♪ >> from here three in san francisco, welcome to "bloomberg west." i'm cory johnson. here's a check of your top headlines. u.s. stocks ending the week in a negative tone, despite a strong jobs report. the labor department says 250,000 jobs were created in december, but wages were down. citigroup is cutting bonuses after a lackluster end of the year in fixed income and equities business. bonuses will be cut up to 10% according to people briefed on the matter.

citigroup's ceo said fourth-quarter trading revenue would be down 5%. the house approved the construction of the keystone xl pipeline. the senate is expected to follow suit, setting up a confrontation with president obama, who said he will veto the bill. the president of the american action forum says the pipeline is critical to canada. >> from a canadian point of view, they get access to a market they would like to compete in. it is a better way to transport oil. it is safer. if you don't have a keystone pipeline, they will find other ways. but this is the low cost, safe way to do it. >> in nebraska court also threw out a challenge to the pipeline. amazon is quick at giving refunds. they take just 1.3 days on average to return money to customers, the quickest of any

online store. amazon offers an instant refund feature with the aim of getting customers to spend that money again at amazon, quickly. stories making headlines today -- the terror attacks in paris. suspect behind the charlie hebdo massacre are dead. in another incident, a man took hostages in a kosher grocery store in paris, an attack police are calling anti-semitic. his common-law wife escaped -- police consider her armed and dangerous. president francois along address the nation. >> -- francois hollande address the nation. >> i want you to remain mobilized. vigilance is something the state must demonstrate. with the prime minister, we have once again reinforced to protect our public places and make sure

we can live quietly, without being the object of a threat or risk. >> meanwhile, the nation's prime minister egg knowledge failures in french -- acknowledged that failures in french intelligence helped lead to the attacks. box is proceeding with its ipo, after several delays. in a new filing, the cloud storage company says it plans to sell 12 million shares. that could give it a value of $1.6 billion. the ipo is a long time in the making for box. they filed 10 months ago, but delayed due to a choppy climate for tech stocks and kind of crummy financials. i spoke to the ceo and founder of cloud storage company ignite about what he thought. >> it has been one of the ipo's

that has been stalled for a long time but we are glad to see them finding it out. we wish them well and hope it will be successful. by doing so, it increases the interest in our space and makes it better for all of us. >> maybe you should explain -- your company does what that is similar to box? >> the similarity is we are targeting the enterprise. the difference being that box is highly vertically integrated. you have to use their clout, their product and their apps. with ignite, you cannot ignore infrastructure. thereby give choice to customers -- any cloud, any storage, any device. but the commonality is we're both going after enterprise. >> why is this business booming so much for dropbox, for box,

for ignite? >> the opportunity the total available market size is huge. i fundamentally believe we are all barely scratching the surface. it is a highly latent need, mostly in the enterprise. given how the space is evolving and the market opportunity is getting bigger, there is room for plenty of companies right now. >> specifically related to box fuel -- growth has been related to marketing expenses that have been extraordinary. is that because they are trying to get ahead of you and dropbox and the only way to do that is to spend money on marketing? >> there is an element of that. if box sells more, we sell more. they have more marketing dollars being spent to popularize this category. for companies like us, it opens

up gateways. once solutions get interesting from an i.t. point of view, they start looking for enterprise-centric solutions. that is an opportunity we have seen in these industry verticals. >> for every dollar box spent in revenue, they spent $1.38 in marketing to get that revenue. their argument is surely that they are recovering revenue. once you get a customer in they stay and they cannot move their business away. how sticky is an ignite customer, how sticky is a box customer question mark is the stickiness -- a box customer? is the stickiness different? >> if you are focused only on the enterprise not appealing to both the consumer and the

enterprise, the churn on the enterprise side is almost negligible from our perspective. the more you appeal to not just the user-centric nature of your solution, but also i.t., which has been maligned with the advent of the cloud, the stickiness will be a lot higher. >> you are saying that when box makes the argument, most of our customers are enterprise customers and they are very sticky, you buy that? why? >> i would differ slightly. a lot of their customers tend to be small and medium businesses. enterprise, it is any company with 1000 employees or higher. the stickiness on that latter segment is high, because once you do a good job in dealing with business partners, it

increases. as long as your solution does what it is supposed to do, it is incredibly difficult to take you out. >> so when the roadshow begins in the next few days and weeks what kinds of questions would you want to know about box's business if you were an investor? would you want to know what percentage of customers are small and medium-sized businesses more likely to drop box, if you will pardon the pun? >> as an investor, you need to analyze their segmentation of the business, look at the churn rates look at the cost of customer acquisition and the economics for all these critical segments then really decide where is the beef? you cannot assume they will grow in all the segments, including there are big kahunas there

microsoft and google. so pick the market you are good at, and show the economics. >> that was the ceo and cofounder of ignite. we will continue the conversation in the next half-hour with a special edition of "studio 1.0," with the company's cofounder and ceo aaron levie. products released at the consumer electronics show could lead to a whole new market. we look at the biggest winners next on "bloomberg west." ♪

