Reaccelerating Growth at Scale with Box's CRO Mark Wayland and SaaStr CEO and Founder, Jason Lemkin

Knowledge workers dip in and out of a number of SaaS applications, but when they're doing work, they're very often doing work in content. Content really is all of our businesses. The box content cloud is more than just storage and collaboration. Workflow, governance, security. On the Box content cloud, that's best in class. This idea of changing the way that we work is an important one because we're never going back to the way that we were before. It's really the evolution of the platform. You know, I really think we're kind of in a renaissance of sales. High tech sales is such a highly complex role that it requires a really broad skill set. I like being in jobs that force me to be my best and to learn new things and do more. Fox really ended up being kind of the perfect place for me. You can lose and you're gonna lose in sales. You're gonna win and you're gonna lose. The key is to every single day do the very best of what you you want people in the sales organization that are going to be able to grind through when times are hard. I just don't really have any quit in me and I like to be around people that are like that.

Mark, it is great to have you here. Thanks for joining us.

Thanks for having me, Jason. Great to be here.

And this, this session's gonna be super interesting because Mark's gonna talk about a topic that I think so many of us, from founders to folks at scale to billions of revenue, think is, is it possible to reignite growth, to re accelerate growth at scale? We all go through a rough month, a rough quarter, but Box is such a great case study. Box has been part of Saster since the beginning. At the first saster annual in 2015, our first speaker was Aaron Levy. He came one week after the IPO. The public markets were still struggling to understand Cloud. Now we get it. And Box is also so interesting because, and I'm oversimplified and Mark will dig into this, but in some ways Box, the initial version of Box is an example of maybe some TAM limitations winning the market. Right? Box was Box won in many ways. This sort of enterprise content management, basic use case, but became very mature, right. And grew at mature rates as it hit 3,400 million in revenue. But now approaching almost at a billion in error. Box has re accelerated, which is fascinating. Right. And Mark will share why that is and how you do that. And it's a really interesting case that I think we can all learn about from multi product and more. And Mark, before we get there Just by way of background, you did the whole tour of duty at Salesforce before Box, right? From RVP up to the top, is that right?

I did, yeah. I was fortunate to be there for a decade, both in enterprise and commercial sales, starting as a frontline manager and into second and third line leadership. Most of my time in the core kind of sales and service products. But in the final couple of years around Pardot and the marketing cloud, so really had a great experience there and learned a ton about how to operate in the SaaS world. That's really helped us here at Box.

Now, Salesforce obviously is the most iconic SaaS company. Right. But it's a big one, right? It's at 20 something something billion in revenue. Before we get into this, what were just maybe one of the one or top two learnings you took from Salesforce that worked? I mean, Box isn't tiny, right? But Box is much smaller than Salesforce. What were some of the top couple pieces of the playbook or learnings that you brought into Box that helped here?

Yeah, I mean, I'm a big believer that sales leaders have. Have skills that you can put in three buckets. You know, they have deal skills. You generally don't get promoted unless you can close deals and make it rain. They have people skills. They're often kind of people, you know, people magnets. They have charisma, they can speak on stage at a sales kickoff and that sort of thing. And then they have strategy and operation skills. And you know, really what I learned at Salesforce in the years that I was there, I'd strongly argue is the best, you know, operated software company on earth and probably still is today. I really learned that playbook around how do you go to market, how do you operate in the SaaS world? And that's everything from carving territories to segmentation to verticalization, obr ratios and the like. I mean, basically we had the opportunity there. I was there from 400 million to about 10 billion to sort of experiment with and toy with and change lots of things. Success allows you to do that. We had lots of failure, but along that kind of a growth path, we were able to absorb those bumps in the road pretty well. And I think really the operational side of the sales leadership role is what I learned there.

And then you. So you join, if you joined Box a little over two years ago, then you joined just before all this fun Covid stuff, right before. Before we get into all of that. Right. And then a crazy journey there, a crazy journey of will the world end right after you Join right to. Wow, how is distributed work going to change everything in enterprise? Right?

Yeah, it's been interesting. So I've been here for two and a half years and the plan was not to be doing this job from home but that those are the cards that we were dealt. So we've been on this path to re accelerate growth at scale per the title of our talk today and doing it in this world, which has been a really interesting challenge and I'm incredibly proud of the work the team has done.

Okay, one quick other question while I have you and then let's absolutely get into the slides. But thinking about it, when Aaron Levy, CEO of Box was at Saster Annual this year in September, he made a really interesting answer to a question I asked and I want to get your opinions from the front line of sales. And I said where are we in this sort of COVID boost for SaaS? Right? And if we look at the public companies like there's folks like Zoom or Shopify where the second Covid hit, we needed them, right. And they saw this rocket ship and then sort of a return to like pre Covid growth. Great growth, right. But kind of return others in collaboration continue to grow. And I asked Aaron what he thought and he made an interesting comment for all of us doing more enterprise stuff. He's like, well, enterprise buyers take three years to make decisions. Like big, big chunky decisions, right? So some of those happened a week after, but a lot of it is still happening now. Like if we made a decision to move to Box from on Prem or SharePoint or whatever reason for some, some of those decisions are still being implemented now. So in the enterprise do we have like a couple years of this Covid boost still coming? Do you have a sense of that from the front lines?

