devices. We want to be able to share with people all around us. Storage technology is getting cheaper and browsers are getting way faster and better, so we could actually use the Web as the conduit by which people could access and share their information. Those were the big megatrends that we looked at in 2005.

When we look at 2018, the megatrends have multiplied pretty significantly in terms of all of the things impacting businesses. Companies want to be able to work in a much more real-time way. They want to be able to work with much flatter hierarchies, so people can share up and down the hierarchy of the organization much more rapidly. Organizations are working with a much larger number of partners, globally, so they want to be able to instantly collaborate no matter where somebody is in the entire world that they're working with.

We know that manual processes are going to give way to more AI driven processes. How do we use automation, whether that's machine learning or artificial intelligence, to begin to advance the business processes that we're doing as opposed to a much more manual approach? We know that product experiences are going to become much more digitized and personalized and much more automated for customers.

When you look at all those big megatrends and then you add in cybersecurity threats, you add in compliance issues, globally, we see this as sort of shaping what the future of work looks like. We imagine a workplace and an organization where people have access to all of the information they need to do their job. They're able to share and collaborate with anyone they need to be able to connect to, to be able to present their ideas, or to be able to accomplish their tasks.

We believe that teams are going to be much more agile so that you can make decisions much more quickly. We know that the sort of blurring of the inside of an organization and the outside of an organization is happening, so you can share just as easily with an external partner as you can an internal colleague. We want to build a technology platform that supports that future of work.

What we also are very cognizant of is that it's not just going to be Box that is a part of that future of work. We know that companies are going to use Slack. They're going to use Facebook Workplace. They're going to use Okta. They're going to use Office 365. They're going to use Google Docs.

Our job is to find a way to be the place where content can go when you want to be able to govern it, secure it, manage it, and collaborate around it. But, we know that you're going use content in lots of different places--

Michael Krigsman: Right.

Aaron Levie: --where you're doing your work. That's sort of what we see as the future of work, and our job is to just go out there and evangelize it and make sure that, unlike the '90s or the 2000s, the world doesn't end up with just one homogeneous technology stack that largely is coming from maybe one or two vendors and you're not getting the kind of innovation that we know is possible when you have a plethora of amazing solutions.

Michael Krigsman: I want to remind everybody, you are watching CxOTalk. We are speaking with Aaron Levie, who is the CEO of Box. Use the hashtag on Twitter, #CxOTalk, and you can ask questions right now.

Aaron, when you talk about the future of work, it's very ecosystem driven.

Aaron Levie: Yeah. Yep.

Michael Krigsman: Maybe elaborate on that, please.

Aaron Levie: Yeah. [Laughter] I think any CIO or IT leader watching will certainly recognize this, but every time you get a pitch from a technology company that's a platform, in particular, you always get that pitch where the company that's talking to you is sort of at the center. There are all these spokes of all the other companies that sort of integrate with that technology.

Michael Krigsman: Yeah, I'm going to slit my wrists over that kind of pitch.

Aaron Levie: [Laughter]

Michael Krigsman: Yes, exactly. Okay. Got it. [Laughter]

Aaron Levie: Yes. That is what everybody has pitched all day long is, "We are at the center of the universe and all data flows into us." I don't want to be too hypocritical because we have that pitch too. So, I'm making fun of us and everybody else in the industry.

I think what's interesting is, and it's mostly just because I don't think we've figured out how to show this graphically. What's interesting is I don't think anybody is in the center of the future of the IT stack. What's happening is we are all sort of nodes that connect to one another, and so you have to think about it more as a constellation almost where we want Box to be the place where content goes. Slack is a logical place where channel-based communication goes. Facebook Workplace is a place where, if you want more of a social stream or be able to publish or broadcast information, that kind of data would go. Office 365 is obviously where a lot of office productivity, email, et cetera would go.

We are all hubs and spokes to one another. I think the reality of the future of the IT stack is that it's not really a stack in the traditional sort of layered sense. It's much more of a Web or interactions interoperability. Our job is to go and help customers and work with partners to be able to deliver that as a reality.

