When Karen Appleton Page first joined Box, it was an eight-person startup who still held most of their meetings at Starbucks. Together with Aaron Levie and their small team, Karen helped grow Box in the company it is today by building on the strength of partnerships. But how do you know if partnerships will work for your business? Who should you partner with and how do you make sure your partnerships are successful? Find out in this session from SaaStr Annual 2018.
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Realizing the Business Impact of Partnerships with Box
Announcer: Please welcome Aaron Levie, Chief Executive Officer, Co‑founder and Chairman of Box, Karen Appleton Page, Executive and Investor, and Jason Lemkin, Founder of SaaStr.
Jason Lemkin: Can everybody hear me? I wanted to mix a few things up this year and had folks that worked together for a long time. We had Michael Pryor and Michael Cannon‑Brookes from Atlassian earlier. That was pretty funny when you had a direct report interviewing his boss.
Jason: He said, “This is the exact opposite of a staff meeting, this one’s pretty interesting.” This one’s even better. Karen and Aaron worked together for probably more than a better part of a decade. Probably for a decade, right, or longer…?
Karen Appleton Page: Just about.
Jason: Karen was a single‑digit employee when it was box.net. It was probably in some weird office in Palo Alto…?
Jason: …weird office in Palo Alto, right?
Aaron Levie: It was part residential, part office thing. It’s not clear why Karen joined us.
Jason: Not clear why you joined us. You convinced her to be the first experienced person probably that joined the company at all. Among other things, all the global partnerships for Box, and we wanted to talk…used the session talk about partnerships in general.
Also, maybe talking backstage about other early learnings from there. I know that Aaron is going to ask Karen some stuff, I’ll jump in, and if we have time at the end, we’ll use…we haven’t done this, so roll with us. We will use the #askbox because it doesn’t look like it’s been used since 2008. #askbox…
Aaron: I’m defensive.
Jason: I think it wasn’t part of the Box‑works thing. Maybe it was. We are going to have asked Karen and Aaron. I thought there were some chance people would mistype that on the Twitter.
Any ones do ask #askbox and we’ll try to get those toward the end.
Aaron: Make sure to keep us on track because I could go anywhere, and we could end up wondering in the…
Jason: I’ll keep you…
Aaron: …in the politics for all I know.
Karen: Sure, help with that one.
Aaron: Maybe just to kick things off…and it’s funny. This is actually interesting because we haven’t done one‑on‑one in probably a year‑and‑a‑half or two years.
Karen: Yeah, it’s about that long.
Aaron: We’ll pick up some old habits on that but maybe just to kick things off, paint the picture. You joined as employee, I think, eight ‑‑ seven or eight ‑‑ at Box. Why in God’s name would you join an eight‑person start‑up that had no business model?
We were actually at the time focused on consumers. This was before we were in the enterprise. I believe, if I’m not mistaken, you were consulting for PayPal or working on some projects there. Is that confidential?
Karen: [laughs] No.
Aaron: How did you decide to join Box? What was that experience? You were the first executive we brought on.
Karen: I tried to go work for PayPal, and you said I couldn’t.
Karen: Then, I was like, “Well, wait.” [laughs]
Aaron: I was not familiar with employment law in ’07. I thought I could just prevent you from doing that.
Karen: I did try to listen to my inner voice that was saying, “This is crazy.” However, my inner voice was completely shut off and cut down by your louder indoor voice that said, “No, you’re not, Karen. You’re going to join this company, and it’s going to be great.” It was great.
Jason: How many conversations did it take? We all think we have this superpower as founders that we can recruit anybody, right? “All I just need to do is meet Karen, and she will definitely join my six‑person start‑up with that weird office I saw in TechCrunch.” How many meetings did it take, and what’s the real trick?
Karen: We never really met in the office. The first time I went to the office, I was in a skirt and heels, as you would think that you might wear as a professional going into a meeting. I opened the door, and I had six heads spin around and look at me like, “What, what are you doing here?” [laughs]
It was really funny. It was our first meeting. After that, we met at Starbucks. That was our office out of an office. We started talking about it being a consumer business at the time, we started talking about how do you engage with other companies, other businesses so that you can grow and extend the reach that you have, which was the foundation of why I started.
When I asked Aaron later, though, why he hired me, he told me he didn’t think he had a choice either. We’re both in this together.
Karen: You told me that Josh referred me, and therefore, you had no choice. Neither one of us thought we had any other choice but to do that.
Jason: Do not listen to your VCs, but here it worked out, though.
Aaron: It was a very fortuitous intro. We actually didn’t know what we were looking for at the time. It was seven or eight people, and what we knew was we needed some experienced talent to come in and actually help us grow the business, find new growth vectors. I don’t know, did we have even a role for business development? Or that was actually…?