>> this is "bloomberg west" on bloomberg television, radio, and bloomberg.com. one of the new devices from the consumer electronics show -- logitech has to figure this out. they make all the junk, the keyboards, the mouse, the

speakers all the bells and whistles that you add to your tech toys. the logitech ceo is working to figure out what people will actually be buying after ces. i talked to him earlier, and asked him what he saw at ces. >> first, it is amazing, the depth and breadth of what is happening in electronics. >> house so? -- how so? what's he used to go there and you would see the mouse area and the keyboard area. now you see drones everything health-related everything home-related. it is amazing. >> in terms of the places products are going what are the technologies behind them? do you see unifying themes? let's obviously bluetooth offerings are exploding. -- >> obviously bluetooth offerings are exploding.

but a lot of things in the home. wi-fi, all these technologies. there are lots of things happening, competing technologies like there always are. but in the end there will be more opportunity. >> i'm sure you had a million meetings. what kind of meetings does your company take? >> we do several things. i saw a retail customers from all over the world. it is a very efficient place for that. i probably met 25 entrepreneurs there because we are looking for ways to accelerate our strategy into new mobile and home spaces. i met a lot of entrepreneurs. and i spent time looking at new things new products. >> in terms of looking at these products how do you look at what is going on? what is your methodology to make sure you are seeing what is important? or do you just wander?

>> i do a little wondering. but we have a lot of areas we are in. four key growth areas we're focused on. this new area we call seeds, things you don't know about that we have not announced yet. we have seven categories we are building in right now, and i'm looking for things that can accelerate or replace things we're doing. >> give me one or two. >> i cannot. they are top-secret. i would love to. but i can show you something else. one of the sectors we are already in is bluetooth speakers. some viewers will already have seen -- >> i have one at home. i use it in the room where i work out at home. >> i love to hear it -- you can play it in the shower. it is called the ue boom, and we just announced the ue mega boom. if i turned it on -- we are

sitting in front of a huge window by the day. it would rattle the windows. this is incredible. 20-hour battery life, amazing acoustics. 360 sound, it plays all the way around. >> give me some kind of context. >> we had an incredible year and a half. we launched it back in may two years ago. it has an extremely well around the world. >> what kind of numbers? >> in the u.s. we are at -- it has become our number one profit. >> 10% share in the speaker market. >> our number one selling product. >> more than keyboards? >> more than any single keyboard. and it is still growing very rapidly. >> how do you decide? you have a pilot keyboards. how do you decide which product to work with?

obviously you want to work with the ipad. you want to be -- i don't know what the number two. >> tablet is samsung. >> how do you decide what to make products for? >> in terms of the platforms we support, we look at scale and consumer experience. we want to do things where the experience can really be enhanced. we want to give people another reason to buy an ipad. it has to be that good. >> if you are enhancing the htc whatever the xyz whatever tablet that no one uses, what good is that? >> there are lots of things we are not working on that we could. there are more opportunities we could possibly get at right now. we are focused on going after the one we feel we can build a stable, exciting business. >> how do you decide that? >> we look at the trends and

consumer experience, and where we can add something. we have created four new businesses, all of which have become really significant. >> one of the growth businesses right now? >> the bluetooth business is taking off. our gaming business is taking off. our video collaboration is a way to essentially have a videoconference experience in a small room for under $1000. you just plug in your computer, and you have videoconferencing at a very high level. >> that was the logitech's ceo. tweeting from the side of the biggest rock in the west. new technology helping climbers -- people watch climbers attempt what could be the hardest climb in the history of climbing. next on "bloomberg west." ♪

>> welcome back. this is "bloomberg west." go pro has led to a boom in videos of extreme sports, but we have never seen this. to climbers attempting the don wall of yosemite's el capitan. we spoke to a business analyst for "bloomberg west" and a one-time collegiate climbing champion. she set us straight about why the dawn wall is so daunting. quite this is potentially the hardest free climb in history. >> do you have to pay for it? >> you don't have to pay for it. free climbing is using just your own body to propel you upwards

instead of pulling on ropes or any type of gear that might be in the wall. it is just you and the rock and you only use the rope for protection. >> you are using your own muscles to get up this wall. >> it is pretty much just you. >> let me turn further to peter. talk to me about this business that is that fits with all this. shooting this movie and making this kind of movie. >> i have been making rock climbing videos for 20 years, and my partner josh lowell is in yosemite with his brother, on the wall working with climbers. im more behind-the-scenes on this one. we worked with companies like patagonia and north face companies that sponsor these athletes. we put together films.