Yeah, I mean I think that for us the boost from COVID was sort of a measured one. So we certainly had a lot of customers. You know, we're in a land and expand business like most SaaS companies. We have a lot of customers that purchase from us departmentally. And then at the start of the pandemic they didn't just send a part a department home, they sent everyone home. So we got a lot of seed expansion there. But for every one of those accounts that gave us SEAT expansion, we certainly have customers that were in directly impacted industries. So we had, we had some attrition from, from customers maybe in travel that had huge impacts to their business. And the other thing about our software is that if you're in the office or if you're at home, you kind of use Box the same way. You're collaborating with teammates and with external, you know, with external folks on content, you do that the same if you're in your cubicle in the office as you do when you're at home. It's very different than the zoom dynamics where it's like when you're in the office, maybe you weren't using it and then you're using it all the time. So we got somewhat of a lift. But I think what we're seeing this year is that all of the digital transformation initiatives that were back burnered at the start of the pandemic have now been brought to the front of the burner. So all that sort of neglected spend, all those projects that were put on hold that organizations are putting in place to help transform their business, those are going on big time right now. And I think that's the lift that we're seeing more so than a pandemic related lift.

That's maybe a more thought that's maybe that was trying to get it more thoughtful, which is that there's this initial boost for but then there's this digital transformation boost that may take two to three years to play itself out. Right. If that doesn't all happen in a week or a month, massive digital transformation. But if that's been pulled ahead by the last 18 months. Right. That could be a good run for all enterprise cloud vendors for a few years. Right. That are like Box, are in a position to take advantage of it.

Most definitely. Most definitely. Another big dynamic that we're seeing is, you know, our friends at Okta do their annual business at work study and the average enterprise has 175 SaaS applications.

That's crazy.

So that's an incredible number because when I started at Salesforce, we were having a conversation with enterprises about putting in their first app or their second app. So it's pretty incredible that 175 now. So I think the other dynamic that we're seeing going on is consolidation of apps. So for many organizations, the CFOs and the CIOs are just fatigued at the number of apps that they have in their environment. It's not 175 too many, but maybe it's 50 or 75 too many. And so we think the consolidation is definitely, along with digital transformation, consolidation is going to be a big wave in SaaS in the coming years.

That is interesting because that's always, we always see that. Right. And it's almost like the rebirth of the suite. Right to focus on fewer, better vendors. And yet best of breed vendors always seem to pop up all the time as the Internet changes. Right. What are you seeing on the front lines in practice? What does that mean? Like can you capture more budget for box if you can capture some of these adjacent spaces? Or how is it, is it they want to concentrate the same budget and fewer vendors or who's benefiting and who isn't from that, from that consolidation?

Well, I think that the extra large vendors will benefit big time as they did in the client server era. And so if you think about the number one and the number two cloud investments at the app layer, not the infrastructure layer that organizations are making in Microsoft and Salesforce, they will certainly benefit from consolidation waves and they'll acquire companies that a lot of those point solutions will get gobbled up in their portfolios. As we've been seeing for years. We would be sort of an upper middle sized cloud, if you will, maybe a large sort of a cloud. And so for us, we're in this space where we can be a consolidator or we can be consolidated. And certainly we prefer the opportunity to be a consolidator if we have a credible path to help CIO sort of shrink spend in their SaaS portfolio. And so if you think about us and our core content cloud market, you know, this year, as you know, we added Electronic Signature to the platform and that's a really exciting move for us because, you know, it's our belief that Electronic Signature should be part of your content cloud, not another app that you have to go buy. And so I think that for us it's going to be a combination of lots of net new wins as we broaden the portfolio around content oriented use cases and then massive improvement in our renewal rates as we give customers more and more reasons to stay with the content cloud.

Yeah. All right, well, let's dig into this because renewal rates and growth in nrr, right, have been a key to reigniting growth at Box, hasn't they? And we'll talk through some of this. But NRR has gone way up too, hasn't.

