“Clayton Christensen wrote a book called The Innovator’s Dilemma. It illustrated how a start-up company—by employing innovation that disrupts existing business models—will always beat established big companies. It validated us for what we knew was right: the future wasn’t about simply improving on what was already done; it was about being bold enough to make big, sweeping, dramatic changes.”1
Marc Benioff, founder, chairman, and co-CEO of Salesforce
You can get a degree in just about anything these days, including one in “Adventure Education” from Plymouth State, one in “Bagpiping” from Carnegie Mellon, and even one in “Puppet Arts” from the University of Connecticut. I don’t know anyone with the aforementioned diplomas, but I do know plenty of graduates with degrees in accounting, law, computer programming, information systems, and political science. To date, though, I don’t know one person with a degree in sales.
Of the over 4,000 universities in the U.S., fewer than 200 have a sales program, let alone a sales course. There is no such thing as an MBA in sales. Despite this lack of academic training in “influence,” about one in nine people enter the workforce in some kind of sales role. That’s roughly 11 percent of folks employed in some kind of sales gig, without any real formal training in how to persuade people.
What’s interesting is how the sales industry has changed in the last couple of decades. Direct door-to-door selling is old hat; cold calling is all but done. Marketing channels are now dominated by Facebook and Google. Facebook is perhaps less of a social network than it is an advertising platform that hordes of marketing teams use to ultimately drive sales.
Ahead of Facebook, Google is now the biggest media owner in the world. It attracted $116.32 billion in ad revenue in 2018 (the majority of the online company’s total revenue pie), which represented more than twice Facebook’s $55 billion haul, and over 40 percent of the $283.35 billion global advertising market.2 Google makes vastly more money from digital ads than any other company on the planet. Together, Facebook and Google account for about sixty cents of every dollar companies spend on online advertising. It’s an astounding shift from the days of traditional selling.
While post-secondary institutions may be excited about the idea of introducing the first real MBA in sales, the next era of selling won’t be driven by academic pedigree—instead, corporations and their industry leaders will leverage search tools, social media, machine learning, and, most important, customer relationship management software (CRM) to create better sales teams.
This shift is happening in real time, with cloud-based CRM systems like HubSpot, Oracle’s NetSuite, Infusionsoft, and Salesforce making it more efficient for sales teams to manage prospecting, marketing, and relationship building. Top salespeople are combining these tools with their unique ability to build relationships in person. It’s all part and parcel of the modern-day approach to selling, where business cards and business lunches seem irrelevant. Does anyone even have a business card anymore?
In addition to the one in nine in a formal sales role, the rest of us, perhaps unwillingly, are also in sales. Our personal brand is becoming increasingly important. Job seekers are eschewing résumés and cover letters in exchange for personalized web pages, tailored social media silhouettes, and well-crafted blogs. Reference checks from employers are now part of a broader, more important Google search, Instagram audit, and deep dive on a potential candidate. We are in a truly unique time where the business of selling—whether it be a product, a service, or one’s self—is very different than it used to be.
How did we get here?
The concept of managing the customer relationship is likely as old as the idea of exchanging money for goods or services—sales as a profession probably started with the first Mesopotamian to try to talk his buddy into giving him a couple of shekels of barley for his spare goat. Let’s fast-forward, through the fifteenth-century Grand Bazaar in Istanbul, quite possibly the world’s first shopping mall; to nineteenth-century book peddlers trading on the strength of teaser chapters; to cosmetics companies like Avon and Mary Kay; to 1920, when a professor emeritus of psychology, E.K. Strong Jr., published The Psychology of Selling Life Insurance, allegedly the first work of its kind to focus on specific selling techniques; all the way to 1936—when Dale Carnegie, already famous for his courses in salesmanship, public speaking, and interpersonal skills, published How to Win Friends and Influence People.
