The Continuous Productivity of Aaron Levie

MIT Technology Review

The CEO of Box is building an online file storage system designed to reshape industries.

By Ted Greenwald on November 29, 2013

WHY IT MATTERS

Cloud services are challenging entrenched makers of traditional desktop software and could make offices more productive.

 

 

Aaron Levie bounds onstage with the swagger of a standup comic. But he’s not performing at the Comedy Store. He’s in the Grand Ballroom at San Francisco’s Hilton Union Square kicking off BoxWorks, his company’s annual customer conference. Steve Jobs had his black turtleneck, Mark Zuckerberg has his gray hoodie; Levie’s uniform is a staid black suit, a capitulation to the buttoned-down enterprise software market he aims to conquer. But he spices it up with a cheeky pair of colorful sneakers. Today they’re bright red.

First order of business: the choice of one of his favorite bands, Blink 182, to close Box’s two-day event. “We wanted to engage a younger demographic, so the first choice was Miley Cyrus,” he says, calmly pacing the stage. “But in her contract, she stipulated that we needed to call the conference ­Box­Twerks.” A chuckle ripples through the crowd. “Don’t worry,” he adds. “The jokes will get better.”

They do. He roasts competitors like Microsoft (if he were considered to fill Redmond’s newly empty CEO slot, would he have to fix the company or just get a new version of Windows out the door?) and industry icons like Larry Ellison (if New Zealand beats the Oracle CEO’s boat in the America’s Cup race, Ellison could simply acquire the country and shut it down). He even pokes a little fun at himself, showing a goofy picture of what he calls Box’s entry in the next America’s Cup: Levie pedaling a paddleboat across San Francisco Bay.

It’s a lighthearted performance, but Levie, 28, takes his business seriously. He wants to provide the Internet with something fundamental: a storage system for business-related files that employees can access on any device. In his view, Box’s technology is the infrastructure for a new way of working that’s more spontaneous, fluid, collaborative, and productive.

That aspiration places Box between the enterprise software equivalents of Scylla and Charybdis. On one side is Microsoft, still a formidable force in the business software market. On the other is Dropbox, a phenomenally popular consumer-focused service that sneaks past corporate gatekeepers tucked inside employees’ smartphones. And yet Box may do far more than either rival to virtualize the office.

100 million terabytes

Data stored in the cloud in 2012

The forces propelling Box have been gathering for decades. When mainframe computers gave way to PCs, large companies stocked up on packaged software from companies like Microsoft and Oracle. 

To run it, they invested in racks of servers, fleets of desktop PCs, and armies of information technology managers. Then along came the Internet. Programs like Salesforce offered software as a service, eliminating packaged software, automating updates, and saving infrastructure and management overhead by running in the cloud. With the rise of mobile devices, employees brought their personal devices into the office, packed with their own apps that routed around ­management-sanctioned software—a phenomenon encapsulated by the phrase “the consumerization of IT.” The traditional corporate IT department began to appear obsolete.

Along the way, IT managers lost control over one of a company’s most valuable assets: documents. If employees use their own e-mail accounts to share secret contracts or store presentations about upcoming products in a ­consumer-grade file storage service, there’s a risk that the details could ricochet around the blogosphere in minutes.

Levie has designed Box to put the IT department back in control, to the delight of customers including Amazon, ­Glaxo­SmithKline, Procter & Gamble, Siemens, and Toyota—97 percent of the Fortune 500, as he’s fond of saying. Like a number of similar services, Box provides file storage in the cloud—remote data centers somewhere on the Internet. It’s simple enough for individuals to get up and running on their own at little or no cost. Users access the service from Box’s website, its mobile app, or software running on a PC. Move a file into Box, and the file becomes available on many devices; change the file, and the alterations propagate to the other devices as well. But beneath the surface, Box provides features like security and permissions control that let corporate IT departments manage the way information flows through organizations. To get these professional-grade features, companies pay Box between $5 and $35 monthly for every employee who uses the system.

Box has 20 million users. That’s few compared with Microsoft, which holds more than 385 million accounts between its consumer- and business-focused file storage services, SkyDrive and SharePoint. It’s also puny next to Dropbox, with 200 million accounts. Even so, Box has advantages over both in the corporate market. Largely written a decade ago, Microsoft’s code is intricately entwined with a pre-mobile, desktop-based, intranet-bound way of organizing corporate IT. The company has been struggling to catch up with the rise of the cloud and mobile computing, while Box is designed to fit smoothly into an increasingly informal work culture born of easy-to-use Web and mobile apps. As for Dropbox, it has spent years catering to consumers and might well spend many more building enterprise-grade technology.