I think what's interesting is that the industry, the cloud and SaaS industry has done a really poor job of helping customers think through this architecture. There has not been the reference architecture designed for, what does the best of breed IT stack look like? Where does Workday fit in? Where does Service Now fit in? Where does Salesforce fit in? How do we make all these technologies work together?

As you can tell, I'm a little bit too passionate, probably, about IT stacks. What we get really excited about is thinking through, what does the modern IT environment look like? We have thousands and thousands of customers that have that representative set of technologies. We internally at Box use Workday, use Salesforce, Office 365, Google Suite, [and] Okta, so believe we are the best exemplar of what that modern SaaS ecosystem can really deliver. Our job is to hopefully kind of drive that reference architecture and make sure that our technology works with the rest of the industry in the process.

Michael Krigsman: What does this imply then for the CIO and for the skills, the talents, and capabilities that IT needs?

Aaron Levie: Yeah. This has been a ten-year journey so, fortunately, a lot of this has already been showing up. We spend a lot of time. I don't know if you've seen this. I'd be curious. We're seeing a new role emerge in a lot of organizations. It's titled differently depending on the company, but largely the person who used to be the head of end user computing or head of infrastructure, we're starting to see evolve to sort of the head of workplace technology, the head of workforce technology, the head of employee experience technology.

It's this role that's certainly responsible for, but finally thinking through the deep implications of, what does a much more collaborative environment look like? What does a much more end user productivity-oriented environment look like?

In many cases, they have a counterpart in HR that they're working with around employee experience, and that's blowing our mind because it's incredibly exciting. Just as we saw that the CMO and the CIO were pairing together three, five, or ten years ago and that rise to the martech stack, we're now seeing a very similar trend happening within cultures where, if you have a CHRO, head of HR, or head of people that is driving cultural change that is, okay, we want to be able to be more agile, we want smaller teams, we want to be able to have up and down communication and communicate that's very flat fundamentally, that only works when you have a technology stack that can deliver on that.

The funniest thing that I tend to see is when you have a CEO of a big corporation or a head of HR of a big corporation and they're pontificating about the new way that they're going to be working, the new way they're going to be innovating, the new agility initiative that they're going to be driving. But, then you go and ask them, what is actually in your IT stack to deliver that? It's the same technologies that they've been using for 5, 10, or 20 years.

We just know, instantly, that there's going to be a massive disconnect between the culture change that they're trying to drive from the technology that's going to enable that culture change. You fundamentally cannot have an open, transparent, fastmoving, and agile culture if your technology stack is in on-premises environments, doesn't support real-time work, [and] doesn't let you instantly collaborate with people around. That's what we're seeing a lot of.

Back to your question. I'm good at going on long tangents. I apologize.

Michael Krigsman: [Laughter]

Aaron Levie: But, I think what the CIO, what the IT leader needs to be thinking about is, just as we saw that movement in martech or sales technology, which is all about business performance and driving growth, I think there's going to be this employee experience tech stack that is this modern set of tools that drive the kinds of cultures that I think most organizations are trying to deliver, much more open, much more transparent, much more fast-moving, much more agile cultures. Being able to deliver on that and knowing that it's about creating a pairing between how we're going to work, the technology we're going to use to work, how those technologies come together, and being able to deliver that kind of end user experience that traditionally has been an oversight in most IT organizations.

Michael Krigsman: Right. I think that there's nobody who would disagree with this goal of creating a newer, open, better user experience, better collaboration, but I think inside large organizations, the challenge they have. You just put your finger on it. There's a disconnect between the intention and the reality.

Aaron Levie: Yup.

Michael Krigsman: The question then becomes--you talk with all these different customers--how can they bridge that gap? How can they move and march towards that goal that you're describing?

Aaron Levie: Yeah, well, the way that we see the disconnect, and again I'm one small data point relative to the amount that you'd really want to do to build up the full analysis on this.  What we tend to see is there will often be a mismatch in the speed at which IT is coming to this conclusion or the organization is coming to this conclusion. Sometimes you'll have the technology team. You'll have an early adopter, innovator in the IT team say, "Hey. We're going to go to Slack, Box, Quip, these modern technologies," but the CEO or the head of HR hasn't come along for that journey. And so, now this is a technology-driven initiative as opposed to a business-driven initiative or organizational driven initiative.

