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Dreamforce interview: Marc Benioff, CEO,

Dreamforce interview: Marc Benioff, CEO,

04-Nov-2008 CEO Marc Benioff shares his thoughts on pure revenue models, evangelical sales and why SAP's pitch at Cloud Computing is the most horrible thing ever... logo

By Stuart Lauchlan, news and analysis editor

It's an increasingly stormy market out there. Why is Cloud Computing such a good thing in this economic climate?

Marc Benioff: These are difficult and unusual times. There's certainly a lot of fear out there. But our opinion is that there has never been a better time for Cloud Computing. If you need to lower your capital expenditure and lower your risks, then this is the time to do it. I have been very optimistic through this entire year and we haven't made any changes to our planning. People need solutions now that isolate them from risk.

I actually have a lot of empathy for our enterprise software peers because they don't have the opportunity that we have in having a full portfolio of revenues. Companies like Oracle and SAP are seeing big licence drop-offs. SAP has a hiring freeze and is contracting and when Oracle reports I wouldn't be surprised to see the same thing. When you're Oracle or SAP and the only tool you have is a hammer, then everything looks like a nail. We are far more flexible and adapatible. We have the power of elasticity.

"Business ByDesign is just horrible. I've never seen anyone do a worse job. SAP are doing a terrible, terrible, horrible job."

Marc Benioff, CEO,

We don't want to make a lot of material changes to our business. We're not making material changes to our pricing or to our acquisition strategy. We know exactly what kind of companies we are looking for and when we find them then we'll go for it. We don't want to change that strategy because market conditions mean there are some lower cost companies out there. We are very excited about CRM and about Cloud Computing and we don't think that because other things are cheaper it means we should change our strategy.

What I try to do with our company is to ensure that we have a very diversified revenue portfolio. I personally want to show the biggest and the smallest companies in the world that we have an offering for them. The Platform approach gives you the ability to have that portfolio. And you have to be a pureplay. You can't be gaming out the model with licence sales. You have to have a nice revenue curve based on a pure revenue model.

So you won't diversify into other areas, such as HR or accounting?

MB: We view ourselves as a distribution constrained organisation. If I'm jealous of SAP and Oracle for anything it is that they have sales forces in the tens of thousands. I need more sales people who can go and do evangalical sales for the future. If we decided to sell new categories of application then we would have conflict. That needs continuous funding. CRM and the platform are the two most strategic aspects of The Cloud and that's what we focus on. Now, do I want HR and accounting and MRP on my platform? Hell yeah! I just don't want to have to pay for that. I want other people to build it and sell it for me. We want them to build on our platform. If we try to be it all and do it all then we're like SAP trying to be everything. You have to choose your poison.

"These are difficult and unusual times. There's certainly a lot of fear out there. But our opinion is that there has never been a better time for Cloud Computing."

Marc Benioff, CEO,

Are there plans to set up a data centre in Europe any time soon?

MB: We have a very different approach to our data centres. We run our own data centres. We have our two primary data centres in the US which handled 10 billion transactions for customers in the past quarter. Through our relationship with Citibank, we are now opening a data centre in Singapore and as part of our continuing evaluation we are looking at where we will place a data centre in Europe. We are also evaluating a data centre in Japan. Those will come about as and when they are appropriate for us.

We have continuous investment but we are not typical of other data centres. We have centres with 500 computers in them rather than 5,000 or 50,000. The reason we can do that is because we run applications that are written from the ground up for a multi-tenant environment, we're not running things that were just not written for The Cloud. We leave that to other people. The customer has the ability to expect a certain level of performance as a result.

Is Cloud Computing really a strategic purchase?

MB: It is important for vendors to give customers solutions that benefit both the customer and the vendor. You have to make a choice as a developer whatever you choose. Portability of code is just not something that we've gotten to as an industry. This is not a commodity product. You're making a strategic relationship decision so you need to look at your vendors deeply and choose what is the right thing for you. When customers bought Sybase or Oracle, they made a decision that was strategic to them as a developer. Our job is to make sure that you pick our platform as once you choose someone else's its practically impossible to get you off it.

"Larry Ellison is my mentor. He is a tremendous leader in the industry. He still owns 5% of our company. Now that I've said that, he also studies the Art of War."

Marc Benioff, CEO, expanded its relationship with Facebook this week, but wouldn't LinkedIn be a more B2B-focused partner?

MB: We love LinkedIn and we love MySpace and you will see us work to things with them in the future. There is no reason why the same thing we've done with Facebook can't be extended to other social networks. But you want to start with the number one social network. They were ready technologically and philosophically so we didn't have to do any heavy-lifting. But we want to do other relationships as well. We don't want to take any particular religious decision in that respect, so you will see further announcements in those other areas.

Microsoft recently made its own Cloud announcements – are they becoming a greater threat?

MB: Microsoft is the largest software firm in the world so if you are in the software market you are competing against Microsoft. You are if you are Oracle or if you are SAP. The reality is that you just gotta take 'em on. What you have to do is create a more compelling customer proposition. Microsoft CRM does not run on an iPhone or a Blackberry. We run with Microsoft technology. We work with Outlook. We fully embrace Microsoft. If you go into their world, then you get locked out. They hate everybody; we love everybody. This is our core strategy. (I learned that from Larry Ellison!) When Azure or Azaboom or whatever it's called is finished I hope we see Microsoft standing on a stage at Dreamforce.

Microsoft kind of understands that they are way behind on Cloud Computing. They did not release technology with their latest announcement and it seems to be two years away. This is why Microsoft slows everyone down. It's them and nobody else. They use their monopoly to control the industry and keep us in a box. I have huge respect for Ray Ozzie and what he's doing at Microsoft is interesting up until the point when it becomes them and nobody else. That's how it used to be but not any more. There's a door open in a black room and developers are walking out into the light and we and Facebook and Google and Amazon are there to receive them.

What about Oracle? Larry Ellison doesn't seem to believe in Cloud Computing...

MB: Larry Ellison is my mentor. He is a tremendous leader in the industry. He still owns 5% of our company. He has been a huge believer and he is constantly giving us advice and support. Now that I've said that, he also studies the Art of War. He has not invested in Cloud Computing because that's just not his revenue model. His job at Oracle is to pooh pooh Cloud Computing. I understand that. But ultimately it doesn't matter what Larry thinks, it's what his customers think.

And SAP? You offered to let them build their own Business ByDesign SaaS offering on Any interest?

MB: I've sent several emails, but they haven't been returned. They should use our platform and stop dicking around. Business ByDesign is a huge implosion! They have completely emasculated their customer base. They don't understand Cloud Computing. They should take a development team and develop and application on our platform. Why do they have to have their own platform? It doesn't make any sense. The most important thing on software is the internet. Maybe their new management team or whoever they have left will see that. But Business ByDesign is just horrible. I've never seen anyone do a worse job. They are doing a terrible, terrible horrible job. They should stop making Cloud Computing announcements.

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  •  04-Nov-2008
    Story read 794 times

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