But Levie’s vision may be the decisive factor. Box doesn’t merely store documents, he points out, but facilitates communication around them. And communication—not a nicely formatted, ready-to-publish document—is the crucial product of work. The latest updates to Box’s service make document archives interactive, allowing users to add metadata, scroll rapidly through high-­resolution previews, and search for snippets of text. The system is also taking a leap from content storage to content generation with the addition of Box Notes, a basic text editor that encourages collaboration: avatar icons skip across the screen in real time to show who’s typing what.

In this way, Levie threatens more than just other cloud storage providers. He’s shoveling coal into a locomotive of cloud-based enterprise services that promises to mow down any software company if it can’t translate its desktop offerings into sleek mobile apps that interact with their users’ data anytime, anywhere, on any device.

“The cloud is going to drive a new way of working,” he says after the conference. “The ability to deliver medical research from a lab to a doctor in seconds, or from an educational publisher to a student—it’s about real-time, collaborative, synchronous information sharing. It’s going to change work. Not just the technology of work, but work itself.”

*   *   *

The cloud—or, more precisely, the rigor of running a rapidly expanding cloud-based software company—has certainly shaped Levie’s routine. At 11 a.m., he arrives at Box’s office, a sprawling workspace with an Italianate exterior in Los Altos, California. He attends meetings until 6:30 p.m. or so, whereupon he’ll have another meeting over dinner or walk down El Camino Real to a Vietnamese pho house. After returning to the office, he naps for 20 minutes. Then he’s back on the job. He leaves at 2 a.m. and heads for the nearby apartment he shares with his longtime girlfriend, and he’s asleep by 3:30. By 10:15 a.m. he’s awake and ready to resume plotting his conquest of the workplace.

During the brief time between arriving at his apartment and hitting the pillow, he reads: manuals of business strategy, biographies of celebrated entrepreneurs, histories of iconic companies. “He has read more books about the tech industry than anyone I know,” says Josh Stein, an early champion of his at the VC firm Draper Fisher Jurvetson, one of the companies that have collectively invested more than $400 million in Box. Indeed, in conversation, much of the time Levie sounds less like a first-time entrepreneur than a professor lecturing on the latest theories of the technology adoption cycle.

These bedtime stories are also scary enough to keep Levie awake (and in the office) at night. “It creates this deep paranoia,” he says. “At any moment, you’re making decisions that might determine the survival of your company. That doesn’t lend itself to being in Hawaii for a month.”

Aaron Levie has never taken much interest in leisure. Born in Boulder, Colorado, he was pulling weeds and walking neighbors’ dogs for money by the time he was eight years old. When he was 10, his family moved to Mercer Island, a strip of land in Lake Washington between Seattle and Bellevue, a 20-minute drive from Microsoft’s headquarters. The tech bubble was beginning to inflate; he and his parents, a chemical engineer and a speech pathologist, discussed business ideas around the dinner table. He was an indifferent student, but he spent his free time building websites: a search engine, a real-estate site, a downloadable toolbar that pushed news. (“It probably gave you a virus,” he jokes.) His friend Jeff Queisser, now Box’s vice president of technical operations, supplied technical know-how. “About every month, I’d get a call at 1 a.m. to come to his hot tub, where he’d pitch an idea,” Queisser recalls.

Levie wanted to be a movie director in the mold of Quentin Tarantino, but the University of Southern California’s film school rejected his application. He settled for USC’s Marshall School of Business. 

During his sophomore year in 2004, a marketing class project led him to research online data storage. Early providers of that technology had been devastated when the dot-com bubble burst in 2001. Yet technology had evolved to the point where storing files on a hard drive in the cloud could be practical for mainstream computer users. “There was a disconnect between companies that existed and the size of the opportunity,” he says.

He roped in Dylan Smith, a Mercer Island friend who was studying economics at Duke University, to handle finance, and in April 2005 the pair launched Box on roughly $20,000 Smith had won at online poker. Within weeks, they had thousands of customers. Off to a heady start, they sent an e-mail to the billionaire Mark Cuban, whose popular blog, they thought, could boost their public profile. Cuban responded with a request to invest. The founders gladly cashed his $350,000 check, dropped out of college, and moved into Levie’s uncle’s garage in Berkeley.

