Thomas White Global Investing
Global Players

Global Players

September 2010

Marc Benioff, CEO, Salesforce

Marc Benioff

Image Credit: Robert Scoble on Flickr under a Creative Commons license

“I still have not accepted that has made it. I feel…you have to kind of keep going and work harder.”

— Marc Benioff, 2010

What are the keys to success? Marc Benioff, chief executive officer of Salesforce would say “swimming alongside a pod of dolphins” and looking to rappers for inspiration. Benioff is not joking. He actually spends a quite a bit of time on the beach near his Hawaii home and he admires rapper MC Hammer’s marketing ideas. Today, the unconventional CEO is busy launching his next brainwave, a communications tool named Chatter.

Salesforce is like the fate line that changed Benioff’s life. Prior to the birth of Salesforce, Benioff’s personality could have been pigeonholed into the average, albeit precocious, geek category. Specializing in computer games, he set up Liberty Software while still in high school, and soon after worked at Apple as a programmer. In 1986, he joined Oracle, and at just 23 years of age he was named Rookie of the Year. Three years later, he became the youngest vice president the company has ever had – a distinction he still holds today.

Fast forward ten years. After working in various sales, marketing and product development roles for Oracle, in 1999 Benioff decided to live his dream, by starting his own company. During his years with Oracle, Benioff had been working out a strategy to sell software through the internet, bypassing the conventional manual installation methods. Unknowingly, Benioff had hit upon a pulsating jugular vein in technology, known as ‘cloud computing,’ a platform where users are able to conveniently use software and applications over the internet. By now, the concept has become commonplace, but as recently as a decade ago, customers struggled to buy packaged software and manually install applications using a CD. At such time, Benioff’s idea seemed more like science fiction. So much so, that Benioff fretted that his company would fail within two years.

Launched with an initial investment of just $1.2 million, Salesforce quickly attracted attention. Partly fascinated and partly skeptical, customers began tapping into the tool for its convenience. Salesforce had a powerful selling point- companies could skip the bother of software licenses and superfluous hardware. And eliminating these factors immediately brought down prices.

But that is only one aspect that contributed to the rapid growth of Salesforce. The company rolled out aggressive marketing campaigns, including sending self-branded “S” shaped chocolates along with media press kits to journalists, and embraced a customer service ethic, promptly addressing customer concerns. This helped build Salesforce into a major competitor to the software behemoths.

Fortune magazine recently ranked Salesforce fourth in the “100 Fastest Growing Companies” in the world for 2010.

“When I look back at the past 10 years, I think, ‘Wow, I can’t believe what we have accomplished’,” Benioff himself exclaims in an interview with CNET. A little over five years ago, Salesforce’s revenues were in the neighborhood of $500 million. That figure has long since doubled. Salesforce crossed $1 billion in annual revenues last year, becoming one of the few companies to ride over the recession. In 2009 alone, the company accrued 12,500 new customers and its employees have grown to 3,800 from 2,000 just four years ago. In August 2010, Salesforce posted record revenues of $394 million in the second quarter, a leap of 25% year-on-year.

Yet, Benioff is not one to rest on the laurels of his achievements. Especially, since he feels the pressure of competitors breathing down his neck. “Salesforce has got a nice lead, but as they look in the mirror there are absolutely titans racing down the highway coming after them,” cautions Frank Gens, a senior vice president and chief analyst at market research firm IDC.

Benioff’s latest innovation, Chatter, is expected to contribute $1.5 billion in annual revenues. Chatter is used as an internal communication tool that allows workers to follow each other a la Twitter and Facebook or keep up with colleagues around the world like Microsoft’s Sharepoint. Already, 82,000 customers use Chatter including 20,000 companies. The executives at Salesforce themselves use it. To promote meritocracy, Benioff says he monitors the network to identify hardworking employees and the best customer support personnel. When questions of employee privacy came up in a press conference, Benioff retorted with his typical sarcasm, “We’re not talking about a tea party; we’re talking about how to get things fixed.”

His employees seem to agree. According to a company review website Glassdoor, Benioff recently received a 90% approval rating from his employees, edging out the CEOs of Oracle, SAP, Microsoft and IBM. Benioff, who is known for his philanthropic efforts, seems to have won over not just his employees. “We actually consider him a shaper of the software-as-a-service platform. I don’t think enough good things can be said about what he did to get this business off the ground for everybody,” compliments technology leader Eric Openshaw of Deloitte U.S to CNN. Salesforce has indeed become the new technology phenomenon. Perhaps swimming with dolphins and listened to rap music are not to be underestimated. At least it seems to have worked for Benioff.





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