This was a big turning point in sales psychology—the first, and perhaps the best, depiction of the relationship-based approach to sales. To date, Carnegie’s masterpiece has sold over 30 million copies, making it one of the bestselling books of all time. I’ve often listed it as required reading for courses I’ve taught at the University of Toronto.
Leap ahead a few more decades to the 1980s, which saw (in addition to big hair, Atari games, and Michael Jackson videos) the first versions of digital rolodexes. ACT!’s software product, introduced in 1987, allowed users to organize contact information more efficiently, and was perhaps the first CRM system on the market. Other vendors quickly followed with similar management software for businesses, spurred on by the explosive growth of personal computers and advances in server architecture.
In the early 1990s, Tom Siebel founded Siebel Systems, which quickly grew to become the largest provider of sales force automation tools, and by the late 1990s controlled almost half the broader CRM market. Other software giants noticed, and companies like Oracle and SAP began offering new applications and services to compete. The pressure was on to innovate and retain a share of a growing market.3
The rise of the web throughout the 2000s sped things up, as the sheer volume of available information slowly chipped away at any kind of seller’s advantage. Armed with more intelligence, prospective buyers were introducing a new equilibrium, which meant another new role for technology—one in which software would help salespeople to not only manage sales funnels, but also deepen their understanding of buyer behavior. This drive to better understand the psychology of a prospective buyer forced CRM companies to introduce even more sophisticated software tools.
The CRM market has grown by leaps and bounds to become a household acronym across almost every industry. Worldwide, CRM became the largest software market in 2017, according to Gartner, Inc., with total revenue amounting to roughly $40 billion—and that number is set to rise to over $52 billion in 2019, with 75 percent of the market expected to be issuing such tools via a SaaS (software-as-a-service) model.4 Today, SaaS companies crossing $1 billion in annual recurring revenue are almost commonplace, with Atlassian, Box, HubSpot, and Zendesk all well on their way. And leading the pack is Salesforce.5
Marc Benioff had an entrepreneurial spark from an early age. At fifteen, he began creating games for the Atari 800 computer. By sixteen, he was pulling in about $1,500 a month—enough to pay for his tuition at the University of Southern California.
Following USC, Benioff took a job at technology giant Oracle, a company specializing in software, cloud systems, and enterprise software. He fit in nicely at Oracle, rising up the ranks in a variety of positions, and working closely with the company’s boss, Larry Ellison. At twenty-six, Benioff was promoted to senior vice president, the youngest person ever to hold the title at the company.6
Benioff clearly had a very bright future at Oracle, yet he couldn’t shake the urge to try something entrepreneurial. Without much of a plan, he took a sabbatical in 1996, opting to get clarity on what was next from Hawaii and India. Benioff’s time away was transformative.
As he details in his memoir Behind the Cloud, Benioff came to two clear convictions during this period. He didn’t want to spend the rest of his career working in a traditional corporate job. And the internet would change everything, not only for consumers, but businesses as well.7
These two eerily Bezos-like epiphanies led Benioff to pursue the idea for Salesforce.com—a world-class internet company for salesforce automation. Benioff’s idea was to “make software easier to purchase, simpler to use, and more democratic without the complexities of installation, maintenance and constant upgrades.”8
Benioff’s goals were ambitious, but also timely. In a 2015 TED talk, Idealab founder Bill Gross shared what factors matter the most to start-up success.10 Sure, ambition plays a role. So do other factors like idea, team, execution, business model, and funding. But, as Gross makes clear, timing trumps everything. And Benioff’s timing was perfect—launching Salesforce in early 1999, not only at a time when there were several existing technology barriers when it came to software tools, but also when the overall business landscape was shifting under a new wave of sociographic and psychological factors that had never been addressed or even understood.
Benioff credits his V2MOMs with helping to clarify, communicate, and achieve his goals.