By 2007, Box’s user base had doubled 20 times over and annual revenue was around $1 million. But Levie felt uneasy. The price of hard disks was falling 50 percent every 12 to 18 months. As online storage became a commodity, what would stop Apple, Google, or Microsoft from giving it to customers free? He noticed that the customers who stuck around longest weren’t storing MP3s or JPEGs but Word, Excel, and PDF files. In other words, business customers. Moreover, their colleagues would follow their lead, generating a steady stream of new sign-ups. Levie decided to ditch the fickle consumer market and focus on serving enterprises, companies with thousands of employees, which would be willing to pay for a storage service tailored to their needs. He set about adding the capabilities required by large businesses: search, security, and the ability to create and delete accounts, manage file access, and grant permission to view, edit, or delete.

In embracing enterprise customers, Levie took on what was, at the time, the biggest tech company in the world: Microsoft. And Redmond might have crushed him but for a stroke of luck. In late 2007, Apple introduced the iPhone. For many people, the device was their first smartphone, and the apps they downloaded transformed e-mail, document viewing, and even document editing into mobile experiences. Suddenly, employees were liberated from the strictly managed environment of corporate IT, with its ­password-protected intranets and sluggish virtual private networks. If they found the office regime too restrictive, they simply downloaded apps that ran in the cloud—including one from Box.

As it happened, Apple, Google, and Microsoft did introduce consumer-grade file storage services in the cloud. Microsoft launched SkyDrive in 2007, to a collective yawn outside the ­desktop-bound world of Windows. Apple’s iCloud limped out in 2011, and Google Drive finally appeared in 2012, fully seven years after Box’s debut. Meanwhile, Dropbox launched in 2008 and quickly garnered rave reviews, a rapidly growing user base, and investments from top VCs. Today, it dominates the consumer market that Box abandoned.

But Levie never looked back.

*   *   *

Box’s office is a warren of desks, partitions, and meeting rooms with names like Watson (for IBM’s founder) and Revenue Bong (Levie’s off-the-cuff misremembering of the marketing phrase “sales funnel”). In the room called Fry’s (as in the electronics retailer), the CEO sits with eight colleagues around a long oak table. He’s wearing his black suit jacket over a bright turquoise T-shirt bearing the Box logo and a rainbow. It’s an odd combination, but it barely hints at the rest of his ensemble, hidden beneath the tabletop: neon-yellow shorts, calf-high turquoise socks (to match the shirt), and crimson sneakers. Today is National Coming Out Day, and the outfit is a show of solidarity.

With two cups of coffee on the table before him, Levie peers intently at the slides projected on the far wall. He drills the team, asking whether a given set of numbers are actual or projected and why the targets are so low. (“Five million for 2013? We should do 10. Let’s do 20!”) He swivels and tips his chair as he talks. Within a few minutes, the second cup is empty.

$37 billion

Amount spent on public cloud services in 2012

The team is mapping out a strategy for View API, the technology Box acquired last year with a company called Crocodoc. View API is a document-viewing engine that translates Word, Excel, Power­Point, and PDF files into HTML5 format. In practical terms, this makes it easy for developers to display files stored in Box on Web pages. But there’s more to it. First, it rapidly renders documents so they look almost exactly as they would in their native application. Second, the technology deconstructs them into their component parts, which could eventually be manipulated in software. In a diagram of a municipal water system, for instance, the pumps might light up when a user rolls the cursor over them, revealing data about how much water flows through them.

If all goes according to plan, View API will act as a gateway drug for the Box platform as a whole. Any company that’s overwhelmed by e-mail attachments or wishes to embed documents in Web pages—from manufacturers to universities to publishers to online stores—will find it convenient to store them in Box. In addition, apps offered by some 700 Box partners will let employees store the files they generate directly in Box. Workers will find that they can attach metadata—associating, say, a driver’s license number with an insurance claim—or program the system to forward any incoming document that includes a phone number to the sales team.

As the meeting winds to a close, Levie stands up, revealing his full Coming Out Day costume. “I’m going to jump out,” he says, and strides from the room on bare, caffeine-fueled legs. Moments later, a Box employee pokes his head in the door. “Aaron just ran by in a pair of yellow shorts,” he says. “Is everything okay?”

*   *   *

Levie opens the glass door of the pho house at 6:30 p.m. sharp and takes a booth. The waitress doesn’t even ask for his order; it’s always chicken soup, extra noodles, and a can of A&W root beer. Stirring his bowl, he explains that Box’s prospects depend on its ability to transform work from a serial march of e-mails, meetings, and reports to a parallel process called “continuous productivity.”