Conversely, I'll meet with plenty of CEOs of very large companies that will say, "This is our culture. This is how we're going to be changing. This is how we're going digital. This is the future of our business." But, unfortunately, I know very well the underlying technology that their CIO is delivering, and I know how much of a disconnect there's going to be between the message that that CEO might be saying and the underlying technology that they're going to have to get there.

Unfortunately, it really just comes down to people and process at some point. If you don't have the CEO, HR, technology, ideally the entire executive team in the room saying, "What are we trying to drive culturally? What do we think the business outcomes will be when we drive that cultural change? And, what is the technology that we need to get there?" you don't have the level of alignment or cohesion that you need to really deliver on this. Then it becomes a bunch of platitudes and maybe the spirit is there, but you're not going to actually get the change that's necessary.

Michael Krigsman: Okay. Then let's talk about this cultural dimension because I think that is -- go ahead. Go ahead.

Aaron Levie: The only thing I wanted to say, because I may have presented it as too bleak, [is that] we have seen, I would generally say more often than not, there is a significant amount of pent-up demand within the organization, though, for this change. We used to think it was demographically driven, so, "Oh, the millennials want to work in this new way." But, I think it's in all of us that we want to have more autonomy to make decisions. We want to be able to share and collaborate with people around us. These are pretty innate ways of wanting to work. It's just that millennials are the first, I think, maybe class of demographic that know that this is actually how it should be done and that it's possible to do it this way because they grew up with technology that did not hold them back from being able to share or communicate.

I think, if you sort of went through work not having instant, innate access to these kinds of tools and technologies, then it's a little bit of a leap to say, "Well, how do we actually enable that way of working?" Millennials, literally, when they went to high school, when they went to college, this is how they worked. They enter the corporate world and it's like, "Holy shit! I can't share. I can't communicate. I can't work with the people around me. I know this is wrong."

A lot of the pressure has felt like it's coming from millennials, but this is true of every demographic in the workforce. To me, any time that I hear of an organization that says, "Oh, we have these tenured employees. They've been around here for 20, 30, 40 years, and they just work differently." They work differently because the technology they've had to work has not allowed them to work differently.

I think everybody innately wants to get there. This is why we're fortunate. We have a product that will tend to get adopted pretty rapidly by all demographics within the organization. It's just because there's so much pent-up demand to be able to work in brand new ways.

Michael Krigsman: We have a question from Twitter, but I want to jump in before I ask that.

Aaron Levie: Okay.

Michael Krigsman: You said that the culture, in a sense, follows the technology. But, at the same time, the technology is an outgrowth in many companies of the culture.

Aaron Levie: Yeah.

Michael Krigsman: And so you end up, again, with this kind of non-virtuous cycle. How can organizations interrupt that?

Aaron Levie: Well, I guess maybe I'm taking it a little bit differently, but I love your take. I see it as actually virtuous. I believe that they're inextricably linked almost like swim lanes. You can't have one without the other. The more that you have the two working in tandem, that's really where you start to see the flow of the organization be able to be really at its best. It's when those two things are really humming.

I guess I see them as very complementary and highly virtuous because, when you have a culture that is ready for openness, ready for collaboration, ready for agility, and then you have technology that enables that, then the culture leans in even more on that dimension. Then there's new innovations and new technology because you're bringing that feedback back into the technology. And so, we're improving the technology at the same time. I think these cycles are working really, really well in tandem right now. I guess I see them as highly complementary.

Michael Krigsman: Okay. Fair enough. We have a couple of questions from Twitter--

Aaron Levie: Okay.

Michael Krigsman: --on these points related to the culture. Zachary Jeans asks -- and he's a regular listener, so thank you, Zachary Jeans -- "You want to make the change. You have that intention. Open data in organizational structures sound great."

Aaron Levie: Yeah.

Michael Krigsman: But, what about the politics, the internal politics that interfere with these good intentions?