Vision
Rapidly create a world-class Internet company/site for Sales Force Automation
Values
Methods
Business, and more specifically sales, had historically been transaction-driven. The average ’90s salesperson came equipped with an aggressive churn-and-burn mindset. Picture Gordon Gekko, Michael Douglas’s character in the 1987 film Wall Street, imploring his audience to believe/agree that “greed, for lack of a better word, is good.” Or Alec Baldwin, playing a pompous salesman in 1992’s Glengarry Glen Ross, screaming at a room full of underlings about the law of ABC—“always be closing.” That was the dominant portrait of what successful salespeople were supposed to be like in a corporate setting—it usually meant an amoral pursuit of a single goal: more sales.
Existing software of the ’90s fit perfectly with what a Gordon Gekko might use. Oracle, Microsoft, and IBM had plenty of tools to load and manage lead contacts so cold callers could pound the pavement—Gekko-style. But they didn’t help salespeople understand prospective buyers on a deeper level.
There were also cost barriers. Most software was purchased outright—i.e., paid for up-front and installed on a corporation’s internal servers. Market tools were slow and difficult to navigate, and typically only large corporations could afford them. That left a pretty big gap between the Fortune 500 types and what the rest of the market was looking for.
Benioff looked at enterprise software through the prism of these small-to-medium-sized players, as well as online businesses such as Amazon and eBay—both early inspirations. He wrestled with a key question: Why were software companies selling systems that cost millions of dollars and took up to a year and a half to install from CD-ROMs, rather than something that could be delivered online, and used on demand?11
Benioff, perfectly poised at the intersection of three key trends—the renewed interest in sales psychology, the rise of the internet, and the underserved small-to-medium-business market—began planting the early seeds of cloud computing. He outlined a software concept that could be used on a pay-per-user services model rather than the cumbersome purchase-and-install format that companies were used to.12 The goal was to remove up-front costs by instead allowing users to pay a monthly fee for employees to access the tools. Users of Benioff’s software would, simply, “rent,” rather than “buy.” Wisely, Benioff targeted businesses that were struggling with sales force automation and CRM, mostly small-to-medium-sized firms.
Investors were skeptical. Benioff writes of being rejected by multiple venture capital firms before finally securing funding from some key individual investors, including Dropbox investor Bobby Yazdani, CNET founder Halsey Minor, and, not surprisingly, his old pal and mentor, Oracle’s Larry Ellison. Once Benioff had some initial working capital, he immediately brought in former Oracle colleagues Parker Harris, Frank Dominguez, and Dave Moellenhoff to begin working on Salesforce out of an apartment in San Francisco.
The environment was Amazon-like: raw and bare-bones. The original server room was a bedroom closet. As Benioff tells it in his memoir, “It was an archetypical California start-up scene with a dog in the office and a mass of young and energetic people wearing Hawaiian shirts, working hard, and subsisting on pretzels, Red Vines licorice, and beef jerky.”13
Bare seemed to be the theme early on. When the team churned out the first prototype, built in about a month, the software was simple, featuring only necessary information fields. To test out the UI (user interface), Benioff invited friends and colleagues to visit the apartment, which he called the Laboratory. It’s worth pointing out that most software companies (both then and now) work surreptitiously at this stage, but Benioff knew that the value of feedback far outweighed the risks of a ripped-off version of his prototype, so he allowed just about anyone to check out what the guys were working on: “When a group of Japanese businessmen were in town, they came to see what we were creating. We eventually became a stop on a tour for visiting Korean businesspeople who were interested in seeing an American start-up. Being inclusive of potential users from large and small companies across the world helped us gain valuable insight. After all, our goal was to build something that could serve as a global CRM solution for the masses.”14