The phrase comes from, of all people, a former Microsoft executive—Steven Sinofsky, who at various times oversaw Windows, Office, and Internet Explorer, and left the company abruptly in late 2012 after the turbulent release of Windows 8. Levie saw the news and contacted him by poking him on Facebook. “Who does that anymore?” Sinofsky says. “I guess he thought I was an old person.” The two met over chicken pho with extra noodles, and Sinofsky soon joined Box as an advisor.

Sinofsky’s notion of continuous productivity goes like this: In traditional organizations, information is concentrated at the top of the management hierarchy and dispensed on a schedule. In connected, mobile organizations, on the other hand, every employee has equal access to information, potentially in real time as it accrues. This tends to flatten the management hierarchy; the boss may call the shots, but they’re readily redirected by employees. Moreover, workers can share information easily with people outside the company. This tends to dissolve organizational boundaries. The tempo of activity picks up, data replaces assumptions, and execution takes precedence over strategy.

Sinofsky’s ideas reminded Levie of a 1937 essay entitled “The Nature of the Firm,” in which economist Ronald Coase laid out a rationale for why companies exist: they save the cost, in time and money, of organizing, disbanding, and reorganizing for every new project. “That was true in an era when we didn’t have common interfaces between organizations,” Levie explains. Not anymore. 

Increasingly, companies can assemble the resources they need on the fly: data centers for hire, contract manufacturing, crowdsourcing. More to the point, as the pace of change accelerates, they have no other choice.

Levie wants to put Box at the heart of this transformation. A key part of his plan is to add features and apps tailored to the needs of specific industries, including education, finance, government, health care, law, media, packaged goods, and retailing. Next, Levie envisions connecting not just companies but the industries themselves. To make a Hollywood movie, he points out, files must be shared among studios, agents, distributors, promoters, and lawyers. “At every point of sharing, there’s a slowdown,” he says. “The big question is how to accelerate that process.” His answer: by linking partners, suppliers, contractors, and so on to a synchronized collaboration service in the cloud.

A bigger question is whether businesses should surrender their information to a cloud service provider. Many find the cost savings compelling. But some competitors are betting that enterprises will need to keep files in-house, either because those files are extremely large—making them slow to upload, synchronize, and access online—or because they’re simply too sensitive to store on the public Internet. A company called Egnyte, for instance, offers a so-called hybrid solution that combines cloud and on-premises storage. Such an arrangement might appeal to anyone worried by revelations that the U.S. government—or other snoops—can plunder data held in the cloud.

Scripps Networks, which produces shows for cable TV, is an early explorer of this terra incognita. The company, which is based in Knoxville, Tennessee, and maintains offices in London, Rio de Janeiro, and Singapore, adopted Box after the CEO gave every senior executive an iPad in 2011 without informing the IT department. Scripps had been using SharePoint, but Microsoft’s program didn’t support Apple devices at the time, and it proved unwieldy for ad hoc collaboration, says Chuck Hurst, VP of media and content distribution. Instead, employees were sharing confidential files through Dropbox and other systems that lacked enterprise administration capabilities. The legal department was having fits.

Hurst brought in Box in late 2012, and it has become integral to Scripps’s operations. The marketing department uses it to exchange assets with advertising agencies. The sales reps run presentations directly out of Box. “They can share things quickly and we don’t get in their way,” he says, “so they’re happy.” Box isn’t yet ready to take on the massive files required for production and broadcast video, but Hurst believes it will eventually. At that point, it could revolutionize the way things are done in his industry.

At the restaurant, Levie slurps up the last of his pho. Seven o’clock is only the middle of his workday. The office will be mostly empty when he returns, but that leaves him free to contemplate his next moves. “We’re only 1 percent of the way toward what’s possible in this space,” he says. Personal computers didn’t transform business until there was one on every desk, he points out. Similarly, cloud computing won’t transform the way we work until every office across the world is using it.

Meanwhile, people born in 2014 will never use a desktop or laptop. They’ll know only phones, tablets, Google Glass, and whatever comes next. “The PC shift affected millions; this will affect billions,” he says. “The opportunity is way larger than in previous eras of enterprise computing.”

With that, he pays the check and heads back to work, where the task of making an already always-on world spin ever faster, more efficiently, and more productively never ends.

Ted Greenwald is a freelance journalist in Silicon Valley who has written forBloomberg BusinessWeek, Fortune, and Wired. He profiled Dwolla founder Ben Milne in the September/October 2013 issue.

This story was updated on December 17, 2013.

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