The tower of Benioff: Masterful salesmanship has pushed Salesforce to ever-greater heights

, Internet, Retail, Tarjetas y Pagos Electrónicos

But will the world’s fourth-largest software firm live up to its founder’s soaring expectations?VISIBLE from nearly every corner of San Francisco and from up to 30 miles away, the new skyscraper that will be the headquarters of Salesforce, a software giant, stands 1,100 feet (326 metres) tall, making it the highest building in America west of Chicago. On January 8th, after four years of building, workers will start moving in.
Those who know Salesforce’s founder, Marc Benioff, find his firm’s new digs fitting. As creator of a firm that caters to salespeople, he is himself a fiercely ambitious salesman. In its 2018 fiscal year, which ends on January 31st, Salesforce is expected to reach $10bn in annual revenue for the first time. It plans to more than double that figure over the next four years. Even that is not enough. In 20 years Mr Benioff’s “dream” is $100bn of revenue, he muses.
Can his towering expectations be met? Founded in 1999, Salesforce claims a combination of longevity and size that few tech companies have achieved; its market capitalisation is $76bn. It is the largest tech firm with headquarters in San Francisco and the world’s fourth-largest software firm, after Microsoft, Oracle and Germany’s SAP, which were all founded in the 1970s.
Mr Benioff was early to spot an opportunity in delivering software as a service, meaning that software can be accessed remotely by users through the cloud, rather than being installed on firms’ computers on their premises. This mode of delivery needs no upfront investment by companies for software that may go unused; instead subscribers pay a fee for employees that access it each month. Salesforce’s “customer relationship management” software, which helps companies keep track of their clients and manage prospective leads, is its main product, but it also offers tools for customer service, marketing, analytics and digital commerce.

Mr Benioff is a key element of the product too; a mix of showman, digital guru, political activist and philanthropist. Those close to him call it “marc-eting”. Seeing firms struggling to adapt to technology trends, he puts himself forward as a digital consigliere, travelling globally to advise bosses. Each autumn Salesforce spends an estimated $30m to put on Dreamforce, drawing some 170,000 participants to San Francisco with a promise of parties and prominent speakers.
Not everyone appreciates his salesmanship. He has taken many public positions, often through Twitter—for example, on gay rights and equal pay for women. “As political leaders become weaker, chief executives have to become stronger,” says Mr Benioff. To date the firm has given $168m in philanthropic grants. Many customers like to feel they are not only buying software but doing good for the world, says Keith Weiss of Morgan Stanley. But Salesforce’s annual “10-K” securities filing lists its political positions as a risk for shareholders. According to former executives, Mr Benioff’s fondness for setting policy by tweets, such as cancelling events in states that have issued anti-gay laws, can sometimes cause organisational chaos.
That is not the only drawback. Gerhard Gschwandtner, boss of a firm that publishes a magazine, Selling Power, calls him “a merchant of hope” but also cautions that “selling the future can attract focus away from weaknesses in the present moment”. Only around a quarter of his firm’s sales come from outside the Americas. Its business generates plenty of cash—in its 2017 fiscal year it produced around $2.2bn—but its operating profits have been persistently low. That is in large part because it spends so lavishly on sales and marketing—a total of $10bn between 2015 and 2017.
Investors reckon Salesforce’s business will keep generating lots of cash as it expands into new areas of software. But there is a risk that marketing costs stay high and that Salesforce splurges on deals in order to grow. In recent years it has diversified its business lines mainly through acquisitions. Some purchases, such as Demandware, a cloud-based provider of e-commerce services that it bought for $2.9bn in cash in 2016, were sensible, but others, such as Buddy Media, a social-media firm it acquired for around $750m in 2012, are viewed as expensive mistakes. Mr Benioff also flirted with buying Twitter in 2016 but backed off when shareholders protested. They also worried when Salesforce bid for LinkedIn, a professional social network; Microsoft bought it for $26.2bn.
As for organic growth, Salesforce was later than Microsoft and some other firms to invest properly in artificial intelligence (AI), which is expected to make software more predictive and useful. In 2016 it bought an AI startup, MetaMind, for around $33m, and is using the talent it scooped up in the deal to put together an AI offering, called Einstein, which aims to make Salesforce’s software feel more personalised and insightful. Yet some wonder whether it can close the AI gap on rivals.
Salesforce may dominate sales-management software, but in newer areas of business, such as digital commerce and marketing, it faces stiff competition. Google and Amazon, for example, have an edge in the two fields, and enormous resources. Nor are Salesforce’s existing competitors, Oracle, Microsoft and Adobe, showing any inclination to surrender in the battle over sales software. LinkedIn gives Microsoft access to valuable sales-lead data. Startups could yet beat Salesforce on price or innovation.
Indeed, while Mr Benioff’s pitch is all about supersized future revenues, some people wonder if Salesforce will always remain independent. Its market value means it is neither a giant like Microsoft or Oracle nor a nimble startup. It is not easy to be a midsized publicly listed software company facing competition from tech giants. In 2015 Microsoft reportedly considered buying Salesforce, but a price could not be agreed. If a potential deal were once again to present itself, who better than a master salesman to see it through?

This article appeared in the Business section of the print edition under the headline “The tower of Benioff”

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