As the company grew, Salesforce portrayed itself the way Benioff himself is portrayed: different, unique, and definitely going against the grain. This deliberately Amazon-like approach cast Salesforce as the underdog in the software world, with notable legacy players, like Siebel and Oracle, as the reigning corporate Goliaths. Salesforce embraced its underdog status, picking up organic PR through various attention-seeking stunts like hiring bicycle rickshaws to offer free rides to attendees of a conference held by rival Siebel Systems. As a perk for riding a Salesforce rickshaw, each attendee was given a Krispy Kreme doughnut and a coffee mug with a quote by a U.S. Bancorp analyst that said: “Wake up Siebel, Salesforce.com is a disruptive technology and is slowly moving in on the CRM prize.” The press ate it up.15
In 2004, Salesforce IPO’d on the New York Stock Exchange. Trading under the apropos ticker symbol CRM, 10 million shares of stock priced overnight at $11 put $110 million in the company’s coffers. The stock quickly appreciated, selling at $15 for most of the day before shooting up to $17.20 on day one of trading—a more than 55 percent first-day gain.16
Despite the early skepticism, the success of the IPO indicated that investors were now betting on not only Salesforce’s perfect market timing and vision, but also the relatively certain revenue stream generated by the company’s subscription pricing model. While traditional software companies could sell some big-ticket contracts, Salesforce’s recurring revenue play could garner higher valuations than a traditional licenced software company.17
Today, the company Benioff started out of that apartment at 1449 Montgomery Street in San Francisco is headquartered in a new 1,100-foot tall skyscraper, Salesforce Tower (still in San Francisco), the highest building in America west of Chicago. It is the global leader in cloud-based CRM services. It is the world’s fourth-largest software firm, after only Microsoft, Oracle, and Germany’s SAP, all of which were founded in the 1970s. About one-third of the company’s $10 billion in annual revenue comes from large companies like Dell, Cisco, E*Trade Financial, and Starbucks. And the company plans for even more ambitious growth, expecting to double annual sales in four years on its climb to Benioff’s “dream” of $100 billion in revenue by 2038.18
Given the new digs and immense shareholder value generated by Salesforce over the last twenty years, the climb to 100 billion dollars seems possible. If it gets there, it will be in large part due to two key factors that inform Benioff’s every move: the Salesforce culture, and its relentless focus on the customer.
Like Amazon, Salesforce is led by a big personality. Benioff is a famously gregarious individual and cocky marketer who remains front and center as the force driving the company forward. He is also a philanthropist, and a political activist who has taken progressive public positions on gay rights and equal pay for women and faced off with leaders in the American Bible Belt over issues like state bathroom laws. Recently, on CBS’s 60 Minutes, he said that “as political leaders become weaker, chief executives have to become stronger.”19
Not everyone loves Benioff’s left-wing activism. Some say a partisan CEO isn’t a good thing for shareholders. According to former executives, Mr. Benioff’s fondness for influencing policy discussions by tweeting—which he’s done to cancel events in states that have passed anti-gay laws, for example—can create chaos within the company. In fact, Salesforce’s annual 10-K filing listed the company’s political positions as a risk. But Salesforce’s left-leaning customer base seems to appreciate Benioff putting a few stakes in the ground. Some customers go so far as to say that they “feel they are not only buying software but doing good for the world.”20 However one feels about his politics, Benioff is comfortable in his role as lead C-suite salesman, and doing it the way he knows how: with bold, left-wing swagger, at the head of a company reflecting the same.
