Is It "The End of Software?"
Marc Benioff still thinks so. The salesforce.com CEO explains what other software vendors can learn from the launch and growth of salesforce.com and the on-demand model.
By M.R. Rangaswami, Sand Hill Group
Jan. 05, 2007
A $500 million-plus annual revenue run rate. More than 550,000 subscribers. 1.6 million transactions per hour. 99.9 percent reliability.
All these numbers add up to the leading on-demand software vendor: salesforce.com.
Since its founding in 1999, chairman and CEO, Marc Benioff, has evangelized the beauty of the software-as-a-service (SaaS) model and has grown his company into the poster child for the movement. And the religion is spreading: Gartner forecasts SaaS will account for one-quarter of enterprise applications by 2011.
SandHill.com spoke with Benioff about salesforce.com's launch strategy, why customer enthusiasm matters, the momentum behind AppStore and the difference between leadership and dominance.
SandHill.com: salesforce.com has experienced a level of success that thousands of other software vendors would like to emulate. Thinking back to the first years of the company, can you think of 2-3 things that set your business strategy apart?
Marc Benioff: We truly reached a major milestone this year. On October 31, we closed our fiscal third quarter with an annual revenue run rate in excess of a half billion dollars a year. We figure that only about 40 software companies have ever made it to that mark. I'm still amazed at how quickly we got there. But I feel like we are just getting started in many ways
What set us apart? It's pretty simple: success. We knew from the very beginning that we wanted to sell a service that made sales force automation as easy as buying a book on Amazon.com. That meant customers had to love to use it. And our subscription-based business model meant that they had to succeed. It sounds simple, but this was a major break with the enterprise software model of the past, where drawn-out implementations were long on promises but short on results.
When I was at Oracle, we sold our software only to large companies. We knew that had to change when we started salesforce.com. Now our service is used by 15 people at Zagat and 15,000 at Cisco. That's the power of multi-tenancy: everyone benefits from a secure, robust, shared infrastructure. Today, ADP, Aon, Merrill Lynch, Corporate Express, Staples, SunGard, Sprint, Ashland, SunTrust, Symantec, Dow Jones, and 27,000 other companies are using the same service. That never happened in enterprise software before, and we believe that this democratization of technology is key to the future of software.
My co-founders, Frank Dominguez, Parker Harris, Dave Moellenhoff and I were also very clear that we wanted salesforce.com to be a different kind of company. That's why we set aside 1% of our equity for a philanthropic foundation, agreed that employees could donate 1% of their paid time to charities, and gave 1% of our profits (in the form of product) to 501c3 organizations. It has been a decision that we are very, very proud of. What we didn't know at the time is that this 1/1/1 model would prove to be essential to our corporate culture and a major differentiator in hiring and retaining the best people.
SH.com: Competing software vendors have compared the evangelistic sales style of salesforce.com and other on-demand vendors to that of a religious conversion (a la, customers should convert from on-premise to on-demand - there is no middle ground…) How much did proselytizing the on-demand model play into salesforce.com's strategy originally? And how does it incorporate now, given there are lots of other hybrid and on-demand offerings in the market today?
MB: I often hear talk about the Salesforce experience expressed in religious terms, but almost always because of the fervor of our customers. They are amazed at the success they are seeing, and they are eager to talk about it to our prospects and to the media. This just hasn't happened in enterprise software before. Here's a great example: last quarter, Greg Case, the CEO of Aon, a large insurance and risk-management company and one of our largest deployments, talked about the success he has been seeing with salesforce.com on his quarterly results call with Wall Street. Greg even came out to San Francisco to tape a discussion with me that he's going to share with his employees. That blows me away. He's a visionary CEO in a tough business, so it was really inspiring to me to hear him talk about our service with that kind of enthusiasm.
All these numbers add up to the leading on-demand software vendor: salesforce.com.
Since its founding in 1999, chairman and CEO, Marc Benioff, has evangelized the beauty of the software-as-a-service (SaaS) model and has grown his company into the poster child for the movement. And the religion is spreading: Gartner forecasts SaaS will account for one-quarter of enterprise applications by 2011.
SandHill.com spoke with Benioff about salesforce.com's launch strategy, why customer enthusiasm matters, the momentum behind AppStore and the difference between leadership and dominance.
SandHill.com: salesforce.com has experienced a level of success that thousands of other software vendors would like to emulate. Thinking back to the first years of the company, can you think of 2-3 things that set your business strategy apart?
Marc Benioff: We truly reached a major milestone this year. On October 31, we closed our fiscal third quarter with an annual revenue run rate in excess of a half billion dollars a year. We figure that only about 40 software companies have ever made it to that mark. I'm still amazed at how quickly we got there. But I feel like we are just getting started in many ways
What set us apart? It's pretty simple: success. We knew from the very beginning that we wanted to sell a service that made sales force automation as easy as buying a book on Amazon.com. That meant customers had to love to use it. And our subscription-based business model meant that they had to succeed. It sounds simple, but this was a major break with the enterprise software model of the past, where drawn-out implementations were long on promises but short on results.
When I was at Oracle, we sold our software only to large companies. We knew that had to change when we started salesforce.com. Now our service is used by 15 people at Zagat and 15,000 at Cisco. That's the power of multi-tenancy: everyone benefits from a secure, robust, shared infrastructure. Today, ADP, Aon, Merrill Lynch, Corporate Express, Staples, SunGard, Sprint, Ashland, SunTrust, Symantec, Dow Jones, and 27,000 other companies are using the same service. That never happened in enterprise software before, and we believe that this democratization of technology is key to the future of software.
My co-founders, Frank Dominguez, Parker Harris, Dave Moellenhoff and I were also very clear that we wanted salesforce.com to be a different kind of company. That's why we set aside 1% of our equity for a philanthropic foundation, agreed that employees could donate 1% of their paid time to charities, and gave 1% of our profits (in the form of product) to 501c3 organizations. It has been a decision that we are very, very proud of. What we didn't know at the time is that this 1/1/1 model would prove to be essential to our corporate culture and a major differentiator in hiring and retaining the best people.
SH.com: Competing software vendors have compared the evangelistic sales style of salesforce.com and other on-demand vendors to that of a religious conversion (a la, customers should convert from on-premise to on-demand - there is no middle ground…) How much did proselytizing the on-demand model play into salesforce.com's strategy originally? And how does it incorporate now, given there are lots of other hybrid and on-demand offerings in the market today?
MB: I often hear talk about the Salesforce experience expressed in religious terms, but almost always because of the fervor of our customers. They are amazed at the success they are seeing, and they are eager to talk about it to our prospects and to the media. This just hasn't happened in enterprise software before. Here's a great example: last quarter, Greg Case, the CEO of Aon, a large insurance and risk-management company and one of our largest deployments, talked about the success he has been seeing with salesforce.com on his quarterly results call with Wall Street. Greg even came out to San Francisco to tape a discussion with me that he's going to share with his employees. That blows me away. He's a visionary CEO in a tough business, so it was really inspiring to me to hear him talk about our service with that kind of enthusiasm.