we have a film to her. we do television sit -- we have a film tour. we do television series. however we can sell the movies is how we make profits. we sell digital downloads, dvd's, we license the footage and sell it to television. >> talk about what these revenues are like, how they changed. i feel we see a lot more of this in the broader culture. it is very compelling to watch this stuff. has the popularity of this changed in terms of who is paying? >> i think the popularity is climbing. i think the whole industry sees that. you see the growth in companies like clif bar, north face patagonia. they are all extremely popular, mainstream companies way beyond just the adventure sports culture.

there's a lot more interest. a lot wider distribution of our products -- projects than we did 20 years ago. i think climbing, with youtube being able to see what is on their it has gotten a lot more popular, and people have a better understanding of it than they did 20 years ago. >> when you see people coming into the world of climbing are they inspired by these movies or citibank ads, places were climbing shows up in popular culture? >> climbing is a niche sport. it has its own culture around it. people who watch the films and see the moves people are making, then try to climb themselves the gym communities are growing. people are going to indoor gyms then they are inspired to go outside. the films have a way of bringing people together and making people think, i can do that.

>> said technology is making them more available, and therefore there are more movies for people to see. >> exactly. it is really exploding. >> let me ask you about the cost of making these things. how has technology changed that? >> it is pretty cost-effective with a gopro or something. if you have the skills to film this stuff and you are working with the best athletes you can do the filming cost-effectively. for us, we do invest. we have red cameras we try to use drones be at the cutting edge of technologies. so we spend more to really make it as dramatic and exciting as possible. but the level of entry to make a good action-adventure film the cost unidas pretty low -- you need is pretty low. >> peter mormantimer.

up next, "studio 1.0." the ceo of box thinks his company is worth at least $1.6 billion. watch him explain, next.

>>♪ ♪ >> is an uncommon breed in the world of enterprise technology. aaron levie is known for his colorful sneakers his magic tricks and ironic tweets. but there is no underestimating his ambition to dominate business. he started building websites when he was 13 and met the kids who would become his cofounders in middle school. but unlike places like facebook and twitter where early in founder -- early infighting is legend, all four cofounders

still work there a decade later. joining me is box ceo and cofounder aaron levie. blue sneakers. what are the sox? >> cloutd socks. >> you grew up in seattle. what kind of kid where you? >> i spent far too long on the internet. not a large volume of friends. most of those that were my friends i found it box with. we were growing up in the shadow of microsoft. >> did you idolize jeff bezos and bill gates? >> i knew the bill gates story by heart. what's cool about microsoft, you could go and they would let you be a product tester. a lot of people in high school would go to microsoft, and they would give you a free mouse. >> you met your cofounders in

middle school. >> dylan smith the first cofounder of box, has been our chief financial officer. we played trumpet together in middle school. neither of us were any good at that. in middle school and high school i did things on the internet was josh, and later in high school is some kids. >> tommy have box began. >> 10 years ago, not a lot of innovation was happening. it was hard to do basic things. share files, access data from anywhere, collaborate and work with other people. i was in college at the time, and the idea was, what if you could have hard drives in the cloud where you put all your files, then access it from the internet and any device you want to work from? >> tommy about the early days fondest memories. >> mark cuban was an angel investor in box. that was done by a cold e-mail we sent to mark in 2005.

he sent us a $350,000 check to people he never met. that gave us the idea, maybe we should pursue this full-time which led to us proposing the idea to our parents that we would drop out of college. they got freaked out, but we had to do it and pursue this mission. we dropped out, then we convinced our other two friends to also drop out of college. we all huddled together in berkeley -- >> this is when you moved to the garage. >> a renovated garage in berkeley that my uncle had built. i'm not sure it was legal at all. we would spend 17 hours a day just working on the software, the business model marketing. just four of us living in the same places. pretty disgusting, actually. [laughter] probably more akin to a sweatshop. but we built the company. >> you tweeted a picture of the

garage -- where we slept worked bills. -- built. what was each of the cofounders' roles? >> we each bring different skills. we had the software skills, the hardware and networking skill. the finance administration legal business operation skills and i focused on the product side. >> in the early days, what did you fight about? >> the fighting the bickering as founders -- the nice thing is it all fell back on that trusted relationship that let us work through it. we didn't have the same kind of early founding battles other companies ran into, because we had been friends for in some cases a decade before we even started the company. >> facebook have lawsuit. twitter, tales of infighting and backstabbing.

