These sees Bloomberg Business Week with Carol Messer and Tim Stanovic on Bloomberg Radio. All right, so it's been a while. In fact, the last time we talked with our next guest about his company, the world was in the thick of the pandemic. It's a very different environment today, yet one with as you know, as you heard from our Stephanie Flanders earlier, with a lot of concerns out there.
But the company we're talking about is Box. It's a four point two billion dollar market cap company gained nearly last year with rally games last year. Yep, it was an outperformer. Well maybe it's a bug on the charge. I didn't know there were any of those. The voice you here is Aaron Levy. He's co founder and CEO at the online storage and document management software company Box. He's in our Interactive Broker studio. Welcome, Welcome, How are
you good? Good? You got good to be here actually in person, Um, so good to see you, and yeah, thanks for having me. How's the world changed since when we talked? In the world has has certainly changed, you know, quite a bit. It's actually interesting reflecting on being in New York versus the Bay Area. I do think that, you know, it's a little bit of a tale of two cities in terms of actually, you know, kind of how much is back in both environments. We're back here
more maybe by about in order of magnitude. Yeah, so it's it's definitely different environments. But we are seeing this across our customer base of companies coming back, returning to offices sort of you know, establishing new work patterns, um and it's it's definitely going to be different than pre pandemic, but it's certainly, um equally going to be more different than during the peak of the pandemic as well. What makes you say that, just just walking down the street,
seeing the subways, what's going on. I mean, every every office building I've been in this week has been you know, fairly packed and uh and maybe a little bit more muted than pre pandemic. But if you compare that to you know, sort of the Bay Area in California, it's
it's definitely still pretty different. Okay. What's interesting about this though, is that we heard this week that Bob iger and this is not a Silicon Valley company by any means, but he wants people to come back to Disney four days a week, and Caroline, I've talked about this quite a bit that you know, as the economy weekends and the workers not in as much control, we could start to see more and more people coming back. What are you seeing with with your data at box in terms
of where people are accessing the product? Are they increasingly accessing it at home permanently? Do you think? Yeah? I think absolutely down from the pandemic peak in terms of work from home. I do think companies are sort of all trying to figure out what are their rituals in
terms of how people work and where they work from? Um, you know Bob iger um at at Disney, you know Tim Cook at Apple, what we just saw from Howard Schultz at at at Starbucks, you know, pushing pushing down, you know some of these sort of three or four date policies. I think, Um, you know, it is sort of just now the tip of the iceberg of what might you know come next across fortunate hundred companies and
and uh and more generally. But I do think, no matter what, some version of hybrid work, some version of more distributed work, some version of more flexibility is here to stay. UM and what that all is going to point to is the need for digital technologies and cloud to be able to actually mediate how people work from
any device or any location that they're working from. So we kind of are sort of fine with any outcome, whether everything's fully remote or partially back to the office, or fully back to the It doesn't matter for you
what the mixes does it in terms of your business growth. Now, in all cases, you're going to be creating more digital content than ever before, and there's an explosion of video content, there's an explosion of written content as a result of companies getting more distributed, more collaborative, working in new ways. So in our case, these all point to long term tail ones um because of just the massive digitization of
our business processes and the way that we work. So so we're sort of independent of whatever outcome happens um but but ultimately what we're really focused on is helping customers collaborate in new ways. Eron, you talk big, broad and we do too, but remind our audience exactly like get down to the nitty gritty what you do for
a company. Yeah. So Box works with over a hundred thousand companies, uh, and we have a platform that helps them securely manage their most important data, so their contracts, their financial documents, their presentations, their media content. We help you store it, share its secure it collaborate on that data from any advice anywhere. So it's a cloud platform that the powers how you work with your information. Bulks
still small, mid, large, all size organizations. The majority of the revenue comes from large enterprises, so um so we tend to sort of be waded toward, you know, the fortunate five hundred type organizations, but we support businesses of all sizes with with over a hundred thousand customers. Based on what you're seeing, sorry, I'm not about I'll like to and based on what you're seeing recession, no recession
globally US. What are you seeing? You know? I think you know, these guys have to order, they have to work with you. They've got to say, hey, this is what we're thinking. I mean, I'm the last person that should decide the definition of a recession, but I'm asking no trend. Yeah, yeah, I think there's there's clearly a muting of um, you know, some degree of a muted kind of aspect of just sheer kind of corporate growth that does tie into I T spend um and um
