20VC: Box's Aaron Levie on Why Founders Cannot Hedge Their Bets, The 2 Categories of Wrong Decision and How To Avoid Them & The Biggest Dangers of Being Over-Funded as a Startup

Aaron Levie is the Founder and CEO @ Box, the company incorporating the best of secure content collaboration with an intuitive user experience suited to the way people work today. Prior to their IPO in 2015, Aaron raised from some of the best in the business including the main man Mark Cuban, a16z, Emergence, DST, Coatue, DFJ and many more. Aaron founded the company from his dorm room at the University of Southern California and has led the company to 1,900 employees and over $770M in revenue, as of 2021 data. In Today’s Episode with Aaron Levie You Will Learn: 1.) How Aaron founded Box from his dorm room at the University of Southern California? What was that founding a-ha moment? What did the first year look like? Does Aaron agree, "serial entrepreneurship is overrated"? 2.) Phases of Leadership and Company Growth: How does Aaron define the different phases of leadership required as a company grows? Which phase did Aaron find the most challenging? How did he overcome it? What are the first things to break when companies grow? What can founders do to prevent this? Does Aaron agree, "the best CEOs are the best resource allocators"? 3.) The Market: How does Aaron thinkj about the dislocation between private company valuations and public company market caps? What does Aaron believe are the biggest challenges founders face when they are over-capitalised? What does Aaron mean when he says, "raise when cash is cheap, spend as if it was expensive"? How does Aaron advise founders on fundraising today? 4.) The Team and Culture: How does Aaron create a safe space where all team members can come to him with anything? How does Aaron approach effective goal setting? How does one balance between achieveable and also aggressive goals? How does Aaron approach the art of delegation? What is his decision-making framework for what to delegate vs what to control? Item’s Mentioned In Today’s Episode with Aaron Levie Aaron’s Favourite Book: Innovator's Dilemma: When New Technologies Cause Great Firms to Fail (Management of Innovation and Change)

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  This is 20 VC with me, Harry Stebbings. And today, we're joined by one of my favourite people to follow on Twitter, an incredible entrepreneur, and I'm just so thrilled to welcome back to the hot seat Aaron Levie, co-founder and CEO at Box, incorporating the best of secure content collaboration with an intuitive user experience suited to the way people work today. Prior to their IPO in 2015, Aaron raised from some of the best in the business, including the main man Mark Cuban, Andreessen, Emergence, DST, Co2, DFJ, and many more incredible names. Aaron founded the company from his dorm room at the University of Southern California, and has led the company to 1,900 employees and over $770 million in revenue as of 2021 data. But before we dive into the show today, if you're a venture capitalist or corporate strategist, I want to tell you about Tegus.

• 0:44Harry Stebbings?

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• 1:27Harry Stebbings?

  Speaking of incredible resources Tegus provides, I've always been a big history man, and so I want to talk about Cooley, the global law firm built around startups and venture capital. Since forming the first venture fund in Silicon Valley, Cooley is one of the most active law firms in advising both early and late-stage financings, handling more than 1,300 private financings every year with an equal split of investor and company clients. So to learn more about the number one most active law firm representing VC-backed companies going public, head over to Cooley.com and also check out CooleyGo.com, Cooley's award-winning free legal resource for entrepreneurs. And finally, Sprig. User researchers want their product teams to build amazing experiences that are informed by user insights. Product teams want to ship products quickly.

• 2:10Harry Stebbings?

  Without having to wait for research with Sprig, both teams can get their way. Sprig is a user research platform that lets you ask bite sized questions within your product or existing user journeys. Companies like Dropbox, Square, Open Door and Loom all use Sprig's in product micro surveys and concept tests to understand their customers at the pace of modern software development, so they can make every product decision a customer informed product decision. If you want to obtain rich insights from users at the pace you ship products, then give Sprig a try by visiting sprig.com. Again, that's S P R I G dot com. But that's enough from me. So now I'm thrilled to hand over to the one and only Aaron Levie, co-founder and CEO at Box.

• 2:54Speaker 01

  You have now arrived at your destination.

• 2:57Harry Stebbings?

  Aaron, my word, it's been a long time since we last spoke, but thank you so much.

• 3:00Speaker 02

  I think you were like seventeen at the time, right? How old were you then?