what makes box different? >> when you play trumpet with your cofounder at the ripe age of 11 you have a rooted friendship that bickering and frustrations from building a company tend to not be able to break. >> has keeping the team together been a priority? >> we spend a lot of time together still. once a year -- >> did one of you ever think maybe i want to move on? it has been 10 years. >> it has been 10 years. i have no idea if my cofounders have those moments but none that i have been told about. >> what is it like, becoming a ceo at the age of 19, when your peers are in college partying, not starting businesses? >> it is generally just worse than what your peers are doing. [laughter] it's not very illustrious to be a ceo of a two-person

company. people from a distance looked like they were having a lot more fun. it is more fun to go out than to be on your computer 14 hours a day during college. >> what is the myth of aaron levie, and what is the reality? >> i am early with myths. i don't know what will emerge. but the reality is that it is a simple idea. our job is to build software that previously enterprises didn't think was possible to create. >> how is the aaron levie sitting in front of me today different from the 19-year-old ceo? >> i had a lot more issues with add and stuck. >> you are on the road a lot. how do you structure your time? >> it turns out that enterprises are everywhere. you go out to a farm using drones to manage agriculture.

you don't know how these technologies will intercept with the real world, so you have to go out to actually understand. the view is that it is silicon valley versus the rest of the world, when it's actually silicon valley being integrated into the rest of the world. ♪

>> you drink a lot of coffee. >> i do. >> you take a nap every day. what is this, spain? >> you forgot the three months of vacation. >> but really, you take a nap and you work more in the evening. tell me about that. >> it is really just a best practice. right around 7:00 p.m. or so you take a 25-minute power nap then you wake up fully recharged, and that lasts another five hours or so. that's where i get to go design what we are going to do next what are we behind on, what do we need to think about next?

>> and you have a diary -- >> a diary. >> a aaron levie only diary. >> the range of industries, what you have to learn is that it is very vast. you have to keep track of it somewhere. >> this is something only you see. >> these are my personal things. >> how big is box today? >> we have 1100 employees, 240,000 businesses that actively use the product. 39,000 companies paying for the enterprise edition. 27 million users. >> you recently rolled out box for industry,, health car, retail entertainment. how is that going? >> in every industry we were serving there was some edge of our product or use cases that was far more advanced and innovative than we ever

imagined. a month ago we had box for industry which today covers health care, media retail. we are announcing other industries over the next months that will take box into more regulated industries that we think are very right for change. it will serve every major industry. >> you see so much change and disruption in enterprise technology right now. larry ellison stepping down as ceo of oracle. hp splitting up, ibms struggling. when it comes to incumbents versus startups, how does it play out? >> every couple decades you have this changing of the guard, as it were. startups that are really optimizing disruption have the opportunity to take advantage of that and potentially build the next era of ibm and hp and microsoft. at the same time, you have incumbents that have a lot of cash led by smart and astute

leaders who understand the change. the changes are because they know they are being disrupted. >> peter thiel said that hp is a bet against innovation. >> it is certainly a provocative statement. in terms of relevance, you have leaders of these companies that are recognizing that their previous strategy would have led to irrelevance and they have to change that. we have the view that everything is zero-sum. ibm doesn't have to lose for apple to win or for salesforce to win. >> what about microsoft, a company you grew up with? >> there are specific product areas that could potentially be harmed by this transition, but them as an entire company at the macro level doesn't necessarily have to lose. >> so companies like microsoft google amazon are dropping the price of cloud storage.

how much of a threat is that the box? >> we love that. the same unit of storage is a 40th of the price it was 10 years ago on the supply side of our business. the cheaper storage gets, the more we can deliver unique experiences. >> you recently took on $150 million of funding. why did you take that money? >> as you may have seen, we filed to go public at the end of march this year. a week after we filed, there was a bit of a market correction in the tech space. so you saw a bit of volatility and a lot of high-growth technology companies. we decided it was a bad time to bring a new company to market. we had amazing support from some late stage investors that were willing to support the company

as a private company, so we took that money on to allow us to continue to invest in the business model and building out box without necessarily going public. >> what is the status of the ipo? >> we are still on file. we are still technically not able to talk too much about it but you will definitely be one of the first people to hear about it once we share any updates. >> how much have you wondered did we make a mistake, did refile too soon? >> what is obvious is we should not have filed when we did, because we don't with a lot of distractions because of the filing. i think that whether that was, a lot of news reports, the cycle that had to happen around the business that we brought on because of the filing, that was absolutely a distraction to what our core focus is and has been

which is execution and the business. that life is too short to have any regrets, so we have remained in full execution mode. >> i'm curious what that moment was like for you. you open your books to the world. somebody calls box a house of cards. >> that is an extreme phrase. we are competing against the biggest companies on the finer in the tech -- planet in the technology industry. to do that you have to make a significant investment. in our case that is in research and development, infrastructure, our ability to go to market and reach customers. >> is a criticism that you are spending more on sales and marketing, acquiring customers then you are making. >> every dollar we acquire of revenue is recurring annually, so our job is to keep customers happy and successful and compound that dollar over time.

