But did it from computers that had tiny market share. The iphone is the trail blazers in smartphones and touch screen devices. Currently there are two ways to get information off this device, the screen and the headphone port. The lightning connector, too. You take one of those and youve dramatically reduced the number of ways you can interact with the device, a square reader, microphone, any number of devices. Will they end up being right in the long term . Maybe. But big deal. I just dont get it. This is a very evolutionary update. Why do the phone port now . Why not do it with a bigger revolutionary update when theres a clear quid pro for the consumer. I think in the long run theyll do fun. Some of the Product Companies i would argue like it. Square says it drives merchants to drive the higherprice new touchless reader. There are some companies, beats included, that might actually benefit from this. Im sure there is an element of builtin object so lessens. Remember the mac drive air, and it didnt have a crom drive, and everybody went crazy. It turns out they just ledded market. I think the phone may by too mainstream to lead the market by that much, like jon said. Its one thing to lead the market with one product. One thing laptop, but you have a new mac book prothat people can buy. You want a new iphone chances are youre going to have this one option. Let me take the other side and say probably from one infinite loop in cupertino, they say sometimes the leader gets bogged down in legacy technology, they dont move forward, because theyre worried about people who will feel left behind. Lets not be like that. Lets go boldly where no man has gone before. Maybe they need to do this. And theyre just willing to take their lumps this year. I dont know. We tend to give them hell either way, right . Very true, but theyre going to have to convince me. I like the auxiliary connector in the car. I dont know, you take that away from me . I dont know. The other big story 121st century fox settling with Gretchen Carl son, according to a the settlement is around 20 million as ailes himself is reportedly preparing to sue for defamation. The more interesting question is the future of fox as a cash machine for the murdoch empire. Does it change anything . I dont know. They built a loyal and large audience, but lets face it, its the wrong audience. If you look at the demo of fox news, the average age of the viewer is dead im sorry, its 68, but its aging. Base so i dont know, that loyal audience sticks around, but its clear you dont settle for 20 million if youre innocent. I also think this is a complete mess and has been, but they have handled it quite efficiently. They did it quickly, cleanly, even the settlement has come across quickly. So i obviously dont condone the actual allegations, i do think they handled it carlson said it in her statement, she was impressed how efficient they in attackings issue. Having said that, 20 million for a lawsuit is quite a high price, and there are others who have come forward with wsh we dont know if theres similar allegations, but is there a chance that fox has too continue paying sums of this magnitude . I would not be surprised at all. If you read the carlson settlement ailes has to pay some of that. I think the bigger question is what happens, there are reports that greata van sustern is leaving fox, and there are other avenues that they have for exposure. It will be interesting to see how the deck chairs move. As you say about the wrong audience, i dont know is the right audience even on tv from a broader perspective . A lot of people may say thats money that a lot of networks would like. Good point. If this ages rightwing audience is up for grabs, maybe postelection we will see trump tv. How would you handicap their chances . Would think essentially be battles over the same audience . Ostensibly so. Its hard to launch a network. Fox is the only broadcast network that has launched successfully so its hard to do. 1. Well be talking about this in a bit with vanity fairs Sarah Ellison. She will join us at 11 40 eastern time to talk more about her piece. As tesla looks for another round of funding, elon musk asking employees to tighten their purse strings. An internal memo, musk tells employees, quote im confident we can rally hard and push the results into positive territory. It would be awesome to throw a pie in the face of all the nay sayers on wall street who keep insisting that tesla will always be a money loser. How dough handicap hi chances productionwise . This is a high beta stock. Quite literally this defines the expression going for broke. Hes already admitted they need more funding, which is why they want to curry favor and be viewed positively by wall street. We have never seen such dispersion in analyst expectations. You have a spread of 160 to 500 a share among different analysts. That tells you theres a wide variety of perspectives that this will make it or not. Hes going for broke here. The whole merger with solar city. He has a miss and a goal here to do something much, much bigger. You know, that carries risk with it. Jon, theres only so many times you can send that email, right . After a while you cant breathe if the belt is tightened to a certain extent. Thats sending some kind of signal to investors. Lets tighten the belt for in quarter and hopefully show some profitable, but i i agree. 