and and can push down I I T budgets. Uh. Fortunately, we're in a position where we can help customers save money and drive up productivity and improve their security. So because we do see when people like I was just looking at lending Tree, they cut workers in the stock like initially bopped, bopped, you know, went higher. So I
do understand this idea of technology helping a company. Yeah, so technology will help companies get more efficient, but we obviously want there to be a very robust, you know environment form for companies to grow. And I think there is a muting a little bit of the consumer economy, certainly in some of the consumer tech companies. You know,
advertising dollars are are lessening a little bit. But our job is just to help companies no matter where they are, and that continuum to get more efficient, be more productive, stay more secure. Okay, something weird is happening because you know, most software stocks, most software stocks just got crushed. Okay last year, you guys are up nineteen Yeah, you're in fact close to record highs right now. How this is a high interest rate environment? What's really rough environment? I
think connected with the cloud. Yeah, it is it is a rough environment, particularly if you are a high growth company UM, where your stock was largely bolstered by your growth rate and UM and that with with kind of higher interest rates. UM. You know, the valuation of those companies have come down naturally. UM. You know, it's an interesting you know, UM almost bitter suite dynamics. So we never really had an inflated valuation, so that meant there was sort of less um less room to come down.
At the same time, we've been working pretty um, you know, significantly on improving our profit margin in the past three years. So how do you do that? Just uh, just hyper focus on efficiency across the business UM. Actually not not really about cutting but but you can kind of grow into um your your head count in a lot of cases, largely by just remaining extremely focused on the areas that
are working in the business. So doubling down in sort of the products that are are generating the greatest returns as opposed to diluting your bets. UM, doubling down in the regions that are most productive and so our case by region, I mean, you know where the most sort of you know, the largest i T spending markets and and not deluding our focus from a regional standpoint, UM getting really really focused on gross margin and the efficiency
of our platform. So starting about three years ago, we kind of had a bunch of work streams across the business to get more efficient. And you know, fast forward to today, that's actually in vogue, but it wasn't at the time, and so we never got that inflate evaluation. But as valuations came down, I think across the sector, ours Biken Harrison was was holding up, you know, pretty nicely.
You know, I want to ask you about something because this week are we was that with some research they anticipate the three year will or will be kind of two has for US software stocks, and they talked about kind of overall what they see, but they did cut Box to underperform. They cut the price target to from they're concerned about the sustainability of your turnaround, particularly of Japan growth slows. Your stock was down about six percent
on that call. Can you address it? And they did also talk a lot about the Japanese market, which has been good for you. Yeah, so we we've seen tremendous growth in Japan. UM we kind of got you know, sort of the right place, right time, and at the beginning of a kind of a SASS or cloud supercycle about you know, nearly ten years ago. So we had all the right partners, We had a great team on the ground, and we rode this wave of large companies adopting SSASS and so that that's actually been a very
strong tail into our business. Um. Almost by definition, as that business get larger, the growth rate will come down. So so that you know, was in this sort of note, Um, it's actually something that we already anticipate and it's sort of built in to our general model. Um. But but overall, you know, we we we obviously care about the health of the global business. Even if the Japan growth rate comes down. Our job is to make sure that we
manage that at a global level. Before we let you go, we got forty seconds your joage on Twitter two point four million followers. Obviously you've been following with Elon. What are your thoughts on on what Elon Musk has done to the platform? Um, So, I'm I'm always a fan of kind of moving fast, innovating quickly, and so some of the some of the changes have been you know, exciting to see some changes. Maybe I don't agree with
as much. In general, I think that the platform should say very very focused on getting to a global population of consumers. I think maybe less focus on the paid subscription product, more focused on more features at the free level. Still useful to you, Yeah, absolutely, I mean it's just as useful as it was indispensable. Okay, there, it is cool. Your your timeline is not messed up like my timeline
is just destroyed. Have you swiped? I gotta swipe. Okay, you can show me everyone telling to change my timeline. You gotta change your time. Abou it will all give you some mints. All good luck this year, come back and talk. The paths are going. Really appreciate it. Aaron Levy. He is co founder, chief executive officer of Box. Joining us in our interactive broker's studio, Carol Master, Tipstadovick. This is Bloomberg