the new investments had outpaced the revenue scale, so now we are more in a stage where the revenue we are focused on growing that. but we don't have as many of the new significant investments, because we did a lot of international expansion, bills at the enterprise salesforce -- built out the enterprise salesforce. >> how much of the thought about selling box versus going public? >> we want to sell our software, but we spend about 0% of our time thinking about selling. >> china is a critical market that a lot of the technology business has trouble going to read what is your strategy on china? >> absent learning chinese, mandarin my challenge is how to explore working in that market in a big way. what you will see is as partnering over time with key players in the space.

i would not expect us doing anything really big in china in the near future. >> there's a company you may have heard of called dropbox. your name box is in dropbox. you overlap to a certain extent in certain business. how big of an inconvenience has dropbox been for you over the last however many years? >> inconvenience is a unique word. i think they are a very innovative company. we obviously are a fierce competitor from a business standpoint, the business part of the market. but i think the world is better with them. >> wide you think you can offer business customer something better than they can? >> when you go after enterprise it is hard to balance a strategy where you are world class on the consumer side and also world-class for a life sciences or financial services company. those are very different

problems. at box we don't have any distractions. we are 100% focus on the enterprise. between peter thiel and mark andreessen -- marc andreessen in my tweet volume. ♪

>> silicon valley is sometimes criticized for being too audacious, too arrogant in thinking we can change the world. is that fair? >> it used to be that there was a cycle of disruption within silicon valley, where software companies disrupted themselves. we are having to interact with so many new markets in so many ways. first that starts out we can solve this problem better than anyone else. sometimes that believe is right and sometimes it's not. when it is not we look ludicrous for it. the outside world is excited

about working with silicon valley. something we don't get a perspective for as often as i think we code or maybe should -- could or maybe should. we live in our own bubble, and the view is silicon valley versus the rest of the world when it is really silicon valley being integrated into the rest of the world. for the first time we are not in this isolated universe. there's no tech industry. there is tech-enabled everything. it is an unbelievably interesting time to be the same kind of retailer that five years ago you thought was going away because of the internet. there's companies emerging to develop new technologies to take your customers. 10 years ago you thought amazon would destroy your entire industry. now you are on the upswing because we want all new experiences of how we shop. >> so you think there is no such thing as the tech industry?

or in the future, the tech in industry won't be so defined? >> it will be less defined. it will be seen as the software layer of every other industry. >> your tweets are widely followed. some are funny. thanks for the good material. in response to concerns you what -- would rein in your tweets in response to going public, you tweeted out a picture of a missouri law firm. >> i don't know how the law firm felt about it. [laughter] >> tweeting as much as you do -- why do you do it? >> one myth is i generally only tweent once a day. quite a few are way behind -- >>

you are way behind marc andreessen. >> i'm sort of between peter thiel and marc andreessen. it is the one out my pr team doesn't control for me to share my thoughts on the technology industry. >> i wonder, why aren't you more scared? >> it might partly be generational. i grew up in chat rooms. i'm sure i will season the stupid one day that i wake up and pull a donald trump or something, then regret the rest of my life. >> how much is strategy? >> it is less strategic than you might think. hi brain is all over the place, so it is very representative of the random notions i have. >> i have had the benefit of seeing you do magic. >> i am less active now as imagess a magician. >> how has that affected your career? >> have you ever been to a magic conference? >> no. >> do you think the tech

industry has diverse problem? there is something healthy international brotherhood of magician -- called the international brotherhood of magicians. it was a fun experience when i was a teenager. i would say it is pretty likely. >> you would not say yes? >> it is the path we are on. >> would you ever start something new? >> if this continues to go as it is, i hope to be here for quite some time. >> you want to be the larry ellison of cloud storage? >> because what we do is transcending industry, transcending platforms and devices and ways you can work with information, there's really no limit to what will be possible in the market broadly. we have a wide palette to work with for many years. >> aaron levie ceo of box.

thank you so much. great to have you. ♪