• 3:03Harry Stebbings?

  I was actually twelve. I'm Benjamin Butler in disguise. No, it's a pleasure, but I want to start say, I always like context, you know? So let's start with the founding moment. Tell me, what was that aha moment for Box? And then we're going to dive straight in.

• 3:16Speaker 02

  Sure. So for Box, you know, I always have admired founders that had these epiphanies because our story unfortunately was never that simple. It was more of a collection of events that occurred and then a sort of development of the idea over of a few month period. And it was simultaneously doing a class in college where we had to study a business and I chose the online storage market to sort of understand back in 2004. And then jumping between lots of different classes and different places where I was doing internships from, you could tell that it was really, you know, just difficult to move data around very easily between all these devices. And so a couple of other events basically led to us deciding there was a big market in this idea of what if you could store your data in the cloud and then access it from anywhere?

• 3:57Speaker 02

  And it never felt like an epiphany because the moment I started pitching people on the idea, they thought it was stupid. And so you never even got the gratification of like, you're on to something amazing. It always just felt like, well, maybe this could work. And so we developed a business plan and started to develop prototype and then got really lucky that ultimately users decided that we were on to something.

• 4:15Harry Stebbings?

  You mentioned that kind of the early days and you being young at the founding. My question is. I had Joe Fernandez from Joy Mode and Cloud on the show, a long time ago now, actually. But he said that serial entrepreneurship was overrated, which I thought was a very interesting, quite contrarian statement, given the praise that we laud on serial entrepreneurs. Given that Box was your first company, would you agree that serial entrepreneurship is overrated?

• 4:36Speaker 02

  Yeah. Well, you know, I guess to be fair, it was my first company that maybe had, you know, some form of success, but had definitely tried lots and lots of other ideas prior. So I tend to not get too sucked into, you know, some of the maybe a kind of quote unquote best practices or pattern recognition that I think we tend to pontificate about it. You know, there's amazing entrepreneurs that have done it once, those amazing entrepreneurs that have done it five times, and it all comes down to the idea, the team, and do you choose the right market at the right moment? Those tend to be the factors more than whether it's your first or end company.

• 5:04Harry Stebbings?

  Totally agree, especially in terms of the marketing and the timing. I do want to ask you, when you look at the different stages that Box has been at and the different leadership styles required, I'd love to start there. And specifically, kind of, how would you describe or define the different phases of leadership that you've had to go through with the stage of company?

• 5:22Speaker 02

  Yeah, I think what you tend to experience as a founder, and this is specific to maybe especially a very product oriented founder, so I can only speak from my own experience on this. You have one thing that remains true throughout all of the phases of growth and evolution, which is, you know, product matters more than anything else. And your product strategy, your user experience, what you're delivering for customers, nothing ever changes about how important that is and making sure that your company is always on the right track around where the market's going and what you want to deliver for the market. So that's sort of this thread that always is retained, I think especially for product oriented founders. But what's interesting is that each stage of growth, you end up having to sort of accumulate a new set of either operational skills or other, you know, elements to running the business. So when you're just getting started, really it is only the product, it is only the idea.

• 6:07Speaker 02

  Then all of a sudden you have customers and so you have to start to think about serving your customers. And then as you have more customers, you think about how do you grow faster? And so you have to get, you know, better at understanding sales and marketing and distribution. And then hopefully, if you're lucky, you get to a stage where you have more customers, you're growing quickly, and now you have more resources to work with. And then you're really in sort of the mode of resource allocation. So what new products are you going to do? Invest in what new markets are you going to explore? And so at each stage of growth, you certainly have to be able to develop the ability to work in those different modes. And then all the while, of course, sort of focusing on culture and building, you know, a team to go and actually execute, you know, whatever the strategy is, it probably is less about sort of different sort of skills as much as you have to accumulate,

• 6:51Speaker 02

  you know, more and more operational components as you scale. And then you have to be able to hire, you know, hopefully amazing people that can let you go and scale the business.

• 6:58Harry Stebbings?

  Which phase did you find the most challenging to scale into?

