Box CEO weighs in on Dropbox IPO, AI in content management

Box Inc. CEO Aaron Levie knows about cloud content management and file-sharing IPOs; his company went public in 2015. His well-known competitor, Dropbox -- which is scheduled for public stock offering today -- built its rep on a freemium model for consumers, whereas Box chases large enterprise customers. In the middle -- medium-sized companies -- is where they'll battle.

In this Q&A, conducted on the eve of the Dropbox IPO, Levie explains what it means for the market, as well as what's on the product roadmap for Box now that he's up against a competitor newly flush with cash.

So let's get right at it: How many shares are you planning to buy at the Dropbox IPO?
Aaron Levie: [Laughs.] I think that would be a conflict of interest, so I don't believe I'll be owning any Dropbox shares. It will be an exciting day for the industry. They're going to have a lot of momentum, and their financials are going to be strong.

How do you see Box as differing from Dropbox. Is the Dropbox IPO a threat?

Levie: We do play in different ends of this industry. If you imagine there's consumer/SMB and SMB/enterprise ends of the industry, we veer more toward the SMB/enterprise and they veer more toward consumer/SMB. There's a little bit of an overlap in the midmarket -- [companies] with a few hundred employees.

Aaron Levie

We'll be very competitive with them [for those customers], but that's also a space where you see Google Suite, Google Drive, Microsoft Office 365. So I think the low end of this landscape is very dynamic. We're focused on medium up to very large enterprises -- General Electric, Eli Lilly, Procter & Gamble. We believe this market is so incredibly large it can support both of our businesses.

How did going public change Box?

Levie: It was a huge moment of maturing the organization. It allowed us to build deeper operational excellence, get really tighter on the financial model -- becoming cashflow positive was a part of that, instead of going out and raising capital from our investors on a continuous basis. When you're focused on the enterprise market, having that transparency and significance of being traded on the New York Stock Exchange is pretty important to some of our large customers.

What do you know now about going public that you wish you knew then?

Levie: The biggest shift is you go from a world of three or five or 10 investors and all of a sudden, within a few minutes, you have potentially tens of thousands of investors you're communicating with in a different way than when you're a private company. This is much more complex, at a much larger scale than when you're a private company. A lot of the communication about our business, our vision and where we're going has had to evolve because of the broader investor base.

How is Box's relationship with Salesforce? The company invested $81 million at your IPO, is putting $100 million behind the Dropbox IPO, and has a competing product, Chatterbox. Hard to see from the outside which horse it's backing.

Levie: It's consistent with how we see the industry. It's one of many partnerships, of interoperability between platforms. I don't think it's going to be a single-platform industry. Our mission is to make sure we can connect to all the applications our customers are using. Obviously one that's incredibly important is Salesforce.

From Salesforce's perspective, they want to make sure they're integrating wherever their customers have content. I would do the exact same thing if I were at Salesforce. I wouldn't want to pick a winner; I'd want the customer to pick the winner. Ten, 15, 20 years ago, it was about the vendors controlling the data and controlling what customers could do. Now we're in a world of openness and customer choice.

What is the potential for AI in content management beyond better search?

Levie: If you look inside Box at the billions of files customers are storing, it's large amounts of unstructured information. Those files have so much insight and so much knowledge trapped inside them that it's really, really expensive and cost-prohibitive to extract [it] using manual processes. We think AI and machine learning are the right ways to do this at scale. We believe the state-of-the-art technology can be at least as accurate as what humans can do. For example, images, videos and security workflows ... how do we use more intelligent technology to structure that data and make more sense of it? AI and machine learning are going to fundamentally change how people use their information in the cloud.

What's Box going to look like in five years? Give us a sneak peek of what's on your product roadmap.

Levie: This industry is changing rapidly. It's very hard to give a precise view of what five years from now looks like. What I can tell you is that our overall company mission is to empower how the world works together. We will continue to see some things that are accelerating trends in technology and business: People are going to want to collaborate more and more over time; business processes are going to be more automated, and teams are going to be more agile; the threat of cybersecurity is going to increase and you're going to see regulations, data privacy issues and industry-specific compliance is going to increase over time; and businesses are going to have to go digital in how they work, as well as their underlying business processes. When you look at all those macro factors, we are building a strategy, a software platform that aligns to those trends.