Behind the Cloud: An Interview with Salesforce.com's CEO Marc Benioff

Marc Benioff
Contributor: Marc Benioff
Posted: 12/21/2009

Marc Benioff is arguably one of the most exciting CEOs of our generation. Benioff, CEO of salesforce.com, a trailblazer and game changer in the CRM cloud computing space, has released his newest book (co-authored with Carlye Adler) Behind the Cloud: The Untold Story of How Salesforce.com Went From Idea to Billion-Dollar Company—And Revolutionized an Industry. What Call Center IQ members might not know is Benioff himself once sat in the call center technical support seat. Benioff believes the call center is salesforce.com’s next billion dollar industry. And with the chatter about the service cloud, it very well might be. Benioff speaks to Call Center IQ about his new book for entrepreneurs, the future of salesforce.com and why philanthropy is good for business.

In your book Behind the Cloud you write about your young adulthood and the fact that you started your first software program when you were 15 years old. Your parents allowed you to travel to Europe alone to research a castle you were going to replicate in an adventure game you were creating for Atari 800. You talk about how your grandmother wrote the music for the games. How did the support from your family impact your entrepreneurial spirit?

The support I had from my family was pivotal. There were so many things that they did: My grandmother drove me to RadioShack so I could play around on the TRS 80 Model 1, my mother gave me the freedom to run a business in high school, but provided the parental guidance and support a kid needed. (She let me go to Scotland, but did call Scotland Yard when I forgot to call home.)

It was not only the support, but the model my family provided, which influenced me. My grandfather was an innovative attorney who had his own practice, and he created BART, San Francisco's Bay Area Rapid Transit. My father had a chain of women’s clothing stores. My entrepreneurial spirit was nurtured just by watching them. It felt normal to be 15 and run a company out of my bedroom, or later, from my dorm room. It seemed like a natural thing to do.

You were a customer service rep in technical sales support at Apple. Many of our members oversee customer service support teams. Can you tell our audience what this experience was like for you?

At first, I didn’t like it. I much preferred my previous summer job at Apple where I was writing some of the first native assembly language for the Macintosh, and I enjoyed the perks like the fruit smoothies in the fridge and seeing Steve Jobs walk around and motivate the developers.

I was a shy computer geek and I was passionate about building technology, I didn’t want to talk with people on the phone. It turned out to be better than I expected, and in fact, I learned a critical lesson that about the power of each and every customer exchange. If the exchange was executed as well as possible—if we made the customer truly successful—we had the opportunity to transform him or her into an Apple loyalist and evangelist. This introduced me to the importance of customer success and has influenced everything I’ve done since.

Is there a place for On-Premise "enterprise" software such as Oracle, SAP or other applications or should all enterprise applications move to the cloud like Salesforce? If yes can you describe the reasons and applications for these On-Premise applications?

I believe that all enterprise applications should move to the cloud, but that doesn’t mean everyone else thinks it should! There are still companies very heavily invested in the on-premise-model and they want to ensure there’s still a place for it.

I’m glad we’re on the newer side of the equation, though. There’s not a very promising future for on-premise because customers are ready for a change. Big investments in client-server produced returns that were elusive. Furthermore, the economy that we have been dealing with for the past couple of years has caused customers to question a lot of conventional wisdom—especially when it comes to technology. Customers don't want to part with big buckets of cash or tap into precious credit lines to finance big-ticket purchases of software, hardware and the data center infrastructure that goes with them.

Microsoft, Oracle and SAP are finding themselves confronted by companies like Google, Amazon.com and salesforce.com. And, perhaps to everyone’s surprise, these are not scrappy dot-com companies anymore. Google does everything (it’s even a verb). Amazon.com is the Internet’s biggest retailer and its Web services business uses more bandwidth than its retail business. Salesforce.com hit $1 billion in revenue and you can now get all your enterprise apps on demand.

At a time when many tech companies are wobbling, we drew nearly 20,000 registrants at our annual Dreamforce event in San Francisco last month. That's about double last year's numbers. It sends us a message that companies are hungry for better answers than they are getting from SAP, Oracle and Microsoft. Having seen what’s possible with a new way, companies have been exercising their power of choice.