Aaron Levie: Yeah. This is where it gets really fun is if you have a culture that's built on isolating information, being able to amass power in the organization because of information and being able to keep that to yourself where transparency might reveal mismatches or disparities in either execution, performance, or other issues, then you will have cultural resistance to these technologies. I think, like anything, organizations will change in very different ways. It's important to get, fundamentally, leadership onboard to be able to drive this. You won't get there if you don't, again, have the leadership team that has bought into these ideals.

What I do know is that maybe it's 5 years from now, maybe it's 10 years from now, maybe it's 20 years from now. What I know for a fact is that it will be really hard to have a successful organization or culture without these fundamental principles. It's more of a matter of survival, to some extent, and partly because the best people will go to the organizations where these are the cultures. It will just be impossible to survive because the people that are political, the people that isolate information, the people that can't handle transparency will just be the less successful people and they won't be able to attract the best talent, which will just inevitably, eventually mean even if they're riding on the coattails of their prior culture and their prior era, they won't be able to build successful companies.

I think the proof will be in just the numbers of these, in the business results of these companies. Hopefully, you can get your organization there by showing the evidence of how much better performing these types of cultures are. There's a great book, and I think the principles in this book are awesome. Obviously, companies will implement them in different ways.

There's a great book called Powerful, by the former head of HR from Netflix, Patty McCord. What's really cool about this book, and I highly recommend every single CIO and every single IT leader reads this. It's a book only about culture and HR, but it reads as the other half to a technology book. It reads as the sort of adjacent set of information to, what would your organization look like if you ran a technology stack that was of this sort of modern, open, transparent, and fast-moving ilk of tools? What kind of culture would that set of technologies be able to result in? It's faster decision making. It's more autonomy. It's information that should be available to everybody.

She talks a lot about making sure that everybody in the company has a high degree of business acumen about the business model. All of these kinds of things only come when information is disseminated because, in organizations, information is power, but it should not be exclusive power. It should be power for everybody to be able to make better decisions, to be able to use better judgment.

I think so many companies have grown up on this idea that we are going to isolate and silo data and silo people. Partly it was just because we had no alternative. You could not have had an open and transparent company in the mainframe era, so it's no wonder that that's how cultures eventually got built out. Today, that's not the case. That's why I think we'll see this evolve a bit.

Michael Krigsman: Of course, Patty McCord also wrote the famous Netflix Culture Deck--

Aaron Levie: Yep.

Michael Krigsman: --that so many companies have copied and emulated. Now, Aaron, what about innovation and the relation of all this to innovation? I'm also interested about your relationship to the culture inside Box.

Aaron Levie: Yeah.

Michael Krigsman: How you innovate and so forth. Mm-hmm.

Aaron Levie: Yeah, I think the way that we think about this is making sure that we are building up a culture that is fast moving. We have a few fundamental values that we live by. One is 10X-ing it. We want to make sure that people are constantly thinking about all new ways to deliver on product experiences, on business processes, [and] deep in the stack technology innovations.

The ways that you derive that and you are able to deliver that is, a couple times of year, for instance, we have hack-a-thons where everybody stays up for 24 hours. People will come up with ideas that wouldn't have normally been on the product roadmap. There are prizes and hundreds of people participate. That's often, actually, what contributes to our long-term product roadmap. The ideas that people will come up with and build prototypes for in 24 hours are the things that then we make as production ready innovations maybe a year later.

We had a technology that we announced last year at Box Works called Box Skills. This technology was basically taking machine learning and AI technology from Google, Microsoft, IBM, and others, and allowing that to be incorporated into Box for our customers. That came out of a hack that took 24 hours to build maybe about a year and a half ago. It became a one-year plus project with five or ten people that is now one of the core technologies of the future of our entire company.

What you want to be able to do is create environments where people can come up with those ideas, but it only works if you actually go and implement them. It only works if people see that there is a payoff in the form of actual delivery of what they innovated on. That's one of the many mechanisms that we have. We try and have a culture, again, where people are sharing ideas with one another and we're communicating the best ideas possible.

We're always fighting, again, I think, the traditions of companies, which is, you come into the organization; you're 22 years old; you're the most junior person in the entire company. But, that doesn't necessarily mean you don't have the best idea that is going to give us the next billion-dollar business model.

