Aaron Levie, elephant hunter: Why the cloud's consummate poster boy is actually an outlier
Do you ever have one of those dreams where everything seems mostly normal, but it's not until you wake up that you realize something really reality-alteringly bizarre was going on? That moment when you're sipping your morning coffee, and you think: Wait a minute! My office isn't under water…
That's was a bit like my Tuesday. I was shadowing Box.com co-founder and CEO Aaron Levie on a sales call.
Let's be clear: This wasn't some photo-opp where he answered calls in a call-center. It wasn't a once-a-year press-the-flesh-fest with customers at a user conference in a cavernous convention center. This was a good old fashioned elephant hunt, the kind he goes on routinely these days. It was a quest to sell a lot of software to one of the largest, most complex companies in the world (one I can't name as a condition of sitting in on the meeting.) A company that has bought zero cloud software to date -- not even Salesforce.com.
If you knew Levie back in Box's early days, it's surreal to watch. The still 20-something, wise-cracking, easily distracted Levie is dressed in a suit, laser focused and serious, saying things like, "Are there any other questions I can answer for you?"
He's at a conference room table with a handful of senior IT executives who first talked to Box two years ago. Selling to them will likely take another year, Levie admits later. This particular hunt is a long expedition in which millions of dollars in potential revenue hang in the balance.
Still, they are saying all the types of things he loves to hear. They are describing their frustration at picking vendor after vendor and spending millions, only to throw the software away years later, unsatisfied. They are talking about how they can't pick the best product, because it rarely meets the regulatory and compliance bars for their industry. They talk about the frustration listening to employees all clamoring for cloud software they can't yet give them. There's a lot of gallows humor. Phrases like, "It's a disaster" and jokes about "jumping off a bridge" pepper the conversation.
This is the reality of why this revolution to the cloud, which everyone has been promising for more than a decade, has taken so long and why most consumer-turned-enterprise founders launching companies now will fail. Conversations like these show why true enterprise software companies take a decade and hundreds of millions to build, but manage to hang on to the spoils once they win.
It's not a quick or easy process, even in a mobile-powered Internet age. It's nothing like entering your credit card online and downloading some Dropbox. With rare exceptions, this stuff still just doesn't sell itself.
There's a lot of gallows humor. Phrases like, "It's a disaster" and jokes about "jumping off a bridge" pepper the conversation.Levie cracks a few jokes in the meeting, but he is about 80 percent less wacky than when he entered the room a few moments earlier. It might be a surprise for those who've seen how much Levie likes to talk... and talk. (And talk.) But in this meeting there is very little Levie. Almost none of his self-deprecating chest thumping, almost none of his twitchy, awkward laugh. He even manages to keep his hands from ruffling through his frizzy curly hair. It's as if someone has tied his arm to his side with an invisible rope. I ask later how he learned to sell, and he references reading "How to Win Friends and Influence People." He laughs and then says, "I wish I was kidding, but it's actually a really helpful book."
Sometimes when you talk to Levie you get the feeling his mind is racing, thinking about other things while he tries to listen to you, but not now. Like a carnivorous sponge, he is aggressively soaking in every bit of intel these guys offer up -- what they've bought before, why they hated it, what would solve their biggest problems.
There is none of that consumer Web "build what you love, and the masses will flock" sensibility here. Levie doesn't care what he wants to build. He wants to build what they want. He wants to solve their problems, allay their fears, and fulfill their deepest, nerdiest IT desires. And he wants to build the next multi-billion enterprise software company doing it.
This is increasingly how Levie is spending his time. It may be a surprising for a guy who's known for how much he talks (and Tweets), but he's gotten Box on the brink of a potential 2014 IPO mostly by intensely listening. And listening to the types of people the consumer world typically ignores.
Be very quiet, we're hunting elephants.
The education of Aaron Levie
In the media's frenzy to tell a version of the enterprise software story that doesn't bore readers to tears, many excellent profiles have been written about Levie. They've chronicled his early years. They've described his hyper-caffinated personality. They've detailed the massive $312 million in venture capital he's raised, most recently at a $1.2 billion valuation. They've even described the rejected acquisition offers -- as high as $600 million from Citrix.
But the takeaway frequently misses the mark: The press has fixated on the wacky Aaron Levie as the cloud movement's poster child. In reality, the opposite is true. Aaron Levie is the modern cloud movement's outlier.