• 7:01Speaker 02

  Probably actually the initial phase of having, building a team of leaders that would then go and build the company. And that's really the shift from sort of, you know, you have to kind of do everything yourself or with a very, very small group of people to actually changing your mental model. You go from as a founder, you have to solve every problem in the business as a means of surviving. As you're scaling, you have to attempt to not solve hopefully as many problems as possible in the business directly. And that's your only way of scaling. And so, you know, there's this sort of sudden shift from I can do everything myself to actually I should do as few things as possible myself. And anything you're doing yourself, you really have to question, have you built that a strong enough team? Or have you built a, you know, resilient organization? And so you try and be in a mode where you're rarely trying to do things directly as you're scaling up.

• 7:46Harry Stebbings?

  That shift requires trust. I'm always in two minds, you know, there's two different ways, you know, do you start from a position of full trust where it's the person's to be lost? Or from none where trust is there to be gained? Which stance or mindset do you have with regards to?

• 8:00Speaker 02

  Yeah, I'd say it's probably a little bit in between and a bit more adaptive to the situation or the task and how well developed a particular function is. You know, if you join our business in a very mature part of the business, you have a lot of sort of knobs to work with that you can jump right in and you can have a higher degree of trust right away. Because there's more scaffolding, there's more infrastructure to work with that will, will ensure sort of resilience in the system. Alternatively, if you join in a brand new area and you're a brand new person, then obviously we want to, you know, make sure that we're creating and curating the right type of environment for you to be successful. And that might mean, you know, there's a little bit more management in that type of situation. So I think you have to be adaptive to both the individual you're bringing in and the area of the business in which they're operating within.

• 8:43Harry Stebbings?

  You said about kind of actually over time wanting to do less and less and actually kind of delegating more and more. When I spoke to some of the board members that you have today, they said that this was a particular skill of yours in terms of skill of delegation. Clearly they are too well compensated.

• 8:57Speaker 02

  I don't know who you're talking to, but hopefully we have paid them off.

• 9:00Harry Stebbings?

  So tell me, how do you determine what to delegate versus what to control? And what's that decision making?

• 9:05Speaker 02

  Well, this is the dirty secret of being a founder. If you're lucky, you should attempt to try and find a situation where you can spend as much time doing the things that you're most excited about and believe personally you can have the greatest impact on. For me, the stuff I get most passionate about is product, is the design of our product, is the direction the product's going in, our underlying strategy, certainly our culture, so we can build an organization and a team that everybody wants to be a part of, and then working with customers. And so I've designed my schedule, my time, to be able to support, you know, spending time in those areas, which then by definition means you need to delegate all of the other important aspects of the business as much as humanly possible. And so to me, the delegation kind of comes almost as a natural result of the things that

• 9:48Speaker 02

  I'd like to work on, where I think I can have the greatest impact, and then thinking about what is the sort of then set of needs that the business will have while I'm working on those things.

• 9:56Harry Stebbings?

  And speaking of impact maximization, I've been stalking the shit out of your Twitter, as we mentioned, for the past, you know, two or three days. But I do have to ask, because you tweeted something and you said, place your biggest bet on a focused strategy and iterate until it works. Can you unpack this for me? And how do you think about that yourself, but also I guess advise founders with regards to this?

• 10:15Speaker 02

  Yeah, so that particular tweet came from thinking about when we were super early in our journey, we actually had this sort of option to go in two completely different and highly architecturally incompatible directions. One was we could build out a cloud infrastructure approach. The other is we could build out more of a peer-to-peer software design to our technology. So back in 2005, there was this debate around peer-to-peer versus web-based software. We thought, well, maybe we could actually do both of those strategies. And we actually developed another product that we don't talk about publicly, which was going to be a peer-to-peer file sharing technology that we were going to introduce in the market. And one of our early investors, Mark Cuban, actually said, he had a really good line that said, you can't hedge your bets as a company.