Karen: That was what you told me. Now, whether or not that was just what you said at the moment, because it made the most sense, who knows?
Aaron: Who knows?
Karen: It was fascinating, because at this point, it was April of ’07. There was no such thing as cloud. It wasn’t a term of art the way that it is today. It was Enterprise 2.0, and we actually were beginning to think about what the business model ought to be.
Should we pivot? We made that tough decision that summer, which was also the summer that Dylan decided to go back to school to get a degree. We thought every good CFO should have a degree.
Jason: I didn’t hear the story. I didn’t actually know this. He went back to school to get a degree?
Aaron: Yes. We only actually had three dropouts ultimately in the founding team. Dylan actually has an accredited degree with his…
Jason: [laughs] You have to have someone on the management team when you IPO, from the founding team that has one, right?
Aaron: Ideally, it’s your CFO.
Karen: Yeah. We thought that was a good choice. It was also when the markets just started to crumble. We scurried to figure out how we were going to both do this pivot successfully, begin an enterprise business, and have enough capital to successfully engage the way that we needed to.
Aaron: We’ll leave this into partnerships. When Karen first joined, we were 100 percent focused on the consumer market. That was really the founding story of Box. We were just trying to solve our own personal problems for file sharing collaboration.
Karen came on board, and the original partnerships…you’re going to hear a name that you haven’t heard in probably two decades but one of our first partnerships was with RCA. They had a camera that we wanted to automatically back up into the cloud. That was literally like one of our…
Jason: They’re probably in the digital camera market at that point.
Aaron: I don’t even know if it was digital.
Karen: There was a digital camera market. There was no iPhone. iPhone didn’t exist yet.
Aaron: Those are the kind of partnerships we were doing. What we realized was there was going to be no business model in the consumer space for what we were doing. We pivoted into the enterprise.
We must have had maybe 15 or 20 employees max at the point. Karen and I, we were the two people that went out to go do fundraising. It was incredibly difficult because we were fundraising in the midst of a pivot, which is absolutely the worst lesson that we could ever have, is never fundraise while you don’t actually know your future business model because it’s just very unattractive to investors.
Karen and I, we just…it was great. We certainly built up a lot of tolerance for a high volume of rejections. I remember, we would just be sitting in a car after VC pitches, just like crying about all the rejections we were getting, and then…
Jason: Was it more than 30?
Aaron: Probably you could round up to 30.
Jason: Round up to 30.
Aaron: I think it must have been at least 20, right?
Karen: At least, and dozens and dozens of meetings. We would always end the day at McDonald’s, always end the day at the drive‑thru of McDonald’s. That was just, I think, like…
Jason: Those pitches were brutal. I mean you head straight for the comfort food, brutal.
Aaron: I mean that was just my diet also. I probably told you it was out of recovery but that was really…
Karen: Yes. We got lucky enough to meet Mamoon Hamid who is just an absolute, believer, and…
Jason: Yes. He’s the best of the best. He’s here this year, yes.
Aaron: Has he spoken yet, is that tomorrow?
Jason: That’s a great question. The mobile app struggles to load. It should be built on the Box platform.
Aaron: Thank you.
Jason: I will try to find out while we’re here.
Aaron: You should ask him why he invested in us. That would be good to get that story because I don’t know the answer. Basically, we got really lucky. He founded the company, and then we fully pivoted the enterprise. That was, I think, when we really started to hone and craft the role of partnerships in our strategy.
Karen: You made me say no, keeping me off.
Jason: …just one quick learning on that. I know I want to talk about partners, I met Mamoon through you. I met Aaron. I was in Aaron’s office, right when he crossed 500 employees. We were talking about voice. You got to meet this one VC, Mamoon Hamid who is the best, and I met him.
I asked him a bunch of reasons he invested but one learning for founders is he believed in Aaron, he believed in the vision and here’s my medal. He didn’t have scar tissue.
If you think back, so many folks thought, when was this ’07, ’08? So many folks thought whatever we’re calling cloud now was played out, all the vendors had done, the market was small, like no one would really run their computer or something in the cloud.
Everyone was like the world was going to be exchanged forever and people thought it was dumb. Sometimes both executives and investors, you need folks that don’t have that scar tissue. You need both because you need experience, which we can check out with partnerships but you need a mix because that scar tissue just can weigh down innovation and it just hurts.
Even all three of us have scar tissue, don’t we? We probably wouldn’t do things now that we should be doing. We didn’t see Slack come out of nowhere, and then boom. Everyone is using Slack.