Salesforce’s workplace culture, which is undeniably influenced by its salesman-in-chief, has helped it attract and retain some of the best talent in the world. In 2018, Salesforce topped Fortune’s annual “100 best companies to work for” list, which noted that it spent “$8.7 million over three years to address differences in pay across gender and race.” The company slipped to second in 2019 (with Hilton assuming the top spot), but has spent eleven years on the list—a testament to its company-wide commitment to upholding its core values over the long term.21
Joining Salesforce as an employee starts with baseline compensation and benefits, but also includes, among other things, company-paid gym memberships, yoga classes, discounted airline tickets, and free massages; there are also lavish rewards for performance—for example, anyone who makes their quota gets an all-expenses-paid trip for two to Hawaii.22
Community involvement is a core value, and employees play an important part. As Benioff notes, goodwill and sincere intentions won’t cut through the profit imperative unless they are “woven into the fabric of an organization”—to truly make a difference, a company’s philanthropic program must be “part of a company’s DNA.”23 Backing up that statement, the company has a number of initiatives contributing to the company’s philanthropic energy, including a system it uses for its own foundation, Salesforce.org, called 1-1-1, which requires a pledge to donate:
There’s also the “Power of Us” initiative, which encourages the company’s vendors and partners to engage in their own philanthropic efforts. Then there’s BizAcademy, “a four-day entrepreneurial workshop designed for high school students in underserved school districts”; “Future Ready,” a series of “education and workforce development initiatives” offered to K-12 and post-secondary students; and “Pro Bono,” where the company donates time and resources to help non-profits improve their operations—the list goes on.24
Since the company’s inception, Salesforce has worked with over 40,000 non-profits or educational institutions, donated more than $260 million in the form of grants, and paid for its employees to volunteer over 3.8 million hours. When Salesforce reached the 1 million subscriber mark, it celebrated the milestone by giving away $1 million to ten non-profit organizations.
What has all this done for company morale? According to Benioff, “The foundation has made us a better company. It has served as a tool for collaboration with other companies. It has made our employees more fulfilled, more productive and more loyal. It has made us happier. Customers have rallied behind our cause. This is not why we do it, but the opportunity to work on something bigger together has positively affected our bottom line.”25
Salesforce is perhaps one of the few for-profit software companies of its size to leverage corporate philanthropy as a distinct competitive advantage. But from the company’s point of view, it’s a sound strategy that adds to the bottom line over the long haul. A reduction in overall poverty levels translates into a more skilled workforce, which then feeds more worthy recruits into the job pool. Moreover, giving back enhances the Salesforce brand by generating lots of favorable press—resulting in more exposure, more customers, and more profits.
In 2018, Benioff told Forbes that “nothing is more important to Salesforce than customer success... I believe being so committed to the customer is more important than it’s ever been.”26
A big part of that commitment has been to smaller businesses, which were ill-served before Salesforce. Today, one-third of Salesforce customers are small businesses. The company has made it easy for this section of its client pool to seamlessly integrate with programs like Google Cloud’s G Suite and other valuable software, such as Slack and Mailchimp. Salesforce’s app marketplace allows clients to customize CRM functions, and to tie in systems like Dropbox and Outlook as well as external social media platforms like Facebook and Twitter. Other advantages include access to Einstein, Salesforce’s artificial intelligence (AI) software. With Einstein, businesses can automate basic sales activities to reduce the waste that small-to-medium businesses typically spend manually inputting data.27
Salesforce is also hedging its bets by not only developing its own products, but by helping other companies to develop theirs. Salesforce Ventures, the company’s own venture capital arm, has invested in more than 275 enterprise cloud start-ups since 2009. Its impressive global portfolio includes names like Dropbox, Zoom, HubSpot, Evernote, Survey Monkey, and Automattic, among others.28 And the VC team’s focus is not just on home soil—it’s active in seventeen countries, including Canada, where Salesforce Ventures recently launched its Canada Trailblazer Fund, a $100 million fund looking to capitalize on forecasts that point to rapid growth in Canada’s public cloud software market.29 It’s a bet on the future of technology not only coming from much of Salesforce’s own products, but the entire ecosystem it’s helping to fund.
Then there’s Dreamforce, one of the biggest technology conferences worldwide. Dreamforce 2018, Salesforce’s sixteenth annual tech “Superbowl,” brought together over 200,000 thought leaders, industry pioneers, and thousands of IT professionals from eighty different countries. The conference, held in San Francisco, included more than 2,700 breakout sessions, roughly 100 hours of hands-on training, and over fifty workshops available to attendees.