Has. Yeah, NRR has gone up, ARR has gone up, retention's gone up, and all of that sort of ends with if you're leading a sales organization into higher productivity rates. You know, all of us in SaaS, if you're a sales leader, you're getting pressure from your CEO, from the board and to step on the gas on hiring and never start hiring. And certainly we are one of those class of companies, but if you don't make your reps productive, then you have unhealthy attrition rates and then you end up with an unfavorable mix of ramping versus ramped reps. You really need to solidify your ramp reps and get them to stay. And in order to do so they have to be successful. So over the last couple of years we've seen really strong improvement in our productivity rates. Also the participation rate, which is another important measurement. And what I want to do today is share a little bit on how we've re accelerated growth at scale with one of the end results being this productivity per head rate. And so just a quick snapshot, you know, many of you know box, but we have about a little over 100,000 customers and about 67% of the Fortune 500. And we are used for, we're used by companies in really all industries of all sizes all around the world. But organizations that have highly sensitive content really rely on the box content cloud to secure that content and allow organizations to collaborate upon it internally and externally. And we've been on this journey to re accelerate growth. Jason mentioned Aaron being at the first stasser right after the IPO. So we IPO'd about six years ago. And because we're a subscription business, you know, by definition we're growing. But the growth rate has been on a bit of a decline for a few years. And this is the fiscal year where we've been successful in turning that around, having three consecutive quarters of growth, our most recent one at 14%. Now there's many, many of you out there are growing at numbers that are way larger than 14. But us taking the growth rate quarter on quarter from 11 to 14% this year is a really great, a really great change for us at this scale. And you know, the plan is for us to continue bringing that growth rate up as we go forward. And what I want to do today is share a few of the areas that, a few of the things that we've done to drive that growth rate. So starting with number one, it's really been about mastering the message. So if you have a growth rate that is in the decline or it's not where the leadership team and the board wants it, it generally is seen as a sales problem. When ARR slows, it's generally a sales problem. And very often it is those improvements to make in the sales organization I generally think of as kind of a no finish line business like that work is never done. We can always be doing better in terms of the way that we orchestrate the sales motion. But you really do have to master the message. You have to have a repeatable sales motion. And part of having a repeatable sales motion is having a repeatable message that you're bringing out into the market. So this is the year that we reposition the company around the content cloud. And it's just very simple messaging that does what it says and says what it does. And also the market has been trained to think of these kind of named clouds. You know, when I say sales cloud, you know who I'm thinking of. When I say data cloud, you know who I'm thinking of. And so it's language that's been well established in the market and it really helps us just in a very crisp and clear message share that this is a different thing than maybe the personal storage account that you have that's attached to your email or other sorts of content storage environments. And then it opens up an opportunity for us to share our roadmap and share all of the features that are part of a modern content cloud, including things like electronic signature that I just covered.

Now, Mark, sometimes just on that point, I totally get the simplicity of the content cloud, right? Sometimes I think, folks, we can be a little cynical about this. We can be like, does this really make a difference? Like Box, when you joined, Box was still at 400 million. I mean, it's a well established brand, right? So from the front lines before this change in messaging, because you're saying it worked, you picked it number one, so obviously it did work. What were you saying before? What was the team saying before and how did that change in practice?

I think a lot of the underlining message was similar, but from a messaging standpoint, yes, we were, we were really on this category shifting journey. So the market that we helped create became known as efss, Electronic File Sync and Share. And we were helping to evangelize sort of the new cloud version of that category around cloud content management. And so we're having lots of conversations about this sort of journey from the old market EFSs to the modern market being CCM Cloud Content Management. And that from a category shifting and shaping standpoint, really makes a lot of sense and there's a lot of merit to it. But you know, from my experience, when we would talk about cloud content management for seasoned IT buyers that maybe went down the ECM path, enterprise Content management, and implemented those client server tools, that created a little bit of confusion because then they would want to sort of compare the feature set of the old established 1990s ECM category with this new cloud content management version. And then you're constantly in this like never ending feature comparison of an old model versus a new model, which I don't think was as effective as a crisp and clear message around a content cloud.

And was it when you would go back when as you change this messaging and you would go out and reach out to existing and new customers, is it just to simplify it, was it easier to get these conversations? You said let's talk about the content cloud. It sounds a lot simpler than the 78 acronyms of ECM into DCCS, although for old timers the acronyms may be compelling. Right, but the simple question is easier to get those conversations. And I think you said yes, right?

It is. I mean, listen, I can explain content cloud to my father who owns a furniture store in San Francisco. It makes sense. So it's, it's repeatable. It plays in all markets in all segments and the message has done very well in Japan. So it really, it translates into different languages and it's much easier for us to enable the team on.

Got it. Interesting learning.

All right, so number two is moving to multi product, which is obviously a topic that's covered very well at this event and past events, but we've had a lot of success in launching new products as part of the content cloud and then getting our customers to adopt those products. So if our customers just use us to store content, then they're not getting all of the value out of the content cloud and they don't renew at the same rate. So it's really important that we get customers to adopt the whole product portfolio. And when they do so, their net retention is much higher, they renew more, they buy more, etc. So we've been on a really nice growth curve in terms of selling more and more of these advanced products. And that's not just the sales motion, that's the whole go to market team. That's our CSMs, that's our renewal reps, that's the marketing team, it's the whole team working together to make sure that we get huge uptake of all of our add on products.

So let's just click on that one for a second if you don't mind. I think I'm a little bit dated, but I think a few quarters ago there were some box metrics saying that single product NRR was something like in the 90s or mid 90s. I might have that wrong, but the multi was approaching like 120. Whatever it was, the gap Was very wide. Right. I should pull that up. And so great. I think we've all learned the value of multi product right at scale, but again from the front lines. Not to overuse this term but sometimes it's complicated. Like you don't want to confuse customers or you don't want to jam products down their throats that they don't want. Right. Too many products. Right. So what does this mean in practice? How did sales change? How do you sell them more than one product together so that it's a win win and it's not that AE constantly trying to sell them something that they don't want or have another vendor for. Like how did you implement this in practice so that there's synergy in the products?