Aaron: Actually on that and leading into partners, I think that actually helped us in the strategy because we had the opportunity to invent our partnership approach from scratch.
Kicking things off directly in the panel, I guess first question to Karen, I guess, would be, how did you think about driving partnerships at Box post the enterprise pivot? What was the role of partners? Why did we do it? What was it all about?
Karen: The first thing that we thought about was how do we make ourselves look bigger. We were small, we hadn’t proven ourselves in the market, we…
Jason: Box crushed this. If nothing else Box, crushed…We’ll talk about this, but keep going. We’re talking about with partnership.
Karen: We stood up tall.
Jason: It was an A‑plus, right?
Karen: Yeah, we did. We always looked like we were everywhere. I think that for me, what that meant was personally, we had to create a really good, strong strategy. The strategy was based on market penetration, how do we accelerate growth and foundationally, how do you create credibility awareness with the expectation that that will lead to revenue?
Sometimes, we do deals just for the credibility or just for the awareness and always we had to figure out what was going to be our path to revenue on that. That was the more disciplined sort of a piece of it, but we identified a strategy and we went after it.
Aaron: I don’t know if this could be broken up into a percentage, but how much do you think we did for technology differentiation and integration to make our product better versus as a growth driver to be able to get either reseller channels or distribution?
Karen: We clearly had an approach that was like OK, so everybody’s got these siloed applications and all of them needed some sort of a back‑end that would store people’s information and data. We use that as an approach. That worked really well with NetSuite, for example.
They had a piece of their product that was meant to store all this data. They weren’t going to update it, they weren’t investing in it. We came in and we did a fantastic partnership with Zach that solved two business problems and gave us a new access to a channel. That was certainly an integration that was based on technology.
Jason: Let’s dig into that a little because I remember that even from the old days. We were an early NetSuite integration by from, but you guys crushed it on that. Whether you did in the real world, you certainly did it a perceptive level and all levels from the C‑suite, from Zach, across.
What were the tricks here that you could share? Did NetSuite really need Box as an application that bad in 2008?
Jason: I mean 2000…Of course it did, but you became their showpiece next‑generation partner, right? It wasn’t just that Aaron was the wonder CEO. It’s much more than that. What were the tricks? How did you make that happen?
Karen: I think one of the tricks was that we strongly invested in the people piece of it so we make sure…
Jason: People get this wrong, right?
Karen: Absolutely. I actually think it’s one of the…
Jason: They sit in front of their computers, they do a little the integration, and they wait for the customers to come through the API, right?
Karen: They think that’s the…Right. We made sure that our sales people got together. We have an operational checklist of all the things to do. It was attend each other’s SKOs, make sure we were at each other’s conferences and events, do thought leadership events together, bring the salespeople together.
Then, make sure that everybody knows exactly what to say, how to say it, and what to do when interest was sparked. I think we did a really good job at that.
Jason: On the sales side, sometimes that revenue doesn’t come the next week. How do you get them to do those SKOs? How do you get them to take it seriously versus when HP comes in as a flagship customer for Box? How do you do that?
Aaron: The thing I would say is back to the point previously is this is why you fundamentally need a Karen within your organization because…
Jason: You have to. You have to.
Aaron: My preferred approach would just be don’t talk to anybody, APIs are there…
Karen: Figure it out.
Jason: Just watch the balls come in, right?
Aaron: The technology just works and just integrate these things. The reality is, though, each of our organizations have a tremendous amount of change management. We have a tremendous amount of inertia, we have a tremendous amount of work to do within the field organizations, within the sales organizations.
Unless you dedicate the time, resources, people, and energy to making these partnerships work, they just won’t work. If you’re a developer platform, so we have an intercom behind us, then it’s fine. Then just plug in the API into my application and everything will be fine.
For deep partnerships, if you don’t invest in the people component, then there’s no way you’re going to see a successful outcome. Having people like Karen, but then ultimately the team that she built under her, that was what fundamentally drove our success.
I don’t know if you’re talking about what we did early on to be able to drive that, but the technology was probably one‑tenth of what you had to do to get right.
Karen: Just to add on before I answer your question, it was critically important for us that we had senior relationships at all of these people.
Jason: At multiple levels. Multiple levels, right?
Karen: Multiple. Zach and I, we were buddies. I built great relationships with all of the senior executives that were running things and then made sure that all the salespeople knew each other and all that kind of stuff.
Fundamentally, it was about making sure we were connected at the execution level and at the decision‑making level. That was super, super important.
In terms of building the team, certainly everybody knows you got to hire the best people you can find, but we broke our business development team into two parts. We had the hunters and we had the farmers.
The expertise here was all about how do you nurture those relationships and make sure everything from the content and the product and that we had all of the right folks doing the right things. That was critically important.