You're always fighting this tendency, which is that new person coming in and saying, "Well, how do I actually get my idea to a decision-maker? How do I actually filter that up or feed it to the right people?" The best thing I can try and do is just make sure to hammer that home at every turn that if people act like an owner, if people really are communicating with one another, were candid with one another with our ideas, that's going to be the best way that we can create a culture where sustainably we're going to out-innovate the competition.

Michael Krigsman: Now, I'm just hitting you rapid fire with questions without a break here.

Aaron Levie: Sure. No problem.

Michael Krigsman: [Laughter] Let's talk or go back to this IT stack, and let's try to connect the dots now between the new IT stack, this culture shift, set of goals, cultural goals that you were just describing, the role of the CIO, and where CIOs fit into this world.

Aaron Levie: Okay. Yeah. Should I just talk based on that?

Michael Krigsman: Yeah, yeah, yeah. Whatever, however you want.

Aaron Levie: Okay. Well, I think we need to think about how do we take this set of technologies, again whether it's Slack, Facebook Workplace, or Box, and how do you marry that with the cultural change that that organization is trying to drive? Often it will come from a few discrete or distinct business initiatives.

Sometimes that might be that a company is trying. Let's say it's a retail operation and that company is trying to communicate with all of their retail environments. They want to be able to make sure everybody is aligned with maybe its new promotions, new policies, or new cultural efforts. Something like Facebook Workplace then all of a sudden becomes maybe the tool to go use to make sure that that company can disseminate that information.

We often get brought in a lot of times when a company is facing the need to do much more internal and external collaboration. Maybe your partner ecosystem is changing. Maybe you have new partner relationships that you're trying to drive. What you want to do is make sure that there is way less latency between sharing internally and externally. Box will get brought in to be able to help with that.

I think the CIO has to be highly tuned into, how is the culture needing to change; what are the business initiatives that relate to that cultural change? I think that often what gets missed when you go and look at Silicon Valley, for instance, and you say, "Oh, we want to be like Google," it's important to think about which parts of Google are you trying to be like. Well, it's not the Ping-Pong tables that make Google Google. It's not the volleyball. It's not the high-end chefs that make Google Google. Those are amenities because they have this amazing business model.

The things that at least once made Google Google were:

  • 20% time, letting people go out and spend extra time building innovations that would not have normally come from the standard product roadmap.
  • A high degree of autonomy where, if you had a great idea, you could go and present it to somebody.
  • A massive degree of information sharing. Google is notorious for being quite public internally with how the business is doing, how they can do better. They have weekly Q&A sessions with the founders.

Those are the things that made Google Google. The volleyball is sort of a superficial façade on top of all that. I think we sometimes miss that. The only reason that you would want to wear sneakers or jeans to work or have open environments is merely because, when you create a more casual environment, it lets people's guard down, so they can be more creative, and they can share ideas with one another better. It's not that the jeans are the thing producing the innovation.

We have to think about the system that all of these components tie into. You'll see the CEO who thinks that they're getting really cool because they're now being more informal, but it's not that interesting because if the system itself is not using that informality to drive more creativity, then you didn't really accomplish anything from learning that lesson.

I think what we have to do is really think about, what is it about our business are we trying to change? Why are we trying to change it? Then, look to what are the underlying root sort of system-level things that drive that change that we're trying to accomplish? Maybe it's getting closer to our customer. Maybe it's being able to hire a new type of talent in the organization. Maybe we think that we are getting really slow at breakthrough innovation, so we want people to be more creative.

Maybe some organizations don't have to change at all in this dimension because that's just not a challenge. They just want to get better logistics. I think it's really important to understand, where is innovation, where does this culture of innovation relate to your business model, and how do you design a work environment? How do you design a way of working that will facilitate whatever that business outcome is that you're trying to drive?

Michael Krigsman: Interestingly enough, you just gave the most succinct and clearest definition of exposition of digital transformation that I've heard in a long time.

Aaron Levie: Cool.

Michael Krigsman: But, you never used the term "digital transformation." Is there a reason for that?

