Scaling your product from one specific use case to an enterprise offering with multiple features is a daunting task. You need to consider your existing customers, your total addressable market (TAM), your employees, and how you envision the future of your product. How do you balance these things while creating a great product?
Aaron Levie, CEO and Co-founder of Box, discusses the approaches he used for scaling his company in terms of hybrid work, adjusting to a dynamic economy during the pandemic, and the importance of the Cloud and digital technology for every business.
Decide on your company model and stick to it as you scale, even if you lose deals because of it.
Ever since day 1, Box was multi-tenant, and we made no exceptions to that. We never wanted to go on-prem, and we did lose deals early on because of that. That was difficult, and it can feel demoralizing for you and your sales team. But sticking to your ideal company model is the right move for the future of your company.
Box has always lived in the Cloud, anti-on-prem. We never sustainably fell behind from what one could actually do with computing and software because of this—not being on-prem didn’t destroy us. We focused on the benefits for our customers, on reducing friction for them and their processes, and we’ve always had a freemium, viral adoption. This has been a compelling business model, and customers get all the tailwinds benefiting those decisions.
I’m a big believer in product-led growth, freemium, viral adoption. If you can nail that for the category you’re in, it will be magic that makes SaaS so much more compelling than the prior era of on-prem software.
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Don’t neglect your existing customer base.
I’ll always talk to anyone remotely interested in moving their stuff to the cloud, but I know that most of our new revenue comes from our existing customer base. There is fresh optimism from our customers, and the longer they are with us the bigger the opportunity for expansion.
As a CEO, you align your time with where the dollars will ultimately come from.
Prioritize customer adoption and retention. Build a great product, grow loyal customers, get IT to connect the dots, and continue to drive bigger and bigger deals. When you go multi-product, this becomes easier. Box reported 125% NRR with multi-product customers versus 90% NRR with customers without add-on products. Our customers pay more and stay longer when they buy and use more than one product from us because they’re invested in us and know our value.
Hybrid work improves, not hinders, collaboration with customers.
Every company will eventually be a hybrid work organization. This was true before the pandemic but is especially true now. The singular largest mega-trend and transformation in enterprise software history—digital transactions and hybrid work—is playing out right here, right now.
Digital transactions are becoming the norm and products need to exist to support that.
Even for the most ardent fan of physical offices and in-person collaboration, every IT organization on the planet is going to have to implement hybrid work—and they need products and tools to support that. It will no longer be possible for the world’s largest organizations to use the exact software they used ten years ago when we didn’t have hybrid work as a primary fixture for how teams operate. That software, if it remains unchanged, can no longer serve the evolving needs of companies.
Supporting hybrid work in your organization and for your customers doesn’t hinder your progress and success. Hybrid work means the ability to rapidly collaborate with customers, to hop on a quick video call with a customer to test a new idea or talk about a new offering. It’s game-changing, and it’s easy with the right software.
Hybrid work, product-led growth, customer retention—these may not be new, but the cultural norms have changed, as have our expectations. Decide on your company’s purpose, stick to it, and prioritize your customers. You’ll have everything you need to scale.
About the podcast
Aaron Levie is the CEO and Co-founder of Box, a cloud-based content management and collaboration platform. He’s the visionary behind the Box product and platform strategy and has also served on the Board of Directors at Box since April 2005.
Jason Lemkin is the CEO of SaaStr, the world’s largest community of SaaS executives, founders, and entrepreneurs. Previously, he was the CEO and co-founder of EchoSign, which was acquired by Adobe in 2011.
The Official SaaStr Podcast is the latest and greatest from the world of SaaStr, interviewing the most prominent operators and investors to discover their tips, tactics, and strategies to attain success in the fiercely competitive world of SaaS.