Brexit forces shift in strategy for tech companies, says Box CEO

Aaron Levie, CEO, co-founder and chairman of Box
Alison Buck | Getty Images | TheWrap
Aaron Levie, CEO, co-founder and chairman of Box

Tech companies will grin and bear the consequences of a Brexit as they are forced to serve an increasingly fragmented set of global customers, said Box CEO Aaron Levie.

"This is a mismatch between the potential of the internet and how today's laws work — but there is no obvious solution in any foreseeable time period," said Levie.

The tech industry thrives in an inter-connected environment, which promotes innovation and collaboration, he said. Though the consequences of a Brexit have yet to be fully understood, anything that creates more barriers or further separates economies undermines the power and promise of technology, he said.

Industry leaders doing business globally are now struggling to figure out how to adjust business strategy in a post-Brexit world. So little is understood about the impact on labor, trade and regulation that tech entrepreneurs on both sides of the Atlantic are in "wait and see mode," he said.

"Philosophically, you are going to see a lot of resistance or disappointment from tech companies, simply because the very nature of technology is that we generally are advocating for more open, more global societies," said Levie. "Our job is just to adapt to the realities of what people are voting on and try and move forward."

Though Europe makes up a small part of Box's global business, it is strategically very important, said Levie. The company's European headquarters are in London and Levie is part of a group of UK tech entrepreneurs sharing an email thread around Brexit. Most are disappointed with the outcome of the vote, but remain optimistic because of the UK's resilience, he said.

"This is not what anybody wanted to be dealing with," said Levie. "This is more of a detour in solving any of the underlying issues that would have caused the vote in this direction and I think that is the disappointing factor."

(The company does not break out regional revenue, but has said that around 20 percent its business is outside the U.S. In its fiscal fourth-quarter report, Box posted $85 million in revenue.)

Within Europe, the UK has been the most "progressive" on data privacy, said Levie, with views more closely aligned with the U.S. than the rest of Europe. A Brexit poses a potential risk that the EU will become more conservative in its policies in order to differentiate itself from the UK, he said.

This is a problem that tech companies — from Box, to Facebook, to Alphabet — are all grappling with.

"We are fully prepared for — unfortunately — more and more fragmentation of the privacy and data laws," said Levie. "We are certainly against it from a tech purist standpoint, but we can support it from an actual customer privacy standpoint."

Over the past several years, Box has invested to build a business that serves an increasingly fragmented global patchwork quilt of regulatory requirements. Earlier this year, the company rolled out a new product called "Box Zones" to enable enterprises to store data regionally across Europe and Asia. This product can support any region where there is a cloud data center, said Levie.

Aaron Levie, Co-Founder & CEO of Box
Lisa Lake | Getty Images
Aaron Levie, Co-Founder & CEO of Box

"It is very, very hard to make sure that the data stays in the region of the customers' choice in a way that is going to be simple for user," said Levie. "It is non-trivial in terms of the technical architecture we had to create to do that."

If there was a second referendum, tech companies would try to advocate for a different outcome, he said. Looking ahead to the U.S. Presidential election, the Brexit upset provide a warning against such complacency, he said.

"We should take whatever lessons we can from not taking Brexit seriously in America and just make sure we are as thoughtful as possible about what we really want the state of the country to look like and make sure we vote accordingly."

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