That’s an incredibly different skill set from the folks that are going out and hunting and finding the partnership.
Jason: Let’s dig in on that because it’s not as obvious as it sounds. When you did the NetSuite dealer pick another deal, was Box under 100 employees back then?
Aaron: Probably 100 to 200 employees.
Jason: 100 is not a lot. You can’t afford to have 20 people on the BD team. What do your hunters and farmers really mean when you’re trying to add 10 million, 20 million AR the next year? What does that even mean? We get 100 farmers sort of being in sales, but what does that really mean?
Karen: That’s a great question in terms of the size and how you divide the resources. We just had a lot of people doing a lot of things.
We tried to make it as templated as possible so that with every partnership that came over, that jumped over the fence from the hunting side to the farming side, we had an operational checklist. Here are the 10 things that we need to do with every single partner.
We also had tiers of partnerships so that we knew that type one partnerships got these 10 things and type three partnerships just got maybe a tweet or a blog post or something like that, but we had to be really clear.
I think that it just comes right back to the point of you have to be clear on the strategy you’re executing against to make sure that you’re managing those resources.
Jason: I think Aaron…This is a good reminder for me. I think doing these sorts of deals, if you don’t have Karen is impossible.
Jason: Even if we like to sit in front of a computer, CEOs have a little bit of a superpower in that CEOs will meet with CEOs. If you want a hustle and Zach Nelson is interested in what you’re doing, you can probably get that first meeting and you may even get the second one, but you will never be able to penetrate the organization without a leader to own.
It’s impossible. As CEOs, we make these mistakes. We build the relationships and then we lose the energy because we can’t be the project manager of this, right?
Karen: Right, that’s for sure.
Aaron: This is why I think that partnerships generally have a mixed rep within Silicon Valley and beyond, which is that you see a lot of announcements that then fizzle pretty quickly.
It’s because it’s really easy to do a press release, it’s really easy to do the technology integration. Not really easy, but resources kind of dependent, you can do the integration.
It’s really, really hard day in and day out in the hundreds of sellers or tens of sellers you have in the field and across your two or multiple organizations every single day to show up in front of the customer and be presenting your solutions in an integrated way for that customer over and over again.
That’s the really hard part because that’s people, that’s change, that’s evolving your culture. That’s getting people to recognize that we’re going to be better at selling our software when we have partnerships and we have other people that are working on our behalf and we’re working on their behalf.
That’s the part that takes a really, really long time and that’s the part that requires a lot of change.
I think the thing that strikes me right now in particular in this category in this market is we collectively as an industry have made it really hard for our customers because of a lack of deep partnerships and deep integration.
We are one of the only industries where you take all of this technology and you throw it at your customer, and you say, “OK, you get to now be the system integrator of all of these solutions and all of this technology.”
That’ll be like buying a car with all the parts coming separately, and the customer, and me as the consumer, I have to now go put the car together. That’s what we’re doing as a software industry.
We think that partnerships are fundamental if we are going to actually be able to drive the transformation that’s necessary within IT, which means that we collectively as an industry, we are going to have to find as many ways to be able to work together and present cohesive experiences in front of our customers. That’s going to be both technology as well as the people’s side.
Jason: That’s interesting. Can we chat about that, too? I’d stop going to CIO panels and sessions till recently, and then I did more. A lot of things I learned getting re‑engaged but one is just so much CIO fatigue from multiple vendors.
It’s the flip side of what you’re saying, “No one wants…Great, I’ve got Akhter, or whatever,” it’s not enough, forget about even security I want. How do you leverage partnerships so that it feels like I’ve fewer vendors? Is it just getting on Box’s paper? Is it more than that? How can I take what Aaron is saying and make it easier for the enterprise buyer in the CIO?
Karen: Often the approach that we took was around, that was how do we create a suite of services? How do we partner with others that are in that ecosystem so that we help alleviate some of that, the burden of all of those integrations? It doesn’t always work that way, but you can certainly try.
I mean, sometimes we were dragged into deals as a result of a super tiny small partner. In the case of a huge hospital system, they had decided to use a piece of software for security. The only reason we were brought in was because we already had a deal with that.
Jason: You had the integration?
Karen: Yeah, we’d already had that integration. It was backward because it was teeny‑tiny little company, but, hey, they brought us into a great deal. I think that created some opportunities for us. We also certainly tried to do deals, for example, with carriers where they already owned the customers.
Reaching our partnership with an AT&T or a Deutsche Telekom, gave us access to a huge array of SMB customers. We would let the partner help us construct the suite of services that they had on their list of companies that they were working with.