• 10:57Speaker 02

  And he was sort of not supportive of two different paths to our technology strategy. And that really resonated with me and it's stuck, you know, to this day, which is, you know, as a startup, you have very little. Limited resources, so you have to be as focused as possible in the bets you're going to make. Those bets might be wrong, but if you split your resources in an attempt to sort of try and optimize for any possible outcome, then there's basically, you have a bunch of lower likelihood that if one of those paths turns out to be true, that you'll have actually succeeded following that path. You have to make a bet and then you have to use information and then iterate quickly if that bet ends up being wrong. So if we had chosen the peer-to-peer path as an example, that would not have worked just based on the architecture of the web went. However, we would have then pivoted to a completely different path if that had happened,

• 11:41Speaker 02

  which would have been better than splitting our bets and then ultimately constraining the resources and energy from the path that ended up working, which ended up being the web and cloud-based approach. So I think it's just a, you know, fortunately, I don't see a lot of startups, you know, doing this too much these days. So I think the lesson is kind of well baked in this startup kind of ethos, but it's just incredibly important that you stay hyper-focused and you place your bet and you put as much energy and investment of dollars into that direction as possible and then iterate constantly.

• 12:08Harry Stebbings?

  Do you think that applies to go-to-market? I see a lot today, people being a little bit unconfident about pure product-led growth mode and also having top-down sales or thinking that despite top-down sales, we'd love PLG because everyone wants PLG today. Do you think it applies to go-to-market motion as well as product strategy?

• 12:26Speaker 02

  It does. I would say it's in things like go-to-market, it's probably more relevant for sequencing of decisions. And so I'll give you an example. So, you know, if you are a company that has a very democratizable software solution, where the universe of users is in the tens of millions or hundreds of millions, where you can drive growth through end users, then I personally would sequence product-led growth and nail that because you will always be able to layer in a sales motion on top of a product-led growth engine because the DNA of product-led growth ends up being a lot harder to sort of rewire in later because it's about user experience and software design and pricing mechanics and how usable is the onboarding and all that kind of stuff. That's rarely something that you add to a product downstream.

• 13:10Speaker 02

  Versus sales, you can often layer on top of an existing demand funnel and then you can have a sales team go and Ultimately work with that demand. Conversely, if you had a piece of software that the total addressable market is a thousand customers because it's in a very particular vertical and it's high-priced software, then I would flip the model and say all you should be doing is thinking about obviously your product and your technology, but then having a distribution model that is appropriate to your total addressable market and how you need to serve your customers. It's really important to think about what's the sequence of events of your investment, whereby you invest into things that can always be added in and compounded downstream because you can always do, you know, that particular activity later. And getting that sequence right is just really important as a startup.

• 13:53Harry Stebbings?

  Can I ask, you mentioned the bet there between kind of web-based versus P2P-based. Can you tell me about a bet that didn't go to plan and you made that was wrong? And were there any big takeaways for you from that?

• 14:03Speaker 02

  Yeah, so I would say that there's been two kinds of things, I guess, that are sort of bets that have either been wrong or more alternative scenarios that I would have preferred from kind of how we executed. So some bets are just you're betting on a particular product and for whatever reason it doesn't work. And usually a consistent pattern when certain features or products don't work. And often they frequently have an element of us as sort of product managers and people within the company brainstorming about how amazing it would be if we could do X thing with Y technology, as opposed to thinking about what are the customer problems that really need to be solved right now by our customer base at this particular time? And working backwards from the customer problems and then delivering a solution to those customer problems. So usually there's a tendency where the idea itself is what is so interesting

• 14:48Speaker 02

  as opposed to the problem is so important for customers. That's sort of category one where you sort of can get it wrong sometimes. And this is a very subtle thing. These aren't like binary obvious moments because you can kind of squish together different data points to make different arguments when you're actually, you know, inside doing the development. And then I'd say the other scenario where, you know, I have some, you know, times where we kind of regret certain things is actually usually if we've taken too long to address a problem that ends up being a really big idea for us. And I look back and I say, shit, wish we could have done that two years earlier because we would be this much farther along in our journey if we had done that. And so, so those are probably those the two scenarios.

• 15:22Harry Stebbings?

  It always takes longer to correct as we both know. I do want to ask that because when you take these. You know, it's not always you who takes them, it's sometimes team members. My question to you is, how do you create an environment of safety, especially as a public company and a sizable organisation now, where people have the ambition to take big bets and aren't afraid of what happens if it goes wrong, but also don't feel no accountability? It can't be free rein to fail. How do you bridge that balance?

