Who are listening to Bloomberg Business Week. Jason Kelly and Paul Sweeney here wrapping up a Friday show, and who better to do it with then our pal Aaron Levy, he's the co founder as CEO of Box, joining us on the phone from California. Aaron, how are you? How are things out there? Because it's a it's been quite a week. Yeah, it's um. Uh, you know, certainly in a lot of context, has been quite a week. And UM, you know, we're we're we're hanging in there. Um. Fortunately
we're able to avoid the impact of the fires. But um, you know, no questionable lot going on in California and across the country right now. Yeah, and so tell us, you know, you give an update to your investors this week. Reported earnings was the big thing that you think people should be taking away there. Yeah, we're we're very happy about the performance in UM in Q two. We were able to beat on UM, you know, every metric that we guide to and consensus on revenue growth, UM, operating margin,
ep S, and buildings. So we're we're halfy about the performance in Q two. UM we're really driving study growth, deliver above UM your year revenue growth and um an over fiftcent operating margin um in the business, and that's up from about zero percent a year ago, so uh, you know, very steep increase in operating margins for the company, which has been just a path we've been on to try and better balance growth and profitability. And then we were able to raise guidance for the second half around
both revenue and our profitability targets. So, Aaron, your company, other tech timies, particularly those UH with cloud exposure, really putting up some good numbers in the last quarter and even obviously before that. Some concern, as I talked to some tech investors, is that maybe you and some other tech companies are pulling some of that revenue or that revenues being pulled from next year as companies really trying to ramp up their UH their tech stack to cope
with the changing works style. Is that a concern that next year could be weaker than and maybe expect as some of the revenues pulled forward. You know, I'm sure there are examples of that um UH in in in some particular software categories. It's hard to make a general statement across the cloud category, um UH and industry broadly UM.
And the reason I think you're seeing so much growth right now is that these markets UM, we're often actually far larger than what most investors and the market generally realized. You know, if you take a product like Zoom or Slack or WebEx or these types of technologies, you know, we're used to thinking about enterprise software as maybe being able to be used by tens of millions of knowledge
workers that come into large corporations. And yet today when you have billions of people on the Internet, whether that's for healthcare reasons or home schooling reasons or being able to work from anywhere, UM, you have billions and billions of potential users of these technologies, and you have a set of products and services, whether it's again companies like Zoom or Salesforce or Microsoft that have been around for a long time and they think they are really in
a strong position to go and serve these customers. So I think you have much larger markets than what people realize. And so even though there has been an accelerant to growth in some cases in UM in some of these product lines, you're also going to continue to see them go and and uh and reach the full potential of their TAM over the coming years. So I think there's still a lot of growth left in a lot of
these product categories. And so Aaron, when you think about different verticals that you guys serve, you know, the pandemic has has laid there a lot of weaknesses through no fault of of people's own with this in terms of your customers. Where are you seeing strength? Where are you seeing weakness? I think, you know, we're we're seeing a lot of strength in sectors like financial services, healthcare, life sciences, professional services, the technology and digital sectors, um, even retailers
that are experiencing growth right now or consumer brands. Uh. You know, any company right now that is able to either work remotely or serve their customers via you know, social distance measures are probably companies right now that are investing in digital technologies that are investing in the cloud because they have to keep their operations running, they have to keep their operations resilient, and they're looking for cloud
platforms to be able to help them do that. If you look at salesforces the last quarter this week, which was obviously, you know, one of the strongest quarters they've ever put up as a company, but now at a five billion dollar quarter scale was was almost unprecedented. Um, you're seeing still the market demands for these types of technologies where companies can go and better serve their customers, better empower their employees, and run their operations in a
more resilient way. UM. Companies that can go and deliver on those types of experiences for their clients are going to do well in this environment. That leads a lot of organizations to to really going and investing in proud technology. Aaron Levy, CEO of Box, you are staying with us, we'll talk you more about what is going on in the world of technology again, Jason. We're seeing in the
marketplace technology continuing to drive this market. Some of the performance of these companies with cloud exposures has been extraordinary. It's not just the pandemic, it's pre pandemic as well. And companies going public tech companies actually going public a lot of them, uh, in manyway. So we're gonna talk to Aaron Levy about that and much more. You know, Jason, as we've just heard about just today, there's been some real winners and losers here from an economic perspective, from
a business perspective, from this pandemic. We had Andy Alexander to CEO of Red ruf on uh, just kind of highling the challenges facing the hotel motel business. Aaron Levy, CEO of Box, He rejoins us here in the technology industry, many of the verticals within tech have really been beneficiaries of kind of how business is changing, life is changing. Uh, it's really fascinating. Aaron love to see to get your thoughts all about how you think the funding environment is
for the technology industry these days. Again, one could argue that many of the verticals uh in technology are in fact clear winners and beneficiaries economically, business process wise from this this endemic. Is it a good time to raise
private capital here venture capital in the tech space? I think it's um, it's definitely a uh, you know, probably a tale of two cities in terms of there's there's absolutely some companies where they're very primed because of the market environment, where they have products or services that will help companies run more effectively, or consumer services that are
in high demand. Of course, it's it's hard to make a general statement across all of technology because you do have, you know, some startups that are in the travel space and other categories that might be more directly impacted because of COVID, but in general, uh, it's it's certainly if you are aligned with where the trends are going from a digital acceleration standpoint. Um, it definitely, you know, could be a great time to be a startup right now.