19 analysts surveyed, seven who said the hold, seven who said buy, five who said sell. On one hand you have productivity problems, 600 million of cash burned in the first six months. On the other side of ahn explosive, the best entrepreneur on planet earth and an incredible brand. Better entrepreneur, bezos or musk . Bezos so far. Musk is a great visionnary. Seeing him speak is like watching the fifth element or Something Like that, whereas bezos, hes more like us im still quite a ways, but more like us, just super, super smart. Bezos is apple, musk is google, right . Musk is talking about what might be and bezos is delivering . Exactly. We cant late to hear from him and apple this week. Thank you terry and jon. Meanwhile, markets are mixed this hour. The dow down by 27 points. Nasdaq has flip flopped between gains and losses, and its very close to the flatline. We did get isn services this morning, the lowest reading in 6 1 2 years. Wall street will be watching that after fridays jobs numbers. Printing stocks jumping on nuts that ge is buying three small european firms, and you can see its having a halo effect on the sector. Check out airs of amazon. Com, fresh alltime highs, the stock up better than currently setting at box making an announcement. And the rice and fall of Elizabeth Holm and theranos. And Morgan Freeman on the next episode of binge. When squawk alley couple times back. There are many things you dont want in industrial strength like cologne. Morning but theres one thing you do. gags its called predix from ge. The cloudbased Development Platform thats industrialstrength strength hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. Box ceo aaron levy is in San Francisco with our josh lipton. Josh, over to you. Thank you, kayla. Aaron, thanks for joining us. We should mention you come bearing some props today. Walk us through this hat. This is not a prop. Its a symbol of what were trying to accomplish. We have our conference this week, and its all about how do we dramatically improve the way that people get work done with all of their Enterprise Software and collaboration, so we definitely want to make software great again. This is not an endorsement of any political party. Its just about software. So aaron, one of your it things is the way you think work is done is broken. How will this fix that . We want to drab tickly range the way people work, collaborate, access their share. We have 66,000 customers, in 60 of the fortune 500. But theres so much more we can do. When you look at how in more collected, more data driven, we still see so much response. So we announced box relay jointly developed with ibm. Its about helping you streamline that routine daily work, whether its processing invoices, sending out sales contracts, getting, you know, different kind of contracts reviewed, we want to help you automate that, so taking the best of boxs simplicity with the robust Workflow Technology delivered as a new solution, so this dramatically expand, but allows you to make box be the place where all your work comes together. Jon, you had a question for aaron . I do. Thank for joins us. Hey, jon. If im reading this correctly you had 4,000 new customers in your last quarter, up from 3,000 new customers in the year before. My question is, how much are you having to spend . What kind of incent i was are you giving to get the customers in the door now . And how does that compare to a year ago . When you look at the topline numbers, there is a dramatic improvement in efficiency. As a persons of revenue. Our revenue grew 30 year over year, billings grew 34 in the q2 we Just Announced. A lot of the volume is driven by more efficient sales channels, so bringses new customers on board by our online channels, where they dont have to talk to a sales rep. At the same time, we still dramatically grew the number of big deals that we sold into the enterprise, so 45 deals over 100,000 that were new subscriptions. So we are growing at all segmen segments, but doing so in a much more efficient manner. So talk about microsoft and drop box, what are you see when you look across that competitive last scape . We seep our customers bringing in to many solutions. File shares technology, with fog and the allnew approximate, we want you to buy one solution where all of that work can come together in one place. On the other hand, with a lot of these larger incumbent companies, we actually have great partnerships. We know the future will be about customers will use office 365, use salesforce, slack, docusign, ibm, we want box to be all the place where all that work comes together, so we are the place you can secure, manage, organize, and store all that data. But we know were going to be partnering with a lot of other players to make that happen. Ill bet theres a lot of investorses who say they want exposure to the cloud, so they buy amazon, salesforce. When you talk to the investors i own amazon, counter. Rm, how do you convince them they should own box, too . I think were in a different category. When you think about amazon, youre buying into infrastructure, which is an amazing opportunity. In fact we use amazon infrastructure for a lot of our operation. If our buys crm and believing in sales processes, marketing processes, all of that moving to the cloud. With box were more about the end user product activity, so all of the daily collaboration, Product Development organization, so were in a slightly different category, because were about where everybody is collaborating to produce the final output that that organization is all about. So in life sciences, its about creating new drug discoveries. In media, its about creating a new blockbuster film. In manufacturing its about shipping your new product. Thats what people are collaborating on when they use box. So its a very different category from both amazon and salesforce. Kayla, you had a question . I do. We talk so off about companies being able to use the cloud, but there appears tore a land grab for government clients . I know the department of justice is a customer of yours, but in this election cycle where were talking so much about the i. R. S. , office of Personnel Management have been hacked, Even National committees have been subject to hacks. What can box have done there . What could Cloud Companies have done differently that the federal government is not doing . Yeah, its a great point. When you cloud first started emerging in the mid 