Yeah, well, importantly, I think as a SaaS provider, one of the delicate things from a product management and packaging standpoint is if we're coming out with some new breakthrough product, what do we include in the core offering? And put you have to have increasing value in your core offering over time. That's an important thing. You can't just your customers are not going to renew at high rates if the core offering doesn't change. And that's really the power of multi tenancy and cloud is that it gets better and better and better. And then what are things that legitimately should be maybe another skew that's something that you could charge more for. And so there's a lot of art and science in figuring out that. And I think that we've kind of gotten to a good place on it. So and then, and then with customers themselves, you know, we do all the things that, that all SaaS companies do, which are that, you know, we mine the installed base for different user behaviors that would maybe make them have a higher propensity to buy one of these new products. We work very closely with the installed base and we advisory boards where we, where we work with them on the roadmap to make sure that we're building things that are of value to them and that either they would really like to see in the core offering or they have, or they have additional budgets. We're opening up new areas of TAM and maybe they're going to turn down another tool and then buy something additional from us or turn down another tool because we're giving them more value in the core of box. So there's a few different ways that it sort of shows up, but I think it's all about really understanding what those latent needs are in the installed base and with net new customers and really deeply understanding. It sounds incredibly simple but deeply understanding. Why do customers buy and why do they leave? And I think over the last couple of years as we've been turning the growth engine around, we've gotten much deeper.

Appreciation of that sales team or maybe sales success. I don't know if you own the post sales piece too, but do you, what are the tools you use? Do you use QBRs or what other things do you do besides the data to discover customer needs traditional products without, you know, overselling them? How do you manage that? How do you manage that line? How do you, how do you have those conversations?

So a number of ways. So the first thing is, is that, you know, we're very much a use case oriented sale which many, many SaaS offerings are. But I mean the truth of the matter is is there we don't get any inbound RFPs for companies that are going out to bid for a content cloud. So we have to go into our customers and into our prospects and we have to identify high value use cases that are a good fit for the Box content cloud. And so it takes a certain level of technical acumen and business acumen amongst our go to market teams in order to do that successfully. And then with our installed customers we do do QBRs, we call them SVR. So our full extended account teams meet with our customers on a quarterly basis and we do the standard stuff. We go through what their usage is, is which products they're using, which ones they're not. We help them understand how they can get more value out of their current investment. Because if they're not getting value out of their current investment, there's no opportunity for them to expand that investment. So we do all those sorts of things then along with that especially you know, right now because we have such an exciting roadmap. We will brief them on our roadmap to get their feedback and then as they're doing their strategic planning and their IT architecture, they can make decisions about other areas where maybe they would want to expand Box or maybe they can have some cost avoidance by not buying another tool.

Yep. And one last one on this and then we can go on. But this is such an interesting topic, you brought it up before this, this tension and it's a good tension between providing more value to the base. Right. To get those renewals up and especially from a sales perspective, but others wanting to monetize these additional products and features. Right. Don't I get all of this from my existing versus what have you guys learned at Box? What kind of how have you, what have there been good natured arm wrestling debates? You, Aaron, product, everybody. Like how do you decide where that line is and how do you. And you know, because sales wants it both ways. You have, your goal is overall, you've got to grow the nrr, right. You've got to grow all of it. So you have, you have two irons in this fire, don't you? As the CRO.

Yes. Yeah. So I'm responsible for the overall revenue number and I think so first of all, we don't have really a debate about it as a, as a leadership team. Aaron and Dylan, our cfo and really the whole team is fully aligned on how we make these decisions with, with no conflict at all. And I think it really has to do with what the state is of your business. So if you're in a smaller company and you're growing at 50 and 60% a year and you have really high renewal rates, then you should be looking at both how do we go win more logos because clearly the market is telling you that there's market there for the taking. And then you should also be looking at as we have this installed base that's growing and growing and growing and they're very successful in the renewing Hyde rates. We should probably find some more stuff to sell them. So you might be moving into some new product areas, but if you're in a business like ours that's at scale, where you had had is an operative word, you have growth that's maybe on the decline and, and you have renewal rates that are not where you want them, then you really got to pull back from that kind of add on SKU motion and you got to figure out how do we really hold onto this customer base. And that's a combination of giving them more value in their current investment that's going to drive up renewal rates and also helping them understand what that roadmap plan is so that they can build you into their future strategy. Good. All right, are we moving on?

We're going big or going home Next. Now these are such great topics.

Let's go big or go home. So big deals big. You know, as the head of sales, I get asked about the big deals in every board meeting and we put a lot of focus on these big deals. And really I'm about in SaaS, I'm about big accounts. So sometimes I think that organizations can over rotate on big deals. And certainly if you're using salesforce to run your sales organization, it really gets you to look at those things. The Dashboards and pipeline reports. But what you really want in SaaS is you want big accounts. So if you're in a land and expand motion, most of us are, then you want your customers or prospects to join as a small or a medium or a large client. Of course you want them to join, you know, as large as possible. But sometimes they'll start with a phased approach or with a poc. And what you really want over time is to make them wildly successful so they become a big account. The big deal in my experience is sort of that's the vendor speak, like us ringing the bell on a big deal, but in the customer speak is them being a big and successful account where they're going to renew at high rates because they've been successful. So, but that said, big deals are important and so we've put a lot of focus on big deals. And I think that, you know, this, this hundred K metric that we report to the street, the reason why it's important is it is an indicator that customers are using us for high value use cases, as I discussed earlier. And then they're making a larger and larger investment in box because they're getting the appropriate value. And so in this most recent quarter we drove 56% increase in 100k plus deals, which is a fantastic result. And I really think that that is just a great indicator of how this content cloud message is resonating in the market. And we're going to continue to see those results over time, I believe.