• 15:48Speaker 02

  A huge challenge and I don't know of a company that has sort of perfectly optimised, you know, this particular variable. I would say, you know, a couple of things to keep in mind. One, whenever possible, have as ambitious of a goal as possible. And so, goal setting should be sort of ambitious and idealistic in terms of what you're trying to achieve. That is, needs to be separate though, from sort of like what maybe we would consider like harsh accountability, i.e. you're going to get fired or down levelled if we don't achieve that goal. So, so that's sort of job number one is ambitious goals, but reasonable sort of accountability, you know, around achieving those goals. So that way people are willing to sign up for them and aren't sort of afraid of putting ambitious, you know, statements out there. You know, obviously you need a certain degree of autonomy to ensure that people can actually go and execute on the ambitious goal.

• 16:30Speaker 02

  You know, we've had a lot of situations where you might have an incredibly ambitious individual, an incredibly ambitious goal, but there's still a sort of a morass of, of complexity that ends up slowing them down. So they could not have even achieved that goal in any perfect scenario because of the bureaucracy or interdependence on other kind of, you know, functions in the business. So, so you had to also, you know, make sure that you've wired up the team and the strategy in a way that, that can ultimately have a fighting shot at delivering that goal. So those are a few of the, you know, the things that we've learned over the years. But, you know, I generally prefer a, you know, an approach where when you achieve great things, good things happen, as opposed to if you don't achieve the goal, bad things happen. We always want to be learning as much as possible. We post more than everything. But we try and make sure we're, we're using context

• 17:13Speaker 02

  around why a particular thing failed as much as possible.

• 17:16Harry Stebbings?

  For many years you were the underdog. Now, obviously, as a public company and as a very large organisation, some would say you're the incumbent. How do you think about retaining that speed and agility that early startups have? Now that you're not an early startup and you're not the underdog anymore and that you do have processes and structure?

• 17:33Speaker 02

  Yeah, so the only way I've found to retain speed and agility Is through the right organizational design to ensure speed and agility and the right technical capabilities to allow for that as well. You know, I'll take by analogy, you know, maybe a company that is one of the best at this, which is Amazon, where they think about as many things as possible in their business as independent services that any developer can build on top of. And then they have very relatively autonomous teams that can go out and innovate as much as possible. That's sort of core part of their principles, which is relatively small teams, relatively autonomous, building on a set of services that lets them move very, very quickly. Now, what you get in an environment like that, of course, is in some cases overlapping technology, sometimes chaotic user experience because you don't have centralization.

• 18:17Speaker 02

  And so if you compare and contrast to maybe Apple is sort of the exact opposite end of that spectrum. It's a relatively centrally, you know, sort of, you know, run organization where everything is sort of planned, you know, extremely tightly. But what we get as a result of that is an incredible user experience for a limited number of products that they enter the market in. And so I think that it's appropriate to have sort of different parts of those methodologies in different areas. So for design as an example, we probably more have the Apple ethos. So our software design is extremely centralized and that ensures that everything we put out in the market, we believe is going to have the same look and feel, the same great user experience. Conversely, we want our engineering teams to be ideally as independent as achievable by our technical architecture. So that way, you know, we can go and develop as many services as we can with little dependency where possible.

• 19:02Speaker 02

  Again, that's the underlying theory, doesn't always happen. So I think it's important to think about what are you trying to achieve for the customer? And then design your organization structure and your technology architecture in a way that supports that.

• 19:13Harry Stebbings?

  I do want to move to a little bit more macro and kind of the market that we're in today. I'm a bit of a cynic, but we can take this out, that I'm a cynic on where we are in terms of market positioning, but it worries me a lot. You know, and when we look at kind of Box's valuation today, you know, we obviously don't get into numbers and everything around it. But when we look at Box's valuation today and then some private companies that are getting funded at the most astronomical rates. I saw one stay under a million in ARR, being valued at one and a half billion, under a million in ARR. My question to you is like, having this public markets exposure and knowledge now, how do you think about this dislocation between? Public versus private markets.