The only challenges around those things is making sure that when you’re engaging in an army of sellers that those sellers understands the pros and cons, benefits of your product, otherwise the engagement isn’t going to occur and you are just going to churn.
You have to be thinking it through, not only from the perspective of engaging or creating a suite of services but also in how do you create adoption that sticks.
Jason: Let me just ask a question, and let me let Aaron drive it. Related to that, if you work with someone, like a carrier back, and there’re huge companies today, and driving that alignment, how do you learn what their financial incentive is? We’d like to think we can spiff their apps but that never really works, does it?
I mean it works once in a while but even if you are allowed to spiff their ups and take them to the ball games, it’s never really their core goal for quota. This is something we write on the Internet to spiff their apps. How do you line their goals with your organization?
Karen: This is where the rubber hits the road. The minute the ink is on the paper is the minute that you flip over to the launch phase of the deal. That’s where the KPIs are agreed upon, the business plan is more formalized and all of those types of pipeline calls and quarterly business and agreeing on what the numbers are. That’s when that happens.
One time, I did a deal with a big SI. After the deal was signed, the person they assigned to the deal was a program manager, which is wonderful. All the kind of shit is going to get done but you don’t have somebody who is strategic and senior enough to make sure that all of the pieces of the puzzle are going to come together.
That’s the first thing you have to make sure you get the right people, playing on your team in order to make those two sides of the story come together. If you have agreed upon, KPIs and business and dollars that you want to try to achieve and you are going to get together on a weekly basis and figure out if you are on track or not on track.
What are you going to do if you’re not? You get a lot larger chance of having a successful deal.
Aaron: You have a massive man of operationalization to be able to make this work and spiffs is one‑one‑hundredth of the things…
Aaron: Ultimately, the great thing about whether it’s partnerships or just even building product in general is it always comes down to the customer. Nobody is going to sell your software if it doesn’t make the customer have a better experience or make their sales process easier.
What we basically discovered is the partnerships that worked are the ones where the seller on the other side had a better experience being able to work with their customers.
They were able to have a more seamless process selling their solution and the customer was getting more value because of that partnership. If that didn’t happen, there is no amount of artificial incentives and ways of forcing it through the system that at least would work on a sustainable basis.
You might be able to get a small pop but if the customer value proposition is not stronger because of your two solutions or multiple solutions working together, customers doesn’t care, which means that no spiff in the world is going to be able to solve the problem.
I think, when we look back, the impact of partnerships are the ones where our partner was able to deliver more value for their customer and it wasn’t just a distribution channel. It wasn’t just being able to get more feet on the ground trying to sell our solutions.
It was actually delivering a better experience to customers. The challenges is you can’t always know in advance going in on the partnership, which ones are actually going to click and which ones aren’t.
Jason: That’s for the big companies. They lean in early with the big ones.
Aaron: Especially big ones, and they are constantly reorganizing, and one day you do partnership with one team, and then all of a sudden three weeks later you find out that…
Jason: Every year it’s a new team to the company, isn’t it?
Aaron: Every year would be great. What about every three months? These are things that you’re just dealing with constantly on the partnership side but you stick with it because the opportunity is so profound if you can get it right.
Jason: Another reason you need to find your Karen is because of this turnover. You think as a start‑up, you think start‑ups turnover. I am looking at this team that was together for 10 years but at your partners, you probably seen 10 VP ‑‑ probably not CEO but 10 VPs ‑‑ at these levels and the turnover of a big company is exhausting.
If you don’t have a manager, the CEO’s relationship, below the CEO, is going to die during the calendar year. Isn’t it?
Karen: Yeah. Absolutely.
Aaron: Just to make it awkward for Karen, also to say compliment, I think what makes Karen so unique but also the job so unique, the kind of person you need.
The persistence and the relentlessness that you need because it’s hard enough to change your own organization but now imagine trying to change other organizations. You have to be fighting that every single day and be willing to basically get rejected 90 percent of the time and be able to go…
Karen: I think it’s only 80.
Aaron: Only to 80. Sorry to round up. The sheer persistence that you need to be able to have to be able to be fine every single time one of these changes happens is unbelievable. That’s why the role of business development and partnership is, I think, such a unique idiosyncratic role within a start‑up.
It’s like sales but magnified because there is product component, there is technology component, you’re dealing with a whole bunch of other constituents, and you just have to be able to deal with all of that, the ups and downs on that.
Karen: That goes right back to the point of one of the most important things, is making sure you have the right relationships at every part of the company, and I used to…
Jason: You graphed it out, you had to graph…
Jason: This is what people don’t do. This is when your senior or someone is doing it, is you walk in and there is a chart. Often on pen and paper, pasted the wall and it’s some matrix and every person at that partner is on that. You’ve got to do some version of that to win, don’t you?