And are these, when you say new deals, are these brand new customers or these include folks you've migrated up to 100k deals.

These are 100k new ARR deals both in the installed base and with net new customers.

Got it.

This is, and this is not their total spend. So we have, you know, many, many customers that spend with us over 100k. You know, you could have a 80k customer that spends 20 more. That's not in this number for.

Yeah, just a couple just questions I'm curious about when I don't have the number. When I, when, when Aaron came to Saster annual, I was surprised. I don't know what numbers he threw out, but I was surprised how much of the box bigger customers still come from smaller deals. Right. That, that, that, that grow over time. Right. I was under the assumption that boxes, after years the box name was so established that I could just send my CRO in with his briefcase and just close the deals. But a lot of them are still being grown up. Right. And so how do you manage Some of those when you have a culture that's big deal culture. Right. And I love it. I've come from it. It's exciting. How do you manage some of those team tensions versus not breaking things? Right. Because not everybody's ready to sign that contract next week. Right. How do you manage those tensions across your team and maybe even in segmenting your team?

Yeah, well, I mean, so like many SaaS companies, we sell from SMB to mid market to large enterprise. So we have deal mixes that are all over the place. And you know, at over 100,000 customers, you know, the raw number of customers, individual customers, is outweighed in our SMB segment. But the lion's share of the revenue comes from our enterprise business. And so it's a pretty healthy mix. But if you. I think the question is sort of pointed more at the enterprise business. And in the enterprise business I'm a believer that you have to have a really healthy mix of deals in your pipeline and in your closed results. Small, medium and large size deals. And if you're in a business that's really big deal oriented, then it's basically it's hero ball. Right. And so you're making and missing quarters based on a small number of large and extra large transactions. And that is a roller coaster ride that personally I don't prefer.

It's stressful.

I really like to have. It is and I've lived in that one for a while. But I really like to have a business where you sort of make the number or maybe you make 90% of the number on a mix of small and medium and maybe large size transactions. And then those large and extra large deals are layered in on top for over performance. And I think that a few years back we were really, really indexed on these kind of extra large deals. And a lot of the brand names on the logo slide you saw earlier are representative of those sort of large and extra large deals. But as it turns out, if a customer does five 100k deals and they end up with a spend at 500k or they start at 500k, they're still a 500k client. And you really need to build a go to market motion and a reward system and a recognition system that you recognize those deals somewhat equally because in the end they're delivering the same revenue over time. And that customer that buys in 100k bytes, they may end up being more successful because they ramped up their deployment than the customer that takes on so much upfront. And then maybe if it was a political purchase, the People that didn't want to make the purchase may be trying to force failure the project so they can prove they were right. You were wrong.

It's interesting, maybe just listening this idea of it sounds like when you came in or maybe just before, in some ways you might have de stressed the organization by not having one big deal, having to make the month or the week or the quarter. And you may almost need to bring the bar down just a little bit in terms of deal size to make that happen. Right. Otherwise it's constant stress. Right. So this 100k thing, it may be that to drive to larger deals to go big and go home, you might have to lower it to 100k to count as a big deal. Right. So the culturally going to your point, that's a victory and you build that up over time. You don't force everyone to jump on the million dollar deal landmine. Right. And then we're sitting here December 15th, I'm sure there's 10 CEOs are going to watch this that are going to miss their plan for the quarter because that's that 800k deal pushed to the first week of January. Right.

Well, I mean to be clear, I love big deals and the bigger the better. So make no mistake, I'm about big deals and I embrace the why would I chase 100k deal when it takes the same work for me to close a million dollar deal? I'm only going to go after the million dollar deal. I understand that mindset. But the problem is if you don't close that million dollar deal, then you're going to get fired. That's the economic reality of the business that we've chosen. So it's better to build up a portfolio of deals. And I think that some of that sort of elephant hunting approach to selling software is a little bit of a dated and old school model. And the reason why for those of us that were in client server, is that when you do a big client server deal, you need that deal to be as big as possible. You want to back up the software truck because they are going to struggle greatly with the implementation and they're not going to buy anything else from you. So the deal has to be as big as possible. But if you're in SaaS and you have CSMs like we all do, and you have products that are easy to adopt and easy to implement and fulfill the promise of SaaS that we're in the third decade of it, then it doesn't matter if they start small or medium or large. You got to make them wildly successful. And then they're going to buy more over time because. Because they're successful and they're getting value from your platform. And so like I said, it's great when they enter with the largest size deal possible, but it doesn't matter how they enter. We want them to be wildly successful and we want them to be at. Be a big account, not necessarily just a big deal.