Other product-centric founder CEOs have sought to bend the enterprise world to their will by insisting the software will sell itself and that the world has dramatically changed. Indeed, Atlassian is also a likely IPO candidate, famously boasting they don't have a single sales-person on staff. A new flock of enterprise kids graduating from incubators are convinced they'll build what they want, and people will love it -- just like Facebook and Twitter, only people will pay them to use the software. They'll move fast and break things, just like the consumer entrepreneurs who graduated in the previous incubator classes.
That's not Levie, and it's not Box. It's also not what will work.
While a young Mark Zuckerberg once asked Marc Andreessen what Netscape did, Levie has a conference room named after the iconic Valley company.What's impressive about Levie -- beneath all that wild, geeky enthusiasm -- is the fact that he's grown his company largely by embracing enterprise software's past. He's not only developed deep relationships with leaders like Marc Benioff, Zach Nelson, Aneel Bhusri, and other leaders of the cloud wave's early days. He's gone beyond that, seeking out names that the tech world has forgotten -- and most of his peers never knew. Names like Thomas Siebel or Craig Conway -- both last heard from on the other end of company ending feuds with Larry Ellison. [Disclosure: Nelson is an investor in PandoDaily, as is Greylock, where Bhusri is also a partner.]
Both told him to spend way more time with customers, and he has. He slowly migrated from hoody to the jeans-and-a-blazer combo to now wearing suits everyday. (Even if they are still always topped off by his famous Day-Glo tennis shoes.)
In a Valley obsessed with what's new, Levie is obsessed with history. The only unifying themes to the Box conference rooms are words and names that hearken back to the company and the Valley's big moments. While a young Mark Zuckerberg once asked Marc Andreessen what Netscape did, Levie has a conference room named after the iconic Valley company. In a place where youth is prized because of what it doesn't know, Levie sees his as a handicap he actively tries to overcome. [Andreessen, whose venture firm is an investor in Box, is an investor in PandoDaily as well.]
As Levie matures as a CEO, he's emerging as the perfect mid-point on the continuum between a Marc Benioff and a Dustin Moskovitz. He preaches cloud religion as much as anyone else, and Box, like a lot of the modern enterprise players, has a freemium, try-before-you-buy model. Sure, it employs all the tenants of the iterative, intuitive consumer Web. Like a lot of modern companies, it embraced mobile and tablet quickly and has leveraged the bring-your-own-device trend to sell its software.
But Levie doesn't kid himself that his software will simply sell itself. He knows that enterprise customers have very specific needs around security and regulation, and that to build a monster enterprise software company, you still need a heavy dose of good old fashioned Oracle-DNA.
To Levie, sales isn't something that's relegated to a division of the company: It's as much the core of the company as product design is. "In the Valley we think that if you build an amazing product, people will use it," he says. "What we don't understand is that in the middle of the country somewhere, someone is making that decision whose job is on the line."
Without sales calls, you don't know what customers are thinking. To him Box isn't a new kind of enterprise company as much as it is an evolved one. In the late 1990s, sales guys ruled the Valley. In more recent years, hackers have. Levie wants Box to be the first enterprise software company where the two truly work together on an equal footing.
Most of all, Levie gets a harsh reality missed at demo days where "enterprise" is the new favorite flavor: While the world is changing, and billions of dollars in IT spending are up for grabs, the change isn't happening as quickly or dramatically as anyone would like. This is a world where the best product doesn't naturally win. And those who don't spend their days talking to customers are navigating the change without a map.
The IT execs in the room with Levie seem comforted by him. At this point in the great cloud revolution, Levie is one of the few CEOs who is promising software their teams won't hate, but selling it to them in a way they can actually buy it.
"Keeping us honest"
Box is in the news today for something that at first seems entirely counter to what I describe above: It's releasing a new $5 per user plan that's aimed for small business, and doubling the amount of free storage it offers from 5 to 10 gigabytes. "We think doubling down on the freemium part of the business will bring us into companies of all sizes," Levie says.
“What we don’t understand [in the Valley] is that in the middle of the country somewhere, someone is making that decision whose job is on the line.”Not to mention, it will bring Box into divisions of all sizes within large companies. Those divisions then get addicted to a free service like Box, and sooner or later the CIO is calling the company to figure out how he can control this weed in his carefully pruned IT garden. It's the common playbook for the enterprise 2.0 generation, going back to the early days of Salesforce.com.
But one of two things tends to happen when companies get to this stage. Companies retain most of their focus on the prosumer level like Dropbox so far, or in the case of Salesforce.com, they get addicted to the big deals and veer from the small business path. Why? Because they take fewer resources to close and they have a lot more zeros on the end.