Salesforce.com has established the viability of cloud-based computing. The scalability and security issues that IT was very concerned about early in the cloud-based evolution have been addressed and validated. Do you envision that all future software applications will be delivered as a service? Over what period of time do you see this occurring?

We are seeing a major shift to cloud computing, and the trend will accelerate. However, no new technology completely replaces another. We have many customers who still use some form of mainframe and will probably continue to do so for some time. But the best minds and the best new ideas move on. When was the last time that someone told you about a hot new shrink-wrapped business app? Maybe 10 years ago! The best innovation is happening in the cloud right now, and customers know it.

How fast? That’s the big question. Now, every major analyst firm sees cloud computing expanding its share of the overall IT market. The next five years, and the next 10 years will look very different. Right now we are only at the very beginning. I still have a lot of work to do.

You have said that it’s critical for new companies to develop a customer-centric culture early on. Do you ever feel like you have to sacrifice culture to meet quarter-over-quarter growth?

This is a difficult question. In general, no, we don’t have to sacrifice culture to achieve high growth. In fact, I think the culture we built—specifically our integrated philanthropy model and our V2MOM management system—allows us to achieve quarter over quarter growth.

That’s not to say there haven’t been changes. We’ve made enormous changes, financial changes, leadership changes, organizational changes, to prepare to be the company we are today. We’ve tapped people from larger companies whose experience we needed. Other talent, people who have been with us from the earliest days, have moved on. There’s a part of me that misses how I once interviewed every hire, knew everyone’s name, and drove golf balls down empty halls with the team. But the other part of me appreciates that those halls are no longer empty, that we’ve built something beyond my greatest expectations together, and we’ve stayed true to who we are as a company. Companies must change as they evolve. It’s the only way.

Green branding is trendy right now—this is something you have always done at Salesforce. How do you think giving back changes a company’s culture?

Our people are here for more meaningful reason than just to collect a paycheck. The idea of giving people paid time off to volunteer was something I learned from Alan Hassenfeld, the former chairman of Hasbro. He demonstrated how doing something purposeful made employees feel more invested in the company and inspired them to do their best. I thought that secondary gain further justified the hours our employees would be spending outside our office. I hoped the volunteer program would prevent them from feeling as rudderless as I had during my time at Oracle. I think it has.

Our employees have given more than 165,000 hours to the community and helped over 7,500 nonprofits improve how they manage their organizations. Along the way, we’ve become a better company. Our employees say they are more fulfilled, more productive and I can tell you they are more loyal. It’s because we share a common vision and that enables us to work well together. The people here spend days off together working in the community, they share pride in accomplishing something like bringing a new program to the Special Olympics or helping an eco-center get off the ground. Our foundation is a tool for collaboration. We share this model with our partners and vendors and customers. Before our annual Dreamforce event we participated together in a volunteer effort. Last year everyone came out and painted a school in the rain! You have to see one of these events and what happens. I’d love for more companies to join what we do or create their own program. It quickly becomes clear that by seeking profits and purpose together everybody wins.

Your new book is essentially an entrepreneur’s playbook. You talk about the challenges you incurred in your journey launching salesforce.com. In talking about some of the pushback you received from venture capitalists you remind us that MGM told Walt Disney Mickey Mouse would never be a hit because a giant mouse on the screen would terrify women. Can you talk about the significance of this reference for you?

The point is that you have to pursue what you believe is right, even if people tell you it won’t work. There will always be naysayers, but what would happen if we listened to them? Imagine a world without Mickey Mouse. That's no fun. And it’s not just Mickey whose appeal has been called into question. Pioneering companies like Cisco, E*TRADE, and Starbucks, have all been passed on by investors at some point.

VC’s weren’t interested in us when we were raising money. I felt that they were significantly undervaluing our company or they just didn’t understand what we were doing. A few told us that they believed in networked computing—not our disruptive ‘‘no software’’ model. Rejection from venture capitalists was not enough of a reason to consider getting out of our business or even changing our business, it just forced us to find a new way to raise funds. There’s always been another story from Walt Disney that’s guided me: ‘‘If you can dream it, you can do it.’’

Interview by Blake Landau.

Marc Benioff
Contributor: Marc Benioff
Posted: 12/21/2009

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