• 19:49Speaker 02

  I would say that, first of all, kudos to everybody getting those valuations. You can consider me extremely jealous. I absolutely am very fascinated and certainly excited for all the founders that have been able to get those valuations. I'm kind of of two minds. So on one hand, I think it creates some inflationary pressure in software where it's not, that won't necessarily lead to great outcomes. And I also think that being overfunded early can accidentally cause you to either build the wrong thing, go in the wrong direction. I think you've certainly written about this. If you have, let's say, too many salespeople before you've got product market fit, that might not lead to more growth. It might just lead to more problems in your organization, as an example. Conversely, if you overengineer a technology before you have product market fit, you might end up actually be stuck down a path

• 20:33Speaker 02

  that's going to limit your range of motion in the future if you end up having a different or better idea. So there's actually legitimate, real problems that can be caused by having too much capital that are not of the sort of, you know, cynical variety. They're just literally, they will cause your business to be worse off if you actually go and deploy that capital in a sort of indiscriminate kind of way. So that's the first category of maybe why there's, it's a complex issue and why there's challenges. Why I don't get as worried, you know, from a capital market and sort of ultimate economic sense is the reason. Because what's largely happening is we have an influx of capital from a set of investors that otherwise would have to be investing only when companies go public at a later stage valuation.

• 21:13Speaker 02

  And what those investors are doing is they're basically willing to underwrite multiple years of growth in advance of that growth happening to eventually get to the same outcome in terms of the valuation. So let's just take the most extreme example that let's both agree is kind of crazy. I have a million of ARR and I'm valued at a billion dollars, okay? A thousand X, let's just say that's super insane. Well, there might be an investor that says, if I have certain preferences on that equity, and so I get a preferred security, I don't mind waiting to see in three or four years if that company eventually achieves 50 million in revenue. And I'm getting a guaranteed ticket to having equity in that company when it goes and achieves 50 million dollars in revenue. And then maybe we'll be worth 2 billion or 3 or 5 billion at that point. And so what's

• 21:57Speaker 02

  Happening is you're just having relatively sophisticated investors running their models saying, well, we've seen this pattern before. If a company can grow from one hundred K to a million in six months, then it can go to five million in another, you know, twelve months. Then it can go to twenty five million in another, you know, year or two, and that's why they're deciding to invest very early. Now, here's the gonna be the problem. There will be a lot of bets that will not work in that model. Because again, back to category, you know, one, there are lots of challenges companies run into. So we will see spectacular failures in this approach, but ultimately they might get paid for by the spectacular successes as well. So ultimately, I'm not as worried on this sort of impact to the capital market. I would be more worried as a founder of how do you make sure that you do the right thing as a business? When you have this influx of capital much earlier in the company formation process.

• 22:42Harry Stebbings?

  Totally agree. And then also on the human side, I totally underget the model analysis from an investor side. But actually, you're forgetting the crucial thing, which is humans. And what happens to employees who are suddenly like, whoa, I've got five million dollars of equity in this million dollar ARR company. And now they're slightly taking their foot off the brakes. They may be spending a bit more. They're telling their friends that they're a.

• 23:04Speaker 02

  Totally agree. I would say if you're able to avoid the distractions of what that capital can do. Then, you know, certainly having more capital with lower dilution for a founder or even a company is generally ideal. So like that on a pure math basis is a better outcome for all parties, maybe other than the the LPs of the fund. But for employees, you're gonna get more equity in that scenario. For founders, you're gonna retain more equity and you're gonna have more cash to work with. But that being said, we will see a correction. I just don't believe it's gonna be a sudden correction that will feel like a sort of bubble burst. I think it'll be, you know, more pressure for keeping valuations in some reasonable band. That still compared to fifteen years ago will be five times higher than what they were before, but maybe not as insane as we're seeing now.

• 23:45Harry Stebbings?

  We mentioned all design earlier. We mentioned some of your tweets. I loved another one of your tweets. It was about kind of network design in particular, and it was can the later participants get as much or more value than the earlier participants? How do you think about network design today with BOKS? And what was the origins around this tweet in particular?

• 24:04Speaker 02

  This tweet was largely related to much of the commentary. Around crypto, in some dimensions cryptocurrencies and others crypto oriented communities. And I think we have a lot of excitement and euphoric energy right now around crypto, which is fine. But I think we are in some cases inventing new economic theory as we're going along, not remembering just literally how math works. Where if you have an early set of participants in a crypto asset, they can make a lot of money because you might have later participants that buy that crypto asset. But those later participants equally want to be able to capture value and upside. And so then they have to find another set of participants later downstream to go and sell that crypto asset to. And so at some point in a crypto network, so far at least what we've seen, maybe other than Bitcoin and Ethereum and a few others,