Aaron Levie: No. I felt like it was a long enough explanation without that. [Laughter]

Michael Krigsman: [Laughter]

Aaron Levie: I didn't want to add more words. You know it's funny. Now you're going to create another tangent. It's funny that you bring digital transformation into this because I think everything that I did just discuss is obviously what I think people are trying to do when they talk about digital transformation. I think the challenge is digital transformation often sort of leads people to going straight to, "Okay, I need this modern mobile app. I need Uber or Airbnb for my business." That is often the necessary result of digital transformation, but the way of getting there is not that you just build an app, or you create an Airbnb for your business. It's actually thinking through, what is it about digital companies that allow digital innovation to occur so effectively?

It tends to be the case that a digital company and, in this case, I'm just going to think of the Airbnb of the world or the Spotify of the world, a digital company is run, usually. This is obviously stereotyping to some degree. It's usually run in a more flat way with more knowledge sharing, with faster moving, smaller units that are able to work in their own specific domain, and that is usually the thing that enables a digital company to be successful because oftentimes it comes from, in many senses, the way that we build software, which is small teams building projects.

That kind of ripples through the culture where it's almost hard to separate the GitHub mentality of software development, which is everything is out there right there, I can see every single change that ever happened, from the kind of culture that a software organization would expect, which is, I want to see everything. I want to have access to all of the information, so I can make the best decision, or I can go look through the history of how we got to that decision.

These cultures are kind of inseparable, the software culture, the digital development culture from how the rest of the company have to operate, the speed at which we have to operate. That is, I think, why you can't accomplish digital transformation without tying into, how is the workplace going to function; how is the business model going to change; how are our underlying business processes going to relate to that transformation? That's we spend a lot of time thinking through those components.

Michael Krigsman: We only have about ten minutes left, and we have about two hours' worth of conversation that I'd like to have to continue. We'll have to do another show just on digging deeper into digital transformation.

Aaron Levie: We'll do 352, the show number.

Michael Krigsman: I love it.

Aaron Levie: Okay.

Michael Krigsman: [Laughter] But, we have to talk about AI.

Aaron Levie: Ah! Of course.

Michael Krigsman: Just as a transition point, how should CIOs think about investment in new technology versus existing technology?

Aaron Levie: As it relates to AI?

Michael Krigsman: Well, in general, but specifically I'm thinking about AI because it's so new.

Aaron Levie: Yeah. Yeah, I mean I think it's really interesting because I would say, three years ago, we didn't really have to think through the data question as much around your architecture. I think that's what's sort of fundamental to AI is now you really have to understand, what data do you think is going to be really important to driving your business in the future, because that data will probably be improved by machine learning or, depending on the type of data, some form of artificial intelligence. If you have an architecture design that doesn't let you apply machine learning to that data or you're not using vendors that are very, very focused on making sure that you can apply machine learning or AI to that data, then what you're doing is you're making decisions today that will be severe technology debt five years from now or ten years from now.

Really understanding the architecture of, how can you work with that information, how do you work with that underlying data, and making sure it's set up in such a way that eventually AI will be able to be applied to it. That'll be different for different companies. If you're an industrial company, then you're probably wanting to think about, how is IoT data going to be able to be used against machine learning, so I can improve my customers' maybe health checking of their infrastructure? That is going to have a particular set of decisions that you're going to want to make about your architecture.

If you're in the retail business, then you want to be really thoughtful about, okay, where is all this commerce data going? Where is data about my customers going? You might want to make sure that it's not going into a place that is going to become a black hole for you to be able to work against.

Being able to think through where, in my business, machine learning or AI is going to have some of the most impact, and make sure that you have an IT architecture that doesn't preclude you from being able to apply AI or machine learning to whatever form of data or whatever form of business process is going to be most relevant to this kind of automation. That's the first thing is making sure that you're designing a future-proof architecture. I don't hear this a lot, but maybe we'll kind of put it into the design case more. I don't hear the word "future-proof" enough.