Okay, one last question on this and I want to get our renewals next. But so you're doing 100 of these a quarter now, Roughly. Right. Looking at this slide, that's a lot. But it's what? It's enough though that even as the CRO, you can have a sense of these hundred deals. Right. You can pull up your CRM and look into them just strategically. How do you help the team balance this? So a big logo comes in. Right. It could just to finish this point, it could be a million, it could be 100k. What guidance or rules or parameters do you help the team to decide to get as much revenue out of that deal as possible without breaking it? How do you help manage these hundred deals?

Well, we don't just manage these hundred, we manage a couple thousand others as well.

A thousand in the pipeline. But yeah, how do you guide the team to maximize without breaking this piece?

Yeah, I mean, so first of all, we don't have a culture of doing unnatural things to try to hit some kind of a deal target. So I will have approvals for deals come up all the time and an account team will say, you know, this deal is sort of naturally an 85 or a 90k deal. Do you want me to try to push it to 100? And yeah, that's not what we're about here. We're about the customer being successful. And I've seen so many times that if you get a customer to buy more software than they're really ready to, you may be excited when you ring the bell, but you're going to pay later. So we don't do any unnatural things to try to hit what are relatively artificial thresholds. We need to uncover high value use cases. We need to build a business case jointly with our customers that allows them to get a yes when they ask for money. And then we have to focus all of our resources on making them successful. I mean, that's really what our business model is. And then over time they'll buy more. So we don't. There's no funny business with us trying to hit these sort of deal thresholds. And then in Terms of like, how do you break that number down? Because it's 100 now, but you know there's gonna be a time when that number is 200 and 300 and you just have to break it down by your team. So we have growth targets on these. I mean, we don't. It's not tied to comp plans. Our comp plans are really based on ARR primarily and on renewals. But we do have sort of soft targets. So we can break this number down and make it more manageable.

Got it.

Cool.

Well, let's talk about renewals next because big progress here under your leadership, right? Yeah.

I mean, I think this is probably one of the biggest changes that we've made. And really, it's a shame.

Before we get here, I'm a little colorblind. What's going on with these colors here? I see the thing. Explain to me what's going on in this slide.

What we're trying to show here in the slide for people that can see colors is that we were in a place where if you think of all of the customer facing people at Box, we call our employees boxers. All of us boxers. If you ask people two and three years ago who is responsible for renewals, most people would say the renewals team. I see they're all silently small team. That's the blue. And now we're in a world where all 2000 plus boxers. And that doesn't matter if you're in recruiting or if you're in product, or if you're in HR or if you're in sales or renewals or customer success. Everyone understands that they're on the renewals team because renewals are the most important motion in SaaS and it's in fact the most important motion in subscription. When you sign up for Time magazine and you buy a two year subscription, they start putting that postcard in the mail to you immediately, even though you bought for two years. Because it's the most important part of our business. And so we did put renewals in the comp plan since I joined Box. But the thing that I was really vocal about is that we can move it into the comp plan and it's a relatively small measure in their variable compensation. But it's really the cultural change and the mindset change that was necessary. We really needed everyone in the company. If you're in the product organization, you have to understand that you need to make products that are easy to adopt and that customers are going to get value from. And when they do. So we'll have higher renewal rates. And if you're in sales, you have to know that when you're selling a deal that the customer has a credible path to a successful implementation. Because if they don't have a good implementation plan, they won't be successful, they won't renew, they won't buy more. And so we really have a whole company mindset around that. We're all in renewals team. I've stood in all hands meetings for the last two and a half years, and in almost every one of them, I say raise your hand if you're on the renewals team and then get everyone to raise their hand. So it's been a big and very, very positive shift for our company.

With smaller companies, what I like to do is make sure that everyone knows that NRR is a top three metric because that aligns people in smaller organizations at box 2 scale. What did this mean in practice? How did you make, how did you come in and get more folks on team blue? Like what, what besides. And we can talk a little bit about this, this, this tweak to sales comp plans, but that's not really what you're hitting here. You're getting all the functional areas to buy in. And how did you do this in practice?

So I think it was the renewals team and just to correct my color in here, the customer success team that were kind of bearing the brunt of renewals and the rest of the organization knew it was important, but, but, but they weren't, they weren't, they weren't in their hearts and minds understanding that I have a role to play in this. So I think it was just really repeating the message and then getting alignment across the executive team and whether that was our chief product officer, our CEO, Aaron, our cfo, Dylan, our coo, my boss, Steph. Like all of us just repeating this over and over and over again that we're all in the renewals team and everyone highlighting over and over and over again how important it is for customers to be successful. And when they are successful, they renew. And we did make the comp changes. We did change all of our operational practices around the, around the way we measure renewals. You know, all the calls and meetings that we have to review those dashboards and hold teams accountable and have interlocks and have clarity on where that number is and where we have risk. I think that the. Because we had a relatively small team that really was waking up every day and thinking about renewals because of our book of business, they could only look out, you Know, maybe three or five or six months at their book of business, in which case it might be too late to have an impact on the renewal. And now, because we've got more people thinking about it all the time, we're now talking about renewals that are 12 and 18 months out. And that's a very healthy place to be in because with that kind of a window, if you have an account that's maybe at risk, then you have enough time that you can affect some change in that account.