2000s, the initial fear was my gosh, ill be losing control of my data, but what it turned out is as Cloud Companies invested in more and more modern and uptodate security systems. We can patch our servers much faster than any onpremise environment can. We invest more deeply in security than the vast majority of enterprises are able to do. You end up getting much more modern security where you can govern, protect, control information. So we finally reached this point where the security you often get dramatically excites what you can all of those individual hacks, in general ute get a modern state of capabilities, maintains governacy u. Your encryption keys, getting analytics and events. So that is why many of them are choosing box, because we can end up giving them the tools to help them stay protected better than what they could do in their own traditional environment. Its just comparing 10, 20, 30yearold technology to technology thats incredibly up to date and adapting in real time. Aaron, a great wideranging discussion, sir. Thank you very much. Thank you very much. Take care. Also josh lipton, thank you. Are the media and Silicon Valley partly to blame for the rise and fall of theranos and its founder Elizabeth Holmes. And carl sits down with Morgan Freeman for the knicks emsolve of episode of binge. Do you care if youre seen on an ipad or 70foot screen . I dont kay. Yeah, just look at me. Swranity fairs new issue has a deep dive on theranos. Nick builten recounts the damage control that it went, including rushing into an interview with our ven own jim cramer. This is what happens when you work to change things and first they think youre crazy, then they fight you, and then all of a sudden you change the world. Or not. Nick billton joins us now. Thanks for being with us. One of the things that struck me about this is her professors even early on are arguing against the efficacy of the method that she was trying to use to analyze blood, and she stiff is kind of hanging on to her story even now itches what did that tell you about her character, her special. Interesting, when i first started reporting this piece, i thought it was being to be a lay of the land of what happened and how things erupted aft the wall street journal published a large piece on theranos not being what it said it was. The more i spoke to people, the more interviews i did, the more my mouth was agape at what i heard. I spoke to a professor who said early on they knew this technology wasnt possible. I spoke to the widow of the chief scientist and heard the way she was treated after her husband committed suicide, partially as a result of working at theranos. Just a long list of things. I think that it kind of made my scratch my head over and over as what Elizabeth Holmes was doing while she was running that company. Were you able to figure out what was it about Elizabeth Holmes that led the right people to believe in her, invest, despite some of the strange conditions she set forth around not being able to have a look at the basics of the technology if you are going to invest, the engineers and scientists at the company not being able to communicate with each other. You know, i think that what Elizabeth Holmes did, and look, this is just from my reporting and my viewpoint on this. I cant speak exactly for what the investors thought, but this is 9 way i perceived it. The valley is set up that a lot of people are there to make money. Theres nothing wrong with that, but for so long theyre going around saying theyre trying to change the world, and most of them are not. Theyre just trying to get rich. Along comes Elizabeth Holmes, a woman who runs a company, which is an an anomaly among these men running stormups, and people are like, this is perfect, this fits our narrative that weve been putting out there. She was able to came up further that. I think as a result everyone stood behind her. When someone said Silicon Valley, youre not changing the world, they would point to Elizabeth Holmes. The reality was the company wasnt what it said it was in any way, shape or form. Nick, i have two questions, we talked about the makeup of the board. How did she attract those people . Second if she knew her peer review was wobbly, why be so aggressive with her media strategy . Its interesting. I think as far as the board goes, its you know, it was 12 men that were not should not have been overseeing a medical company. Someone said to me at one point this was a better equipped to decide if america should invade iraq rather than overseeing this medical facility. I think her father who worked at enron and then went to work in the government, i think had a lot of connections. The booed itself made me scratch my head. Why is it a the 2yearold former secretary of state is running this board. Ive spoken to certain people on the board that even said that. I think that, you know, this is just another example of this company that was working, you know, hiding things, no one knew what was going on, and the only person that knew all the secrets was Elizabeth Holmes. As you read through the story, you see its one layer of an onion after another after another. Nick, there does seems to be a continued founder and perhaps holmes personified that, but its up to the board and other executives to provide checks and balances. Obviously that didnt happen, but do you hear other stormups looking at this as a cautionary tale . I think other startups that probably blur the line of med and tech are looking at it as a cautionary tale. I can tell you from my reporting that the government is looking at it as a cautionary tale. One of the things i found out when i went to Silicon Valley to interview. There were certain peel that said two days earlier the fbi knocked on my door and theyre doing an investigation. I think if it turns out that Elizabeth Holmes was being deceitful to investors and to patients, some of whom, you know, have sa