I think that a lot of the ways that we design, for instance, RFPs, the way that we do IT decisions is very, very rearview mirror oriented. It is, what has this technology delivered thus far, and that is sort of what the RFP usually delivers. I think, instead, we need an RFP design and a mindset that is much more about, what will this technology deliver in the future and not in the next 6 months or 12 months, not the near-term roadmap that you can see? Fundamentally, what will this technology be able to do in five years or ten years?

For that, you're not looking at the code or the features that have currently been developed. You're looking for the principles of the company that you're working with. You're looking at where they sit in the value chain of the ecosystem. Are they going to be a vendor that is a neutral platform, or are they going to build out all of the technology themselves? How do they value openness versus closed systems? You want to understand the philosophy of the organizations that you're working with just as much as you want to understand the current technology that they've written.

I don't hear this enough from IT organizations, and I think it's a big miss because I see a lot of IT organizations that will make short-term decisions that almost immediately become debt that they're now baking into their IT architecture because they've gone with a vendor that maybe today could meet today's RFP, but where the trajectory of that innovation is going to naturally asymptote because, fundamentally, either the values of that organization or the architecture of that technology is built on has an obvious asymptote.

One example I'll just give you to kind of make this as real as possible: we, four or five years ago, would see a lot of customers say, "You know I really want to be able to share and collaborate on files, but I have to leverage my existing storage technology because I've already made an investment there.  And so, I'm only going to implement software that works with my existing storage technology."

What we would tell customers is, "If you do that, you have to recognize that, basically, the software that you're implementing is frozen at today's innovation." This is a period of time right now in particular where there's constant change in the cloud. There's security change. There's compliance change. There's privacy change. There's machine learning change. You might be thinking you're getting a good value because you're going to leverage your existing storage technology but, in fact, you're basically freezing the amount of innovation you're going to get at the moment you make this decision versus going with a platform where, every week, there's new innovation.

Michael Krigsman: Right.

Aaron Levie: Obviously, I'm referring to us, but this could be true of any kind of category of technology. Being able to really think through, where are the curves actually going, and where do we see the innovation actually heading?

I would say one final thing on this. Unfortunately, my analyst relations person is going to beat me up after this. I think, unfortunately, analysts need to also be thinking through how can we improve our frameworks to think about forward trajectory as much as being a snapshot? I don't think that we see this enough in the waves or the magic quadrants is helping customers understand that technology is not static. This idea of having a dot on a static sort of thing is actually sometimes, in a fast-moving environment, really, really unhelpful for making technology decisions.

I would argue that we need something more like either a quadrant for the principles, the values, or philosophies of an organization so you can see this organization is high on the openness and fast change dimension. This one is on the closed, static dimension. I can understand, if I'm making a decision based on some particular kind of architecture design, what company is going to deliver against those values more? That's one thing. Or, some kind of quadrant or wave where you can actually see the trajectory of that vendor.

Their momentum is very obvious, so I can see that this one company, actually, in the past two years, has moved that far. This other company has moved that far. So, I should be making a momentum-based decision as opposed to who has the most technology, because the vendor that went that far, maybe they have 100 times more features than the vendor that went that far. In our traditional way of thinking about it, the vendor that has the 100 times more features is the obvious winner, but I want to bet on momentum. I want to bet on the trajectory and an innovation curve that a company is on because I have to make future decisions right now. That is something that's not exactly in the mindset of a lot of IT organizations [and], unfortunately, research firms as well, and I'd like to change that if we can.

Michael Krigsman: Yeah. The other problem with analysts is they are very siloed, and so you get a very narrow kind of thinking that doesn't always or even often consider the interplay across these different dimensions you were just describing.

Aaron Levie: Yeah. By the way, just to be fully clear, I'm very sympathetic to the fact that making sense of our complex vendor universe is not a trivial task. We don't make it easy on anybody. I don't know that there's a better way other than if we could try and incorporate a little bit more sense of velocity. Velocity in sort of future-proofness of IT decisions, I think, would be really, really helpful to incorporate into how we think about technology. But, I'm not suggesting that I've got the magic bullet on this one.

Michael Krigsman: I know we're pretty much out of time.

Aaron Levie: Oh, no!

Michael Krigsman: Do you have a minute for one more question?

Aaron Levie: Yeah, sure.