Yeah, just tactically on this. Cause it's interesting. And then let's definitely talk about a productivity before I time. But that little piece of sales comp that's tied to renewals. Right. Just one. I love this idea as a founder, but I find these secondary or small pieces, sales team forgets about it. Right. It's really the. How does that work in practice? And does the sales team own the upsells too? Is that. Where does that fit between these. Do they have that incentive to keep doing the upsells or is it. Or how do they. How do they own that. That. That customer relationship over time?

Yeah, we made no change to that part of the comp plan. So the comp plan is based on. On. On new arrival. And that is both can be achieved through bringing on a new customer or by adding on products or additional seats to an existing customer. And that's the majority of the comp plan. And that's how it has to be if you want to be a growth company. And then there's a smaller component of a comp plan that we've now put at renewals. It's a relatively small component in comparison to the new ARR component. But it's an important one. It's, by the way, the same comp plan we were under at Salesforce for almost all the years that I was there. And so that's the change that we made. But it's a relatively small component and you take taxes out of it. And then you look at an overall renewal book of business that's being managed by a single rep, and that individual renewal doesn't really make much of a difference for them. And that's why I think it's important to have a mindset and a cultural change because the actual comp change is not really as big, I think, as people think when you really break it down kind of deal by deal. Got it. But so they are still responsible for bringing a net new customer on, making them wildly successful and selling them more over time. So they do stay with their accounts once they're installed. Cool.

All right. A productivity. This is super interesting changes that you brought in right from your learnings.

Yeah. So we had a lot of improvement here over the last couple of years and next fiscal year hoping to see further improvement. One of the things that we did is we have a world class recruiting team and we work with our recruiting team to approve our hiring rubric. We had a lot of learnings over the years on what's the profile of reps that do well here at Box? As I mentioned earlier, we're not getting any RFPs for a content cloud. So we really have to have sellers that have high business acumen and understand how to go inside of the organization and navigate both the IT organization and the line of business to find those high value use cases. And that takes a certain kind of a seller. So we rebuilt the hiring rubric so that we can find more of those types of world class sellers and then we made huge investments in enablement. And you know, sales enablement is an area that has more attention now than ever. I talked earlier about that sort of never stop hiring, always step on the gas Mantra that all SaaS companies sort of live by. But what organizations are realizing now is that if you don't make those reps successful, then they're going to a trip and you'll have that unhealthy mix between ramp and ramping reps. And so it's been interesting for me, you know, in SaaS board meetings now, I don't think, and you know, correct me if you tell me if you agree or disagree, but eight years ago I don't think sales enablement was a topic in a SaaS board meeting. And now maybe even three to four.

Years ago it wasn't talked about enough.

Right, right. But now it's every single1. Like SAS boards have gotten really, really smart about hiring metrics, about productivity per head, metrics, participation rate. What is your enablement program? What's the mix that you have of ramping versus ramp reps? These are not things that were in board meetings not that long ago. And that's because everyone understands that it's not just about hiring, it's about overall headcount, the mix of ramp and ramping and what your productivity per head is. So in order to do that. Right. One of the big, big levers is enablement. So we have a wonderful enablement team that manages both of our new hire boot camp, but all of our ongoing training and we've made huge investments there over the last couple of years. That are now showing returns and then really the engine room for everything that you do from enablement standpoint has to start in product marketing. Not the skills based enablement, but all of the product and messaging and use case and all those solutions, all that stuff really has to start in product marketing. And so Chris Kohler, our cmo, he's made huge investments in the PMM team and then the PMM team really creates all that content and then in partnership with enablement gets it out to our team. So I would say those three things were kind of the biggest levers to these improvements in the productivity per head numbers.

And 68% means what exactly what does that mean on this chart?

That's the productivity per head over two years has gone up 68%.

Got it. So effectively their yield, their bookings, right? How much they close per headcount. Right. But that's fairly massive. 68%, even 20% would be huge at scale, right? 68% is a lot of change.

Yeah, it's a pretty big number. I mean we're not going to be able to sustain that kind of growth over time. It's a favorable stat for me to put in this presentation.

Got is. And that first one's interesting. You said this a couple times. It's really resonating with me about there's not like 10,000 RFPs out there looking for this content cloud or that, that, that might surprise people, right? Box has its challenges, but it's in a, it's in a 20 year old category. You'd think there would be more RFPs, more budgets, right? But you're still, you still have to fight for budget, right? You still have to create budget of these organizations, right? And so how do you, I get what you're saying, how do you screen for these folks? Because a lot of, I'll tell you, a lot of AES that join big brands, they want to pick up the phone and close. That's why they joined big brands. They want to go to number one. Not sales is never easy as we know, but they want all the benefits of a brand, right. Helping them in a sales process. But you're looking for, you're looking for almost startup type folks, right? Folks that are product savvy, that are smart, that can talk the talk, right?