Karen: Absolutely. I was…
Jason: Liquid paper, put white strips over the quarterly changes on the chart.
Karen: I was always the one at the conference who was waiting for the speaker to come off stage to be like, “Hey, you really need to know more about what we’re doing right now. We should talk.” [laughs] I’d be like…
Jason: Let’s chat about that, that works, that worked?
Karen: We have to go. Sure, who was the start?
Jason: It’s not something most people would think to do that you couldn’t get…have your head of partnerships, jump at a conference, and ambush Zach Nelson or Marc Benioff, and talk to him about the Box platform. If you don’t try, it’s not going to happen.
Karen: How else you are going to meet them? I mean you have to figure out and I would definitely scan, where are they going to be? How can I not awkwardly or weirdly try to find them? I certainly…
Jason: Awkward and weird are different.
Jason: I mean awkward is OK. This had to be careful, not to cross the line to be weird.
Aaron: I think any of our jobs looks a lot less elegant and glamorous when you actually reveal what we actually do day in and day out.
Karen: Right, but we had a great approach around that. I mean I think we did a lot of dividing and conquering. We used a lot of our networks to do so. Rison was one of our investors and they often had huge corporates in…
Jason: They were great at that, right? That was there is…the real way they could help enterprise companies…
Karen: You just follow up like crazy and make sure that you’re doing so in a way that is relying about your proposition and the reason for either buying the product or partnering to an extent.
Jason: Can we dig into something that Aaron gets your thoughts, Karen, and some that Aaron said about because I have experienced…and it’s great for founders that little partner that actually delivers a lot of business.
You’re probably going to sign the deal with HP or Salesforce, even if you are not sure the revenue’s going to…You got to do that deal. This little vendor, you never heard of it, healthcare or something, four guys, there are people in Idaho bring you a big deal.
For folks that want to be that Idaho thing, how do you leverage that? You got to bring them one, you can’t get Box’s attention if you are four people today without bringing the customer. How do you get them to believe that one is 100 or who did you see…what did you see where you would lean in and help someone that brought that didn’t deliver 100 customers?
What’s the secret there?
Karen: Do you remember [inaudible 28:07] ?
Aaron: No. Not that one.
Karen: That was funny, though. Oh, gosh.
Jason: You can generalize the tips if there is some sensitive stories.
Karen: No, no, no. I don’t know that…we always try to get the big customers.
Jason: Did you have any small partners that brought you the big deals?
Aaron: Maybe the thing I will at least kick off is…part like…
Karen: Yeah, the one that I was mentioning, this little security company that brought us huge hospital.
Aaron: Yes, exactly. I think the thing is as a partner, and we have to do this when we go partner out, and so thus vice versa.
If you’re a partner trying to partner with us, you have to do the same thing. You have to deeply understand what is the strategy of the company you’re partnering with and what is the wage, what is the area that partner has to uniquely needs your solution for?
If that doesn’t exist, or if it’s overlapping too much, or it’s just going to create complications for the customer, then there is no partnership to be had. By finding the complementary areas where two solutions truly does begin to impact the customer in a very different way, that’s what we found to always work.
When we look at it, maybe a company that might be smaller than us, it’s not necessarily, do they have a distribution channel or do they have lots of customers? It is, are they doing something incredibly unique that is going to offer a lot of value to our customers, that is not in a space that we would expect to get into?
It’s really important for the partner to understand those things going into the conversation. The worst pitches that we will get and the worst pitches that we will do are the ones that’s just making a sense. It’s just like, “Hey, please distribute us because we need growth.”
Nobody cares about your problems. All we care about is our strategy and what the customer is trying to do. When that can align, then there is a way to make it work.
Karen: That’s why we built the platform that had the APIs that everybody could connect into. We became less of a decision maker or gatekeeper but we let other people build on the platform so that they could do with the product and the service what they wanted to do for their business. We just weren’t as active in those.
Jason: Did you ever think about what you might call pre and post‑sale partners, folks that bring you into the deals, folks that don’t help you at all with the customer but make Box better after the deal but don’t help the sales or rep or the sales team one iota?
Do you distinguish those? How do you manage them internally? How do you get people focused? They have different values, different stakeholders, don’t they?
Karen: When I think about that, I think about some of the large deals that we did, that really were on the marketing side.
They helped us with exposure. They helped us with credibility and awareness, but they were less designed to, in some cases, the 50‑gig deal that we did for the very first time was really more about getting end‑users on the platform and creating awareness so that businesses would know that we existed.
That was the big play.