Michael Krigsman: Coming back to AI, let's try to link up now AI and the future of work.

Aaron Levie: Yeah.

Michael Krigsman: There are so many ethical questions. Can you try to weave that story together as you see it?

Aaron Levie: Yeah. I'll at least share our premise first, and then we can add the ethics in. Our premise is that right now a tremendous amount of time and work -- and I'm going to just focus on knowledge work for now because, otherwise, it's too amorphous and broad. There's so much time that is spent in knowledge work today that is really very rote tasks that humans do very poorly. By poorly, I mean inefficiently where there's just a lot of stumbling of interactions, where we're having to look at something and make a very quick decision, but it's actually a factual decision that we're making. It really shouldn't require any sort of mental bandwidth, but we're having to use it up.

I don't know the ratios. Maybe it's one hour a day per person. Maybe it's four hours a day per person. This is calendaring. This is aligning people with the right information. This is searching for data. This is finding facts about the business.

We spend a significant amount of time at work on things where, if you didn't think about how you would accomplish it for one second, we know, for a fact, computers can do. A computer could instantly get me and a colleague into a room at the right time and the next available time. We know a computer can do that. A computer could tell me, if I asked it, what was our revenue in Q3 of last year. A computer can do that. We know that a computer can do that. It can connect to Salesforce. It could have voice recognition.

The question is, what if we got back all of this time from scheduling, messaging, asking for questions, and getting data? What if we could put that time into being able to do either more fulfilling work or just the work that we are better and more capable of doing than a computer? That's going to be creative tasks. That's going to be working with customers.

If I just look at one function in our business, just a random function, our customer success team as just one random team, the customer success team, their only job in life is to make the customer wildly successful with Box. But, if you looked at how many hours a day they are not in front of the customer, but instead, they're in systems pulling data, doing messaging, trying to run reports, all of that time is time that they're not with a customer. If we could automate all of that, it's not as if we've automated the customer success function away. We have automated the technology and data parts of that job so we can actually go and spend more time with customers.

I think, when you look at the vast majority of, at a minimum, knowledge work, very few jobs in a discrete job sense are going to go away. Many tasks will go away. Many tasks will change or disappear. But, the ultimate value of the job doesn't change. In fact, it will often, more often than not, lead to that job being able to be performed much better.

I think that we are nowhere close to the jobless future that I think is sometimes pontificated about, even when you come up with the glaring examples like, okay, there's the executive admin that now can be automated. What will that mean? Well, in fact, what it probably will mean is that a large portion of people that previously could never have had an executive admin now can have some kind of AI and human sort of facilitated assistant that will actually make the market for admins much larger. There are a lot of these things where I think the size of the market for many job functions will actually increase because they will now be more efficient to be able to deliver to a much larger portion of people.

I think we have to be very thoughtful about ethics. I am not a crazy libertarian around let's just wait to see what happens; innovation is king. We need to be highly thoughtful about it. But, let's not go super pessimistic to the point that we actually don't use these technologies to make all of our lives better, both on the employee side, as well as the consumer side. I think we are, in the largest sense, the highest level, not getting into specifics, in the largest sense, we are only at the beginning of the benefits and the improvements of machine learning or AI. We're nowhere close to some of the consequences of it.

That does not mean we don't need to be thoughtful, but there's nobody in the world that could argue that our customer success rep should be spending more time in tools and data than with the customer. And so, let's go and automate the things that are just the drudgery of our daily lives at work and make it, so we can actually do better work. That's what we're really excited about.

Michael Krigsman: Okay. Very sage advice. Well, this has been a very fast 45, 50 minutes. I'd like to thank Aaron Levie, who is the Chief Magician and CEO of Box.

Aaron Levie: [Laughter]

Michael Krigsman: Aaron, thank you so much for taking time.

Aaron Levie: Thank you. Thank you so much. Take care.

Michael Krigsman: Everybody, thank you for watching. Don't forget to like us on Facebook and subscribe on YouTube. We will be back next week with the Chief Digital Office of Uniqa Insurance. He's also a board member of that company. It's a huge insurance company in Europe. Thanks so much, everybody. Have a great day. Bye-bye.