• 24:47Speaker 02

  is you see a plateau where once you have that asset reach a certain value, future participants don't perceive as much upside as the earlier participants. And so then they can't sustain the network because they are not going to get the same upside and reward. So they're going to want to go and start a new network. Compare and contrast that to traditional based network effects in social networks or even marketplaces like Airbnb, where every new user that joins Airbnb experiences more inventory as Airbnb grows. And every host experiences more users as they join the network. And so the network value gets more valuable over time for both participants in that ecosystem, the host and the user. And so you don't have the same kind of tension where at some point Airbnb

• 25:29Speaker 02

  becomes less valuable to either party in the same way that a crypto network currently, as they tend to manifest, will likely become. So that was the origin of that.

• 25:37Harry Stebbings?

  I mean, speaking of the difference in network design there between crypto and traditional web based, I am assured you also put crypto done right could lead to more abundance on the web. Why do you think so?

• 25:47Speaker 02

  So I've been on a little bit of a roller coaster on my crypto points of view. That roller coaster has essentially followed just three key moments. The first was the first 10 years, which was Bitcoin. And basically, I've always been fascinated intellectually by Bitcoin, but not really participated just because it doesn't appeal to many of my concerns on inflation and other things. So not participated in that. In the past year, we've had a resurgence of Ethereum based blockchain oriented development. And obviously, Web 3 has emerged from that. And within that period, Started out skeptical and then I did a lot of deep diving on the technology and found that the technology certainly does do what it purports to say it does and has some very, very interesting relevant use cases.

• 26:28Speaker 02

  And then now the third phase is, is I'm probably more now moderate slash moderately skeptical because I think that the technology is being positioned for more than what it actually can do. Which ultimately I fear tends to lead to bubbles as well as possibly a bad outcome for, for how the web function. So I think the idea of having a sort of a shared database that any developer can access, put things into and then make accessible to other developers, you know, has some use cases. Game items is sort of one that's come up. You know, there's some really interesting theories around, you know, certain ways that governments could use the technology. Certainly the movement of money is obviously the canonical use case. So those things I find relevant. The parts that I think have been maybe overpromised is this idea of decentralization of a lot of other information types, social data, my Airbnb, you know, host information.

• 27:12Speaker 02

  There's a lot of things that, that don't sort of need to be or should be decentralized. And I think that's going to end up confusing a lot of entrepreneurs and, and a lot of folks out there and possibly just waste a lot of entrepreneurial effort going into directions that might not make a whole lot of sense.

• 27:25Harry Stebbings?

  How do you think it impacts like traditional enterprise and storage?

• 27:29Speaker 02

  You know, realistically, it largely doesn't. You know, the way to think about it is any design of a decentralized system has to have a certain amount of redundancy built in to obviously, you know, ensure against censorship resistance and whatnot. And so whether that's storing something a hundred times or a thousand times or 10,000 times, you are storing something at an order of magnitude or two or three or four orders of magnitude more than what the direct value proposition requires. So for most things that you do on the web, for most software you use, you don't have a censorship resistance sort of use case or an immutability sort of oriented use case. And when you do, you have a lot of choices of what to do with your data. You can back it up. You can put it somewhere else if, if you'd like. So I think there's a, a small, narrow fraction of data that could be very relevant on a blockchain, but that data is likely going to be limited in size.

• 28:14Speaker 02

  And it might be, you know, things like what, let's say we do an e-signature. Maybe we want that e-signature recording to go on a blockchain. So that way in 50 years from now, we know that we can look it up and sort of, you know, check the hash of our e-signature. And be able to validate it. So I think use cases like that where we're talking about sort of like kilobytes of information absolutely could have very relevant use cases. But the idea of taking petabytes of files or information and sort of storing those 10 or 100 or 1,000 times is just actually going to be quite inflationary to the technology market. And I don't think customers will ultimately want to pay for that.

• 28:46Harry Stebbings?

  I totally agree, but I am also thankful for the continuous stream of brilliant tweets that I have late at night to read. I do want to move into a quick follow up. So I say a short statement and you give me your immediate thoughts. Does that sound okay?

• 28:57Speaker 02

  Maybe I'll find out afterwards.

• 28:59Harry Stebbings?

  I mean, we shall see. Tell me, what's the favorite book and why?