Jason: You wanted to phone. [laughs]
Karen: It didn’t necessarily have the dollar amount that…we didn’t have any intentions of getting huge money out of them but we did them anyway because they were so critical to things that we just didn’t have the reach to do at that point.
Aaron: I look back and I don’t think we ever made distinction although ultimately things went into those buckets, like after the partnership launch where some just didn’t help us in a pre‑sales process but were incredibly important in terms of the customers experience with our technology.
We did a partnership with AT&T where honestly I…you may have had a way bigger vision around it but to me, it was just like, “Oh, this could be cool. We’ll be partnering with a carrier. We’ll see what happens.”
It ended up being one of our strongest partnerships because it turned out that if you’re selling mobility solutions to enterprises and you work at AT&T, you need killer apps to go along with your mobility solutions.
In our product case, we happened to be a killer app for moving lots and lots of bits of information on the mobile devices. For a seller within the AT&T world, we ended up being very valuable to them to be able to go and show more value to their customers.
I didn’t necessarily think all that through when we were doing the partnership but it ended up being an incredibly powerful driver.
One of the biggest lessons that I think we learned is you have to find partners that have the same macro tailwinds as the ones that you’re trying that you’re trying to ride on top of. If there’s not a big macro movement that is propelling you, also the partner shares, then there’s just too much friction.
To be able to align to this…if you’re a data analytics company, then obviously you should be probably partnering with other solutions that would naturally grow in a big data and analytics world. That’s an example.
The same friction is that you’re going to deal with your partners are dealing with. You want to make sure that you have as much of the tailwind behind you as possible with those partnerships.
Karen: I think that as we matured, as we started to think about going public, to the point where when we were public, one of the areas that I worked on was the industry team. One of the important things about that was being able to speak the language of your customers by industry.
When we did those, we started thinking about partnerships again in a different way. We wanted to put Box in with particular companies that worked in a particular industry. We were going back down to smaller companies to do these deals.
We would put together the idea of a group of companies that would benefit a retailer, hospital, or financial services, and then we would take them to market via our sales organization, which of course required the proper communication and alignment.
We needed a product and everybody else involved. We would also take that out through our other channel partners at that time, which included SIs, and other carriers, and IBM, and other large businesses.
I think you [laughs] have to be nimble and be willing to move depending on the stage of the company and the goals or the outcomes that you’re looking for.
Jason: I’ll let Aaron guide it but thinking back on time when you talked about looking big and going big, especially on the enterprise side of Box, back then, how did all these partnerships help you competitively?
As a Box’s partner but also a student, it certainly gave a lot of gravitas. That’s clear. In the real world, how much did that help? It almost felt like it created a mini mode. I mean it’s not a perfect mode. It is a competitive space but it felt like in the enterprise, it created at least a shallow mode that was hard for the people to cross.
Aaron: Outside of the core philosophical context, then I’d be curious, Karen, on actually how we went about doing it. From a pure philosophy standpoint, we determined that we are either going to win or lose based on the power of being a neutral player in our market.
If you wanted the full‑integrated stack of services, then you could easily just go to Microsoft. They’re going to have everything that’s integrated. It’s all going to work together.
Our only strategy was, what is the power of having an open neutral platform that works across all the technology in your environment? By definition, partnerships and our core strategy were one of the same. There was no doing Box without a core partner ecosystem or application ecosystem.
That meant that we actually had to do very deep partnerships in a broad way if we were going to be successful and if we were going to actually build out this value proposition in the enterprise.
I think from there, it was just, “OK, how do you go programmatize it? What are the different types of partners that end up driving that versus being neutral to it?
Karen: I was also pretty well incentive to go after particular deals. You and I and anybody else on the various teams, we’d set it up. We knew exactly who we wanted to partner with.
That wasn’t like, “Left a chance.” We didn’t just sit back and wait for the phone to ring. We were like, “We want these or 10 premiere companies that we need. These are the channel partners that we want.”
We executed relentlessly to get those and that meant everything that we’ve said so far. How are we going to meet the right people? What might they want to do? What could we build? How far will we not go to do the things that we want to do?
That was really an important piece of it. We were relentless on that.
Jason: When you want to be open, you have to be the most open. You have to have everyone. I always stressed about this. When you’ve got Salesforce, and then Oracle wants to be on your platform, and you’re open, but how do you be equal open with everybody when everyone isn’t equal?
They are not equal. I mean, with Marc Benioff, once you’re helping, you’ve got to go up to his extra house on Nob Hill, there is just the office, and have the sit‑down. Don’t you?
But then when Larry Ellison, but he’s retired, so how do you…but it is a little bit stressful, isn’t it? Even if you are open, the partners do not have equal gravitas, do they? Any insights on how to manage that? You just smile and do your best?