In his memoir, Benioff says, “I know that markets are more receptive to change in challenging times. We are now in a time of extraordinary opportunity. People always ask me, what’s in store for the future? The future is whatever we imagine. We all must think three years out, five years out, ten years out. What’s ahead of us is whatever we create. Seize the opportunity in front of you.”30 Benioff was reflecting on the opportunities inherent in the 2008–09 financial crisis, but his thoughts are equally relevant in today’s world roiled by the ongoing American political crisis, and to the future of his company. It also provides insight into his 2018 purchase, with his wife Lynne, of Time magazine, for $190 million in cash.
There are some obvious reasons why Benioff purchased the ninety-five-year-old asset: for one, Time is a Salesforce client. More important, it is profitable—a rarity for a media company—complete with the world’s largest circulation for a weekly news magazine, and a readership of roughly 26 million. And, of course, there are plenty of synergies with respect to understanding Time’s long-standing subscription model. But, beyond the veil of the front page, are there covert political motivations?
The deal itself stoked further comparisons to Jeff Bezos, who bought the Washington Post for $250 million in 2013, prompting Donald Trump to disparage the iconic newspaper as an “expensive lobbyist” for Amazon.31 Like Amazon’s figurehead, Benioff created an innovative online business, pushed an early narrative to stir up free press, outlined customer obsession as a cornerstone of his business model, and has now put his stamp on the media world. This recent move could be seen as another Bezos-like play, perhaps an attempt to inflate his political influence beyond California. Regardless of the fact that Benioff has said that daily operations of the New York–based publication won’t change, the deal comes in the wake of the magazine featuring Trump on the cover almost two dozen times since he announced his bid for the presidency—each time accompanied by left-leaning criticism. The political influence of the paper certainly isn’t lost on Benioff, who himself has been an outspoken critic of Trump. Whatever’s in store for Benioff and Time, the newest tech CEO/media baron has added yet another unique marketing channel for Salesforce.
On a two-week retreat across the South Pacific in the middle of 2018, Benioff unplugged to do some soul-searching. When he returned, he decided that Salesforce would move forward with a “divide and conquer strategy” and that Keith Block, his long-time colleague and ex-Oracle software vet, would join him as the company’s co-CEO.32
Block’s ascension comes at a good time. The market has adopted CRM as a mainstay, and the $56 billion category is still growing. CRM software has moved from luxury to necessity across organizations of all sizes, including small business, the section of the market that has historically been squeezed out because of high up-front costs.
As CRM technology begins to merge with artificial intelligence, the industry continues to evolve. For instance, Salesforce.com users can purchase plug-ins that are powered by “Neuralytics,” a “predictive engine powered by over 90 billion sales interactions,” to record, store, and analyze phone calls.33
With more sophisticated AI-driven CRM tools, companies can aggregate client data, including things like social media postings and interaction history (e.g., emails sent, voicemails left, text messages sent, etc.) and rank a lead database according to the probability of securing a deal from a prospect. Moreover, sales managers can more accurately predict which members of their team will hit their monthly quotas, and conversely, who might not make the grade.
AI is also helping companies simply sell more stuff. For example, an AI algorithm can help a merchandising operation to price-optimize so discount rates can be applied strategically across a subset of SKUs. The same technology can also forecast next month’s revenue, or help identify which clients are more likely to upgrade a product they already own and which ones may want to purchase a new one.34
And, as the “tech within tech” improves, Benioff continues to expand Salesforce globally. In mid-2019, Salesforce announced a new partnership with Chinese e-commerce giant Alibaba, one that would see the company make inroads into the Chinese SaaS market, with Alibaba as the exclusive provider of Salesforce software to China, and Salesforce the only CRM product suite Alibaba would sell.
More growth is likely, as Salesforce continues to incorporate leading-edge tech into what’s already a best-in-class subscription-based product, operating in a healthy demand-driven market and webbed in a corporate culture defined by employee satisfaction, customer obsession, philanthropy, and progressive political ideals. It’s tempting to call this software giant unstoppable.