• 29:02Speaker 02

  Innovator's Dilemma is my favorite book, and I think it has the most grounded principles of disruption and business theory that sort of works across every ecosystem. And whether you're in technology or any other market.

• 29:13Harry Stebbings?

  Hardest element of your role with Box today?

• 29:15Speaker 02

  Getting enough sleep.

• 29:17Harry Stebbings?

  I think that relates to your newborn, which I'm going to ask about now. First, congratulations. But what three traits do you most want your children to adopt?

• 29:25Speaker 02

  I would say probably kindness, humility, and just, you know, enjoying things.

• 29:30Harry Stebbings?

  We have meta, we have block. If Box were to change its name, what would the change be?

• 29:35Speaker 02

  I think we actually nailed it. I think we were sufficiently vague in our brand. And so I'm not sure we ever have to go through a rebrand with how sort of, you know, basic we landed on name with.

• 29:44Harry Stebbings?

  It's a terrible shame. I thought we could have a meta take too would do very well for you. What about meta box?

• 29:49Speaker 02

  We'll see how meta block works first.

• 29:51Harry Stebbings?

  How did having children change your operating mentality? We said what traits we'd like from them. Did it change you as a leader or how you think about operating?

• 29:59Speaker 02

  You know, I think I'm so excited to have two kids now. I've always liked kids and, you know, just an amazing joy to be able to have children and spend time with them. I think if anything, you know, maybe things like time management have maybe improved marginally because you do have to, you know, make sure that even more organized when you have other humans you're responsible for. So that's probably maybe the only factor that has changed that relates to business, I think, at this stage.

• 30:21Harry Stebbings?

  I'm going to slightly change the structure of this next question. It was best board member. Now, obviously, no one can choose their favorite. So let's change it to most memorable board member you've worked with and why?

• 30:32Speaker 02

  I love all of my board members equally. And, you know, actually, I think every board member has. Added a unique, you know, sort of flavor to our journey. And even at the times where I've most maybe struggled, you know, with, you know, in a debate or in a setting with a board member, I have always come out, you know, learning something completely new or being, you know, more critical and introspective of something we were working on. But I, I think, you know, I've been lucky to have a fantastic board of directors that have evolved over the years that we get to work with. You know, I think as you scale an organization and you're public, having different perspectives that sort of can build on lots of different experiences ends up, you know, being pretty helpful for at least our scaled company.

• 31:08Harry Stebbings?

  I do want to finish though, on what next five years hold for you and what does the next chapter of success look like? We have this interview in 2026. Why do you want to be there?

• 31:16Speaker 02

  I personally think we're at one of the most exciting points of the web and its direction going forward that I've ever seen. So if you think about how much, you know, compute we have to work with, how many new amazing APIs we have to work with, how much the internet is becoming more real time, more collaborative, more multimedia driven, software is going to be more multiplayer and more real time. So I think in three years or four years or five years from now, I think we can expect more immersive applications, better collaboration, being able to do completely new things with our data. Maybe some of that will be driven by AI, maybe some of it will be just driven by completely new formats that we work with. And our job at Box is we just want to be a platform that helps people work with their content in that future state. And we're going to continue to stay focused 100% on that and not deviate from the strategy.

• 32:00Harry Stebbings?

  Aaron, it's been such a pleasure. I hope we don't have to wait quite as many years as been before to have another session, but thank you so much for joining me today.

• 32:07Speaker 02

  Thanks, Harry. Really appreciate it, man.

• 32:10Harry Stebbings?

  What a fantastic guest to have on the show. And I want to say again, a huge congrats to Aaron for the newborn, such a special time. If you'd like to see more from Aaron, of course you can on Twitter at Levy. Likewise, check out the 20minutevc.com to see more from us behind the scenes. But before we leave you today. Our first sponsor for this episode is Core Signal. Core Signal is a data vendor providing fresh, raw data collected from public web sources. Core Signal works with leading Silicon Valley VC firms, helping them enhance their discovery and analysis. Core Signal collects and regularly updates records of millions of professionals and companies from all over the world, allowing VCs focusing on all stages of funding to do one of three things. incredibly well. Discover promising companies at the founding moment, capture and quantify startup traction, augment their DD process.

• 32:54Harry Stebbings?

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• 34:21Harry Stebbings?

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