So Aaron, I do wanna maybe take it in a slightly different direction and talk to you about being a CEO right now because I think and we talked a little bit about this. I think the last time you were with us, and you were very thoughtful about it, you know, sort of leading a team right now, choosing your spots in terms of when to be outspoken, when
to take a stand. I feel like more pressure in some ways is on leaders and specifically CEOs and specifically CEOs of publicly traded companies to take a stand on things, whether they're social justice issues or others. How do you assess that and how do you deal with it as a leader? Yeah? I think, you know, there's certainly no question with the rise of social media, the fact that that you know, companies have to take on greater responsibility
with their broader communities. Also the fact that at this point kind of politics and um and corporate success are almost intertwined. When you think about world trade, if you think about immigration reform, if you think about the health of our of our communities. Uh, these are no longer just domains of the government or just domains of of you know, purely the political sphere. These are issues that affect our our employees and our communities and our ability
to succeed as businesses. So I do think this is an environment, especially given the multitude of challenges, whether it's the healthcare crisis, racial injustice um uh and other issues going on that that that CEO is especially but that companies do have to step up and do have to make sure that the views of their employees are well represented and that there you know, that that that we're able to you know, push forward hopefully a vision for the future that that's going to be able to make
our businesses and communities to be able to thrive. So it's a it's an environment where um you do have to step up as a as a ceor leader because of the fact that the these issues are just too important to be silent about and there are these issues they could have some real business ramifications for lots of difference industries. Does it rise to the board level as well?
Does a board come to you and say, hey, Andy, how are you in the company dealing with some of these issues, whether it's you know, how you're dealing with your workforce diversity, so on and so forth trade issues? How exposed are we to some of these countries where there may be some trade disputes that go up to the board level. Uh? Absolutely, I think you know, the board at least, you know, for for our company, is uh, you know, always having ongoing conversations around things like diversity
and inclusion. Um, you know, how do we make sure that we're building up a company that has a resilient talent pool. Uh, you know, getting given the you know, dynamics from an immigration standpoint. Um, you know, I think the I think the board and investors look to c e o s to make sure to have a clear perspective and a clear stance on where their company stands
on these issues. I've I've had numerous public market investors reach out saying, you know, thank you for taking a stand on immigration, and thank you taking it first, taking a stand on some of these social issues because you know, ultimately businesses can't succeed, we can't thrive, and we can't
build UM you know, uh, you know, strong organizations. If if the community around us is in UM is in you know, state of arrests, and and if we have you know, challenges in the broader you know, social and healthcare landscape. So I do think this is an environment where businesses and and CEOs in particular, do you have to step up to make sure that their their views
are all well known in the market. And so Aaron, as you think about some of the big issues facing Silicon Valley specifically, as as I'm sure as you may be aware, Bloomberg and others have done a lot of reporting around the diversity or lack thereof in in Silicon Valley companies. Is there a greater sense of urgency around Silicon Valley to fund more black entrepreneurs to understand a little bit more about a not a perceive but in actual lack of diversity when it comes both to funding
and hiring in tech companies. Yes, and so um you know this is this is something that there has been a growing spotlight put on this topic over the past certainly you know, a few years, and it's been even more pronounced this year over the past few months given the broader conversations around racial injustice in the in the country, and tech is not immune, you know, from that that issue.
If you look at the reverse and the underrepresented groups getting ventured capital, um it's happening, you know, far uh, you know, far less than than proportionately should be happening. If you think about the the number of people starting businesses out there, so um so you know, whether it's new entrepreneurs getting funded, whether it's you know, hiring at
leadership levels of of our organizations. I think the tech industry has a huge role to play in improving the diversity of of of our companies and of the industry. And um uh. And I know that, you know, certainly a lot of companies are paying a lot more attention to this. Venture capitalists are starting to pay more attention to this. But there's so much more I think collectively as an ecosystem that we need to do. All right, well, we're gonna leave it there. We really appreciate your time.
Good to catch up with you, come back and see us soon. Aaron Levy is the co founder as CEO of Box, joining us on the phone from Silicon Valley and uh, Paul Sweeney man, Uh, it's a different time to be running a company. It feels like it really is. Um. It's you know, always challenging, particularly the technology space where the technology is always is always changing. You need to be uh, you know, creatively paranoid. I guess to make
sure that you're on the edge there. But now you've got these other issues, whether it's global trade and kind of you know coming to the forefront over the last nine to twelve months. Uh two, Now, um, you know, kind of really thinking looking inward at your organization and saying, doesn't really reflect the markets that I served as reflect the communities which I work. Um, is it really to
the point where we're maximizing our potential here? That's another thing that as CEO and a board That's why I raised the board questions. You know, you want to make sure And I heard that from David Rubinsteinel many of his conversations. He'll ask a question, does this get board attention? And I think that's really kind of goes to the issue for a lot of companies. No, it's a great point, and uh, yeah, it'll be interesting to see. I feel like more CEOs more boards. They don't want to be
on the wrong side of history. I mean it's that big, it feels that weighty in many ways. Well it was a weighty week, but we made it. Um really appreciate you hind that more than a double shift here. Hopefully back. Yeah, she'll come back. She'll come back next week. Alex Steele is going to be in that seat, looking forward to having her in the meantime. For Paul Sweeney, the rest of the Bloomberg Business Week team, I'm Jason Kelly. Have a great weekend. Everyone, stay safe.