Karen: You should really carefully [laughs] and do your best. I think that there’s…
Jason: Send the bigger play to…
Jason: Or what’s the answer?
Karen: There are some obligations for some transparency.
Jason: Transparency helps, right? That’s the key.
Aaron: Absolutely. When you can get the partner to understand your situation, then they have enough empathy to know that, “OK, the value proposition that you have to your customers is an open platform,” by which definition means you probably also have to partner with our competitors.
What we tried to do is be upfront with partners, which is like we’d love to do much co‑marketing, co‑selling with you as possible.
That’s not going to preclude us or prevent us from partnering with other companies that might be in your stage because fundamentally we can’t go to customers and say, “We have preferential treatment from a technology standpoint of one vendor or another,” or else our entire strategy gets blown up.
That might be awkward every time there’s a big press release. That’s where Karen has to get on the phone and send…
Karen: Do a little pre‑brief. [laughs]
Aaron: Right, do a little pre‑brief. You give them a heads‑up. You say, “Hey, you’re going to this thing on the news.” We obviously are very committed to our partnership, and we’d love to keep doing more.
That’s just the standard relationship management that I think you have to do in the place.
Karen: Sometimes, we work to our advantage because sometimes it helped the other partners see that, “Oh, gosh. We’ve got to work a little harder. We want to do a little more. What could we do?” That led to sometimes some pretty cool outcomes as well.
Jason: I think you need your Karen because the CEO is tough. It’s tough when you get the CEO, hand burdens or whatever you’ve got. You need someone to juggle that for you, don’t you? Make a bunch of those for Aaron, could you take a few hits for…?
Karen: By design, I mean maybe we weren’t quite that smart in the beginning but yeah, we didn’t have…if somebody wanted to deal with Aaron all the time, we had to change that up.
We needed Aaron to be able to come in. [laughs] We really needed him, when there was a big problem or when we were at an impasse. You need to have somebody who can come in and…
Aaron: It’s a little bit revisionist. You probably were shielding me so I didn’t blow up the partnerships.
Aaron: I think I mostly probably complicated things as opposed to was value‑add…
Karen: There were definitely times I can recall you complicating the business.
Jason: I maybe misremembering some of my Box’s history but I’ve studied it for a while. I think you went through an evolution of how to monetize the platform. I think it probably took you close to a decade to directly monetize Box as a platform.
I bet you guys thought about it in 2008. How do you think about what it’s too early, when do you discourage development? When do you actually have to make a few nickels off the $300 million that have gone in probably to building Box?
Aaron: I think, for us, our struggle was basically…we’re deep believers in openness. You should be able to use our APIs for literally anything that you want to be able to add value onto our product.
Jason: You don’t want to charge initially for that, do you? You don’t want to charge.
Aaron: I still don’t want to charge. Especially, if it’s your data, then you should be able to do whatever you want with it. At the same time, we started to see customers having use cases, in particular customers, so not ISVs.
Customers having use cases where we were being while labeled into another application, doing something completely different from standard integrations.
At that point, it crossed the threshold where said, “OK, maybe there’s another business model here where we say the technology that we’re using to deliver our core service to you as a customer, you can also leverage yourself. We’ll just have a AWS‑like pricing model that’s more resource based.”
That was a struggle because, again, we were starting to charge for something that theoretically we could have made for free.
It was really delivering a completely different value proposition and we had to have that line of demarcation. I think it was also difficult on the biz debt side because we had to decide like, “OK, how do you now treat partners in this category? How do we still have a really, really strong open platform in the process?”
Jason: Somehow, we blew through all of our 40 minutes. Any last fun story from Karen you want to bring up from the partnership days, or otherwise, or vice versa? Karen, you got a good story for Aaron that’s appropriate for the stage? Either of you go first for one last good story that at least superficially is related to the topic.
Aaron: I think the one thing that we probably didn’t talk enough about or actually at all, is also I think just like an elephant in the room on this, is on the product side. This is really where it’s difficult. It’s prioritization and then creating the right swim‑lanes for what a partner can work off of versus what you’re going to build yourself.
There’s a whole philosophical issue that you have to start to be very clear around the principles of, “What are we going to build? What should a partner build? How much time should we be dedicating our resources in developing these partnerships?”
The worst thing you can do is thrash your internal engineering and product management just based on all of the externalities. This is something that we had to get really good at, is making sure that this was a very finessed part of our product strategy.
Karen: Because my philosophy was, “Say yes and so…”
Aaron: Build everything.
Jason: That’s the tension. All right. Let’s thank Karen and Aaron for this session. It’s terrific.