Levie is trying to avoid either fate. Just as he is dragging Box into elephant hunts, he's also insisting they don't spend all of their time there, as the announcement today shows. It's not because he thinks the company will make more money, large as the market for small business software is. It's not because there is white space there. Indeed, he has the most intense competitors on the low end in Google and Dropbox.
Rather, he believes that by continuing to build for the simplest businesses, he "keeps the company honest" from a product innovation standpoint. He keeps the product easy and intuitive. He makes sure consultants and pricy configurations don't creep in, driving a wedge between Box's product vision and the grass roots way it spreads through organizations. He keeps the consumer in the whole "consumerization of IT" trend. The guy who has sought to master enterprise, is also seeking to avoid becoming too entrenched in enterprise.
Levie stubbornly wants the best of both worlds. This is the real test of what Levie is building, less than how people store files or collaborate. This is what investors have bet hundreds of millions of dollars on. "This launch has everything to do with trying to combine those two often polarizing skills into a core business model," he says. "It's less that a Zach Nelson or Marc Benioff don't understand consumer, or that up and coming companies don't understand enterprise. But their business models don't incentivize the understanding of those skill sets. We want our strategy to marry those two things together."
The upcoming user conference BoxWorks will show this hybrid in even starker relief, as half the news will center around things that the enterprise has been asking for and half will focus on making experience better for the end user.
This all sounds great. But as Box continues to grow, can Levie still hold two types of companies that typically hate one another together?
It seems impossible, but he also seems to have as good a shot as anyone. Not only is he in a product category where he was forced to go enterprise more aggressively than most, to differentiate from competitors, but he's remarkably low on ego. Unlike so many entrepreneurs, he doesn't think much of what he's doing is happening for the first time; he's obsessively learning from the past.
In that sense, he's at least aware of how tenuous a balance there is historically between sales and engineering when it comes to business software. Larry Ellison built one of the most enduring enterprise companies of all time by walking that tightrope. Levie is seemingly as anti-Ellison as you could be. But with his relatively recent embrace of the sales organization, he's clearly aiming for that same playbook.
Put me in, Coach
Levie may seem as unlikely on a metaphorical elephant hunt as he'd be in a real pith helmet holding a gun. But he's come a long way from the days when he looked in the mirror and saw a scrawny, 23-year-old who had never worn a suit besides his Bar Mitzvah.
One of the reason he has a good sales record is that he has a very professional, experienced sales team who knows exactly how to use him. He isn't in charge of the process. He isn't prospecting. He isn't closing. He's whooshing in once things look pretty good to give customers some comfort around where the company is headed. "By the time I'm having a conversation with a customer, it's later in the process," he says. In baseball terms, he's more the middle-reliever bridging between the starter and the closer.
"There's a chance I've still never learned how sales work, that they've already closed the deal before I get there and are just trying to boost my ego," he jokes.
Levie has come a long way from the days when he looked in the mirror and saw a scrawny, 23-year-old who had never worn a suit besides his Bar Mitzvah.But self-deprecation aside, he plays an important role. It's less about conveying Box's roadmap -- and more about assuring them this company will still be around in another ten years.
Much of the press may look at Box's valuation and venture capital war chest and see a company priced for perfection, a company that has already turned down hundreds of millions of dollars in potential acquisition spoils and is now forced to build a large, public company if it wants to be a success. While that would be dangerous in consumer land -- where flips are always a valuable plan B -- in enterprise land, it's essential positioning to doing business.
"Two-thirds of the time I get the question, 'What do you want to do with the company?'" Levie says of his meetings with customers. "It's a VC question, because they are almost going by the same criteria. When a company is sold their prices usually go up, and there's usually integration failure. The fact that we have to go for an IPO at this point is a good thing."
Awkward or not, Levie's track record with VCs speaks for itself. He may not know enterprise sales, but this is a conversation he can close.
I ask if that role will change as he gets better at this and the company gets bigger. Will he become the epic closer? Hit the golf links with major CIOs of the world to schmooze and be schmoozed?
He says he doubts it, mostly because he hates the outdoors. I bring up that he didn't think he'd be wearing suits every day a few years ago either. He grants the point and adds, "Maybe instead of golf, we'll be having a nice sushi dinner."
It may be a good warm up for another constituency he'll have to start selling before too long: Wall Street.
[Illustration by Hallie Bateman for Pandodaily]