Well, I don't understand how hard it is. We do have a good install base, right. We're approaching a billion dollars of revenue. So we have 100,000 customers. So every one of our AES has an installed base. And these are, these are, these are Folks that they can call up and they know who box is. And there's always opportunities for seed expansion and for upgrades within those accounts. So there's a lot of that. My comments around we don't get RFPs for new for content clouds. That's sort of a net new standpoint. So we have to go create awareness and that's both a marketing effort and a sales effort. We have to go create awareness for what a content cloud is because not everyone knows that they need one. But make no mistake, every enterprise on earth needs a content cloud for sure. Especially in a world today with ransomware and all of these secure assets that we're all working with. And then if you think about what's going on in the market now, I talked earlier about the number one and the number two big cloud investments. You know, almost every enterprise on earth is doing a major Microsoft O365 project and a major Salesforce project. And these are often multi year investments. You know, I've met with many CIOs of large financial services institutions where they're doing $100 million investment in Microsoft and $100 million investment in Salesforce. And these are investments that in my opinion are almost in conflict with one another. These are like tectonic plates that are coming towards one another because these two clouds don't work together. And the most common integration paradigm that you see with Salesforce is integrating the customer master to other systems. So take the customer master, integrate it to ERP so that your billing system will send out invoices to the right place. Right. But there's no reason why you would want to move that data over to O365. But the data that you do want to move back and forth and you want to do it seamlessly and you want to do it securely is the content. And so what customers are finding today is that they've got a little bit of a rat's nest from a content standpoint with these two clouds because they've got the OneDrive SharePoint, you have the OneDrive SharePoint world in Microsoft and teams. And then you've got the Salesforce environment with multiple content stores and now another one with Slack documents. And we can really be a unifying force between those cloud investments to resolve the friction, store the content in one place, have best in class security on it, and then access that content in either one of those mega clouds. Yep. Cool.

And just one last question. With the training and improved product marketing and the hiring rubric, I'm sure the answer is yes. But you have a much higher percent of the team hitting quota now, right?

Yeah.

And what's your philosophy? In an ideal world, what percent of team would hit quota? 80%, 50%, 110%. How do you think about it as a leader? What do you want it? What is that number? If you do enablement and hiring.

Right.

How good can you do in terms of hitting quota?

Yeah, well, I mean, it depends. It's a good question. So first of all, you have the percentage of reps that are hitting plan or the percentage of reps that are at 50% or 75%. We measure it really closely across, across quadrants. Those numbers have all gone up year on year in orders of magnitude. I can't share that data here, but they've gone up significantly. I think the answer to your question around what percentage of the team should hit quota really depends on what your growth rate is. So if you're, if you're in a business where you're hiring 30 and 40% more reps per year, then it's going to be pretty hard to have really high attainment numbers against full quota, against ramping quota, maybe you can and that sort of thing. But in a business like ours, where we're not hiring, you know, 40, 50% more reps per year, I really want to see sort of 60 to 70% of the reps making the number because we are definitely hiring and we, and we do have people leave the company. So I think that's sort of a healthy 60 to 70%. But I definitely want to carve territories and have opportunity for performance at 100%. I want every single rep on the team to have a credible path to plan based on the addressable market that's in their patch. And so we put a lot of effort into making sure that we create fair and balanced and equally distributed patches across each one of our segments so that everyone has a credible path to plan. Cool.

Well, this is great. We'll hit the key takeaways and maybe grab one or two questions we have. But such an incredible reminder, we forget we just like, we didn't even talk about sales enablement a few years ago.

Right.

We forget that we can always invest in more in our sales team. The ROI is so high there. Right. Even if you don't know what else to do, making your reps better always works, doesn't it? And this is like, this is incredibly. I mean, you can't do 68% forever, as you said, but it's an incredibly visceral example of that investment working. Right. In the salesforce.

Yeah. So a few key takeaways if growth is slowing. If you're listening to this, maybe you have a desire to re accelerate growth in your organization. So the first thing I would say is that if you have a growth problem, it's probably being described as a sales problem and there probably are problems in your sales organization, but they're probably not the only problem. So I would find out what the root cause is and then it's a very delicate sort of razor's edge to walk on as the sales leader to get the organization on board with what are the problems outside of sales that are maybe creating a growth problem for us. So definitely find out what the root cause is and then get alignment across the organization on what that root cause is. And then secondly takeaway would be that renewals are the most important motion in SaaS. They are the growth engine. If you don't have a really, really strong renewals motion, it's very, very hard to drive growth. And then lastly, sales productivity is paramount. If you don't have high performing reps, high participation rate, high productivity rates, are increasing productivity rates, then you will have high attrition in your sales organization. And if you have high sales attrition in your sales organization, then you have an unhealthy mix of ramping versus ramped reps. And really the way that you drive high levels of performance is by having fully ramped reps that are productive at high rates. And so those would be my top takeaways.

Got it. Well, this was an incredible story, Mark, thanks for all the time and the deep dive on the questions and I know the next two and a half years will have its challenges, but pretty incredible run here. Right. In terms of accelerating the ship. And it is incredible to see that with better sales processes, better training, multi product. Right. Focus on renewals. Going from our numbers, 11 to 14% on a percentage basis. It's awesome. That percentage basis is huge. It's a huge amount of impact in a handful of quarters. It should be inspiring to everyone that it can be done. Right.

Yeah. Really proud of the team. It's been a whole company effort to get us turned around and on a growth path and now we're on that sprint to a billion and beyond and I'm thrilled to be a part of it.

I'm excited for the billion party. Mark, thanks for joining us and appreciate all your time.

Thanks for having me, Sam.